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Fourth Quarter Recap & First Quarter Outlook

Stock Market Themes Carry into Fourth Quarter

The fourth quarter was a mixture of all the investment themes that defined 2021. Consumer demand remained strong, inflation pressures intensified, the labor market remained tight, a new Covid-19 variant started spreading, and the Federal Reserve took another big step toward raising interest rates. Despite 2021’s many extraordinary headlines, the S&P 500 traded higher during the quarter and finished the year with a +28.6% total return. This quarterly letter provides an update on current investment themes as markets exit 2021 and look ahead to 2022.

Omicron Variant Emerges in Late November

The latest Covid variant (Omicron) emerged in South Africa the last week of November. Health officials were initially concerned by Omicron’s high number of mutations, and a review of the early data reveals why. Figure 1 measures Omicron’s impact using three metrics: new confirmed Covid cases (top); Omicron’s share as a percentage of total covid cases (middle); and new weekly hospital admissions (bottom). The top chart shows the number of U.S. Covid cases is significantly above the Delta variant’s summer peak. The middle chart shows Omicron is becoming a bigger share of confirmed U.S. cases and rapidly replacing Delta as the dominant variant. While the top two charts indicate Omicron is highly transmissible and spreading rapidly, U.S. hospitalization data suggests Omicron may be less severe than prior variants. The bottom chart shows the number of new weekly Covid hospital admissions is still below Delta’s summer peak despite surging Covid case counts. READ MORE

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This material prepared by TrinityPoint Wealth is for informational purposes only. Additional data provided by MarketDesk Research. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Opinions expressed by TrinityPoint Wealth are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. TrinityPoint Wealth, however, cannot guarantee the accuracy or completeness of such information, and certain information may have been condensed or summarized from its original source.


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