Stocks Soar As Traders Snap Up Bargains  Image: Bigstock Stocks finished sharply higher yesterday, as they closed out a tough January. Even though they put in their first positive weekly close of 2022 last week, the S&P ended their worst month since March 2020, when the pandemic first began. But I'd much rather start weak and finish strong (recent momentum has definitely been on the upside), than vice versa. Investors continue to digest the Fed's latest moves and messaging (even though they've been telegraphing it for months): their bond buying should wrap up in March, rate hikes should begin shortly thereafter, and then they'll begin to unwind a portion of their balance sheet. All to combat inflation. The key takeaway that too may have missed is that the economy is strong. That's why they have the ability to start normalizing monetary policy. For one, if the economy was weak, we wouldn't be experiencing inflation. But two, if the growth outlook was unclear or overly cautious, the Fed would likely not be doing a thing. But instead, they are finally taking action to combat inflation, and remove some of the unnecessarily large amount of liquidity that the economy doesn't need right now. Fed Chair, Jerome Powell, expressed his confidence to that when he said, just last week, that there's "quite a bit of room to raise rates without threatening the labor market." With Q4 GDP having just come in better than expected (6.9% vs. views for 5.7%), and full-year GDP for 2022 expected to come in at 4.0%, it looks like it will be another year of solid growth, which suggests another year of solid market gains. And with earnings season now kicking into gear (stocks typically go up during earnings season), that should usher in even more green arrows. We've got 609 companies on deck to report for the rest of this week. And another 909 next week. We've also got a full slate of economic reports as well, culminating with the always important Employment Situation report on Friday morning. But today, we've got the Redbook retail sales report, the PMI Manufacturing report, the ISM Manufacturing Index, Construction Spending, and the Job Openings and Labor Turnover Survey report (or JOLTS for short). Could be a busy day. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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