Market Commentary - January 2022Stocks have gotten off to a tough start in 2022. Why has the market pulled back and what might we see going forward?Is this normal?We think the most important thing to remember is that periodic stock market volatility is entirely normal. Historically, the S&P 500 Index has averaged three pullbacks of 5% or more per year and one correction of more than 10% annually. Investors have grown accustomed to steady, consistent gains over the past couple of years which makes the current bumpy ride feel more uncomfortable. After only a single 5% pullback in 2021, we have known volatility would come knocking again sooner or later. (Remember, that’s why we had a market pullback built into our planning projections during our review meetings last year.)Why?Even though volatility is normal, it is usually responding to something. Stubbornly high inflation, higher interest rates, and less support from the Federal Reserve are getting most of the blame, and probably deservedly so. Supply chain disruptions and some economic weakness because of the Omicron variant of COVID-19 are also playing a role. Additionally, market history tells us that stock market action in mid-term election years (which we’re in now) are historically quite volatile and most gains tend to happen in the back half of the year.How have rate hikes affected the markets?With the Fed taking proactive measures to slow inflation, the signal of higher interest rates has made the markets nervous. Since rate hikes typically take place in a strong economy, the S&P 500 historically has had positive performance (on average) in the year before and after the first rate hike of an economic expansion. There are still challenges: supply chain disruptions, wage and other cost pressures, and the COVID-19 Omicron variant. But while it is still early in earnings season, corporate earnings are growing strongly and companies are mostly optimistic about the future. What should you do? Remember, while pullbacks and market volatility are not things any of us enjoy, it’s difficult (we’d say impossible) to time the market. Take a look at the chart below and notice how important it is to stay invested during times of market volatility. On average, the market is up around 25% a year after the low, indicating much of the gains take place shortly after the bottom. So if you get out then wait until the coast is clear, it may be too late to recoup the losses. BridgeQuest Wealth Strategies Career changes, retirement, aging parents, liquidity events—navigating life’s big transitions gets much easier with an experienced guide. The BridgeQuest team leads you in the right direction with independent asset management tailored to your goals. Your plan will include objective advice and personal attention every step of the way. *RES-725950-0421 – For Public Use Tracking #1-05140638. Important InformationThis material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. All data is provided as of January 24, 2022.Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All index data from FactSet.This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.Securities and Advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer member FINRA/SIPC. The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have received this message in error, please immediately delete.