8 Trends to Consider When Investing in the Stock Market in 2022


Last year, Covid-19 vaccinations had everyone on their toes for a prosperous economic rebound. Some even predicted the pandemic’s conclusion was near.

But the reality turned out to be quite different, mainly due to the discovery of the Delta and Omicron variants. The start of 2022 so far has seen the pandemic continuing to wreak havoc on the global economy and providing a myriad of conflicting signals.

While the S&P 500 in 2021, which returned more than 27% indicated a year full of high spirits, investors are unsure how long the bull market will run. The uncertainty stems from the fact that the bull market was only briefly halted by the world’s shortest down market in early 2020. 

The last call may be imminent, but there are signals indicating that 2022 may still have some money-making opportunities for investors.

The following are key trends for you to consider when investing in the stock market in 2022.

1. The Covid-19 Pandemic Continues to Drive the Markets

What direction is the pandemic wind blowing? There is optimism that 2022 will be the year when normality returns, boosting tourism, commercial real estate, and conventional retail stocks even further—but then again, we’ve previously heard that narrative.

It was Delta who put an end to the fantasy in 2021. As the year progresses, the development of Omicron poses both immediate and long-term concerns. Moreover, questions like “will there be another variant?” and “how long will the whole thing last?” still remain unanswered. 

However, the silver lining is that despite the fact that the epidemic hasn’t ended, the post-Covid market bounce has already begun. That’s because the stock market has already factored in most or all of the benefits of a fully restored economy.

2. The Impact of the Midterm Congressional Elections

The midterm congressional elections will likely provide the greatest degree of uncertainty to the stock market in 2022. Because the president’s party normally loses seats in the midterm elections, Republicans are expected to perform better this time around. Possibly still, the battle seems to be headed toward a polarized outcome, raising the possibility of unpredictability in the news and even violence. Investors might be spooked by this type of shock.

It’s not a new phenomenon either. During the months leading up to midterm elections, the stock market tends to be volatile. An analysis indicates that stocks were either down or flat leading up to the November midterm elections in 1994, 2006 & 2010, when a change in power seemed likely. However, all hope is not lost, given the fact that after each election, the stock market continued to rise for the next three years.

3. Inflationary Pressures May Have Their Highs and Lows

Unquestionably, inflation is a major concern for American consumers (and the financial media). And the fact is that rising gas costs and supply chain disruptions aren’t part of any transition. There will be financial volatility in 2022 if the present tendencies aren’t corrected quickly.

Stock market declines in 2022 are a certain conclusion if interest rates rise and inflation accelerates. It might, however, suggest opportunities in the bond market or perhaps deliver some good news for savers in the shape of increased APYs.

4. Short Term Struggle & Long Term Benefit for The Supply Chain Industry 

Today, every port in the US has a mountain of cargo containers waiting to be unloaded or reloaded. Another indicator that supply chain issues aren’t temporary.

Difficulties in the supply chain may eventually benefit. In recent years, Americans have begun to question the national security consequences of buying and making almost all of their products abroad. Very good news.

But the short-term market effect is expected to be unfavorable. There will be no long-term recovery from the epidemic unless supply networks are smoothed out and shop shelves remain stocked. The fact that the Omicron variant is bound to stay in in 2022 makes matters even bleaker.

5. The Federal Reserve Is More Than Likely to Raise Interest Rates

A low interest rate environment is favorable for stocks, but the Federal Reserve’s zero interest rate policy (ZIPR) is coming to an end. The only thing investors need be concerned about in 2022 is the number of increases in the Federal Funds Interest Rate.

On the basis of futures market speculation, s at least two rate hikes in 2019. The Fed’s projected decreases in monthly asset purchases—the so-called “taper”—means that by spring quantitative easing (QE) will be done.

Since the beginning of 2020, quantitative easing (QE) and interest rates at a record low have been a boon to the stock market. Higher inflation figures, might prompt the Fed to constrict the monetary policy even more quickly, which would be terrible news for the market.

6. FAANG Stocks May Not Be as Lucrative as They Once Were

The FAANG stocks are a clear indication that the stock market may decelerate in 2022.

The acronym FAANG refers to five internet behemoths that have been powering the bull market for years, including Meta—formerly Facebook, Amazon, Apple, Netflix, and Alphabet—parent company of Google. By substituting Netflix with Microsoft, another popular acronym, FAAMG, is formed.

In 2020, FAANG companies accounted for around 25 percent of the whole market’s gains. Through the end of November 2021, the FAANG stocks had only contributed 3% to the market’s gains for the year.

It is therefore believed that in 2021, the FAANG stocks weren’t a disastrous investment, but they were dangerously near. Some experts believe that investors will go elsewhere for profits in 2022, which would further benefit Tesla and other high-profile companies.

7. Shortage of Computer Chips Will Persist

Stock prices for computer chips will decline as a result of a shortage in the market for almost all of 2022. With the proliferation of computer chips in everyday products, laptops are far from the only ones without them. Detroit’s parking lots are overflowing with almost completed automobiles, with just their final computer chips to be installed before they can be put up for sale.

Supply chain disruptions would persist even if the pandemic ended quickly. Supply of digital signal processors (DSPs), which convert analogue signals to digital, is restricted. Another blow to the situation came in the form of a large-scale fire that broke out in 2020 at a Chinese chip-manufacturing facility.

Until 2023, Intel predicts that there will be shortages in chip production. A good incentive to invest in chipmakers, but a cause for concern about the viability of most other consumer discretionary businesses.

8. Uncertainty in The Job Market Likely to Remain Prevalent 

In 2021, the work market improved significantly. The US unemployment rate fell to 4.2 percent in November, and the tight market has helped raise salaries.

But the data only provides a partial picture of the job market. The US has yet to restore the 22 million jobs lost during the economic recession, and the employment market is still millions of jobs short of where it should be.

The discrepancy can be explained by factors like women being pulled out of the workforce due to child care issues, and their overrepresentation in sectors impacted hardest by the pandemic.

Companies have suffered from increasing labor prices and staffing issues due to fierce labor rivalry. For now, the labor market will remain a drag on many public corporations until these challenges are resolved.

We hope you found this article the Trends to Consider When Investing in the Stock Market in 2022. If you want to track the performance of the companies mentioned in this article, create a watchlist here. And don’t forget to follow our Youtube channel to view useful investing videos. Thanks for reading.


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We strongly encourage all investors to conduct their own research before making any investment decision. For more information on stock market investing, visit the Securities and Exchange Commission (“SEC”) at www.sec.gov/Canadian CSA https://www.securities-administrators….

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