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Tech-heavy benchmark, the Nasdaq Index made its worst start of the year since 2008, down around 11% year to date. Negative sentiment, and a great deal of apprehension as the Fed plans to begin withdrawing its record stimulus, is partly to blame, but also significant uncertainty around earnings season and rising costs is causing buyers to stay on the sidelines. On a technical level, traders will be watching for the index to hold the October 2021 lows, about 2% lower from current levels. Markets could find some relief next week in the Wednesday FOMC, and continuation of earnings of the US tech giants.

Equities bounce as US Initial Jobless Claims rise to 286'000, the most since October 2021. Today's data suggest that Omicron, tight supply chains, and rising prices are likely weighing on economic activity. The rebound in US stocks highlights greater optimism among investors on the believe that maybe the Fed will not remove accommodation as early and aggressively as the markets are pricing in. 

The Russell 2000 has dropped back to February 2021 lows, as investors seek to shed exposure to companies that are not yet profitable. Upon increasing uncertainty, and rising borrowing costs, investors are rotating companies with high valuations, in favor of large-cap companies with significant cash-flows, high dividends, and lower valuation multiples. Those companies with high pricing power and resilience in an inflationary environment are showing the most interest from market participants.

Procter & Gamble raised sales guidance, boosted by cleaning products. However, cost pressure is high with increase in annual freights and commodity costs. It guides sales growth of 3-4%, but expects inflation to weigh heavily. The stock is responding well, up 4%, a dollar shy away from its all time high of USD164.

Microsoft announced it will buy the video game giant Activision Blizzard in a USD68.7 billion all-cash deal. The videogame maker, known for its popular game "Call of Duty", had a stellar performance until February of last year. But the company's share price dropped as much as 45% as it got hit by allegations of sexual harassments and misconduct. This morning, shares of Activision jumped 38% in pre-market before being halted. In contrast, Microsoft shares are down more than 2%, as investors are judging the deal too expensive.