February Market Recap

What’s trending in the market:


Stock Market diving into correction territories: 2022 started in an opposing way to 2021. The stock market, particularly US major indices Led by the Nasdaq, have slumped since the first trading week and kept on diving and hitting new lows without reaching a bottom – so far-. Technology stocks took the heaviest hits since the start of the year, driven by speculations that the Nasdaq index valuations have been too high. Eventually, all other indices followed up, falling from the record highs achieved throughout 2021.


Furthermore, despite strong corporate earnings and record achieved numbers by some giants such as Apple and Microsoft, the ongoing bearish sentiment and selloff pressures have overshadowed such earnings, and markets kept on sliding towards correction territories.


Inflation! In our previous market recaps, we discussed the threat of inflation and what effects it might pose on the economy if it persists. However, according to the recent CPI figure, inflation increased 7.5% a year of year, which is the highest annual increase since the 1980s. This above-than-expected surge in inflation sent a shock across the stock market as investors started assessing the Fed’s next move and how sharply will it pull liquidity from financial markets.


Furthermore, questions arise on how much impact the Fed’s policy change can have on financial markets, taking into consideration that one aspect that’s fueling inflation is the fact that energy prices are skyrocketing and supply chain disruptions are the main factor of the surge in the general price level. Until these issues are addressed globally, inflationary pressures can still be troublesome to investors.


Geopolitical tensions: the recent upscaling between Russia and Ukraine has further added fuel to fire in financial markets globally. The rise up in tensions added to investors’ worries and when the war broke out, the stock market slumped. Now, investors are assessing and keeping all their focus on any news related to de-escalation alongside peace talks, as the attention of investors has shifted towards this topic while waiting for the Fed’s meeting.



Market performance and reactions:


Dow Jones Industrial Average


The Dow Jones started the year on a slight rise, reaching its highest ever level of 36,952 before it started to tumble as it followed all major indices in the broad sell-off in equity markets in January and February. However, it is worth noting that the Dow Jones index was the least affected by the fall, where it fell less in percentage terms than other indices.



Nasdaq Composite


The Nasdaq composite suffered the most in 2022, where the index reached into bear market categories as it retraced more than 20% from its November highs. This was mainly due to technology stocks being targeted the most by the tough selloffs the markets have witnessed so far.



S&P 500


The S&P 500 index was mainly dragged down by the large falls in tech giants, but the index held some levels as it was supported by its other non-tech components. As a result, the index, just like the Dow Jones, just stepped into the correction category, falling around 11% from its record highs.



VIX Index


The VIX, also known as a gauge of fear among market participants, has been rising noticeably since the beginning of the year due to rising fears among investors and the uncertain outcomes of the evens surrounding the financial markets. The index reached a level of around 32, indicating extreme fear.




Yield Curves


Yields on 10-year notes have risen sharply throughout January and February, shortly breaking the 2% barrier before falling back towards to levels around 1.8. the spike in yields was a major reason for the selloff the market saw in technology stocks.


Year to date recap:



YTD return

Dow Jones Industrial Average


Nasdaq Composite







*As of February 28, 2022.




2022, from its start, have put investors on the line in their decision making and from the various surprises the first two months have brought not only to financial markets, but the whole world.

For US investors, the real question on the table now is what will be the outcome of the Fed’s meeting in the coming weeks and how much will the Fed rise interest rates by, as any unexpected decision can spread unwanted volatility across markets. Furthermore, investors will be looking to assess the potential for any recovery in major US indices despite the ongoing issues across different continents.


For Global investors, the war in Ukraine has all the attention now. Investors are now assessing the impact of the war on global supply chains, stability in the commodities market and energy prices. This all tends to affect the global economy as a whole which in turn could affect financial decision making and the financial results of international corporations, which eventually will all pour towards global financial markets.


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