What Caused Yesterday’s Market Rout?

Wednesday was a tough day in the US stock markets as several companies took a deep dive, causing the S&P 500 to slip -0.8% on the day, the second day of drop for the index. Our belief is that the pandemic supply chain bottlenecks are finally affecting market realities with several indicators showing that prices grew by a greater than expected 6.2 percent from last year, the fastest pace of inflation in more than 30 years.

The tech heavy NASDAQ suffered an even worse hit, dropping 1.7 percent after reports that an EU court upheld an antitrust ruling against Alphabet, Google’s parent company.

Finally, with rising inflation, investors expect the US Federal Reserve to aggressively raise rates, which has sent treasury yields up and increased the cost of capital for many businesses contributing to the stock market correction. 

As your investment managers, we are actively adding to our best holdings as we believe that this long overdue drawdown is a good buying opportunity for investors with a long term focus. We increased our stake in companies like PayPal, Square and others. 

Our real estate holdings are also holding stable as prices are still expanding in the US housing market given reduced supply. 

Our job remains to navigate market turbulence and identify the best opportunities for your capital. Thank you for choosing Rise.