Surging inflation, Russia’s invasion of Ukraine, soaring crude oil and natural gas prices, and the possibility of aggressive interest rate hikes by the Federal Reserve caused significant volatility for most of the first quarter. However, the stock market staged a recovery over the past few weeks.
In March, after increasing the interest rates for the first time in more than three years, the Federal Reserve has forecasted raising interest rates throughout 2022, to control the multi-decade high inflation. Investors generally prefer value stocks over growth stocks in an inflationary environment. The major market indexes seem to have factored in all the adverse developments that had resulted in the volatility, so when the market rebounds, value stocks are expected to bounce back. Investors’ interest in value stocks is evident from the Vanguard Value ETF’s (VTV) 1% returns year-to-date, compared to the S&P 500’s 4% loss.
