In this week’s recap: Easing on rate hikes and job numbers cheer markets.
Weekly Economic Update
Presented by Rabenold Advisors, December 5, 2022
THE WEEK ON WALL STREET
Stocks ended higher last week as investors navigated the crosscurrents of a potential easing in future rate hikes and continued strength in the labor market.
The Dow Jones Industrial Average edged 0.24% higher, while the Standard & Poor’s 500 gained 1.13%. The Nasdaq Composite index improved by 2.09% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.68%.1,2,3
A CHOPPY WEEK
The week started lower on concerns about protests in China over its zero-Covid policy and comments by two Fed presidents that the Fed may continue its aggressive rate hike policy. Stocks then surged on Wednesday following remarks by Fed Chair Powell, confirming the central bank’s intention to slow the pace of interest rate increases, which may begin as early as this month.
Stocks buckled in early trading on Friday’s monthly employment report, which showed a higher-than-expected increase in new job growth and an above-expectations jump in wage growth. But stocks cut their losses by the end of the session to lock in a positive week.
LABOR MAY BE KEY
In a presentation to the Brookings Institution, Powell said that it might be time to begin moderating the pace of rate hikes. He cited several areas of progress in the inflation fight, including a deceleration in interest rate sensitive parts of the economy, such as housing and supply chain improvement. He also noted the price declines seen in goods and rents. 4
But Powell suggested the labor market would need to cool down before the Fed could feel confident about making sustainable progress toward its two percent inflation target. November’s employment report showed robust job and wage growth, which indicated any cooling remained in the future.5
T I P O F T H E W E E K
You can’t control what happens with interest rates or stocks in the future; you can control the amount you save for retirement. Boosting your personal savings ratio may bring you closer toward your retirement savings objective.
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: Purchasing Managers’ Index (PMI) Composite. Factory Orders. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims. Purchasing Managers’ Index (PMI) Manufacturing.
Friday: Producer Price Index (PPI). Consumer Sentiment.
Source: Econoday, December 2, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: AutoZone, Inc. (AZO), MongoDB, Inc. (MDB).
Wednesday: Campbell Soup Company (CPB).
Thursday: Broadcom, Inc. (AVGO), Costco Wholesale Corporation (COST), Chewy (CHWY).
Source: Zacks, December 2, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“In times of rapid change, experience could be your worst enemy.”
J. PAUL GETTY
T H E W E E K L Y R I D D L E
A train moving as fast as it can go strikes a man’s hand, yet he is uninjured, and the train goes off its tracks. Under what circumstances could this happen?
LAST WEEK’S RIDDLE: A lone pine tree stands on a cliff. The wind is blowing from the east through the mountains. Which way do the tree’s leaves blow?
ANSWER: Pine trees do not have leaves.
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Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
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2. The Wall Street Journal, December 2, 2022
3. The Wall Street Journal, December 2, 2022
4. The Wall Street Journal, November 30, 2022
5. The Wall Street Journal, November 30, 2022