Stock Market Sees Successful 2021, But Inflation and Expected Rising Interest Rates to Impact This Year

Posted By: Coltrane Carlson
January 25, 2022 @ 5:31 am
Today's Local News

2021 was another consecutive year that the stock market achieved high marks.

Certified Financial Planner Tim Heisterkamp with Journey Financial in Jefferson says the Standard and Poor Index 500 ended last year with a 27-percent increase, the NASDAQ was 26.8-percent and the Dow Jones Industrial Average had an 18.7-percent jump. Heisterkamp believes the increases were due mostly to the additional payments by the federal government to citizens, because of the ongoing COVID-19 pandemic.

“The federal government has had a really easy money policy, with low interest rates and then giving young families with kids, making sure they had plenty of money. With all their stimulus packages, people had money to spend. So as long as there was cash out there in peoples’ checking accounts, then the overall economy will do better because people having money to spend.”

Heisterkamp notes one area that will impact the stock market this year is through inflation, which is too much money chasing too few goods.

“And the (federal) government really set up a perfect storm for this to happen because they made sure that people had cash in their checking and savings accounts. But then when we look at the supply chain and the number of people working, which was decreased, and then we had all sorts of issues with getting the raw materials to make things. So it actually decreased the supply of goods and services.”

Heisterkamp adds the newest COVID-19 variant, the Omicron, made the stock market react negatively when that was new, but it bounced back the next couple of days. He also believes that when the Federal Reserve increases interest rates again, the stock market will also react negatively.

Disclaimer: Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through Cambridge Investment Research, Inc., a registered Broker/Dealer, Member FINRA/SIPC. Cambridge and Journey Financial, LLC are not affiliated.