Broker Check


THIS WEEK'S UPDATE

| December 06, 2021
Share |

THE WEEK ON WALL STREET

Stocks took investors on a wild ride last week as the Omicron variant and Fed

comments upended market expectations. The Dow Jones Industrial Average fell

0.91%, while the Standard & Poor’s 500 stumbled 1.22%. The Nasdaq Composite

index dropped 2.62% for the week. The MSCI EAFE index, which tracks developed

overseas stock markets, lost 0.62%.

A TUMULTUOUS WEEK

Stock prices were volatile all week, swinging wildly after staging a modest recovery

to begin the week. Omicron fears were not the only issue weighing on investors.

Markets were also rattled by Fed Chair Powell’s Congressional testimony stating

conditions warranted considering an acceleration of its bond purchase taper

schedule. Last week’s roller-coaster action was epitomized on Wednesday when

stocks rallied intraday by 520 points on the Dow Industrials, only to close the

session lower by 460 points. Stocks staged a powerful rebound on Thursday on

news that a second Omicron infection exhibited mild symptoms. Also helping the

rebound was news that an agreement was reached in the House of Representatives

to temporarily fund the government and word from President Biden that an

economic lockdown was not in the plan to fight COVID this winter. Emblematic of

the volatile week, stocks fell on Friday following a weak jobs report.


POWELL SURPRISES MARKETS

Markets easily digested the Fed’s early-November announcement that it would pull

the trigger on its bond purchase tapering program, but were caught off-guard by

Powell’s comments during Congressional testimony last Tuesday. Powell indicated

that the Fed would discuss the option of accelerating its tapering plans at its next

meeting. Powell cited the risk of higher inflation and substantial improvement in

the labor market as warranting ending bond purchases a few months sooner than

planned. Powell sought to move away from describing inflation as transitory,

acknowledging that rising energy prices, higher rents, and strong wage gains could

keep inflation elevated, though he maintained inflation would decline sometime in

2022.


THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: JOLTS (Job Openings and Labor Turnover Survey).

Thursday: Jobless Claims.

Friday: CPI (Consumer Price Index). Consumer Sentiment.


THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS

Monday: Coupa Software (COUP), MongoDB (MDB).

Tuesday: AutoZone, Inc. (AZO).

Wednesday: Gamestop Corp. (GME), UiPath, Inc. (PATH).

Thursday: lululemon athletica, inc. (LULU), Broadcom, Inc. (AVGO), Costco

Wholesale Corporation (COST), Chewy (CHWY).


FINAL THOUGHTS

The markets moved in yo-yo like fashion last week as Omicron news along with

testimony by Federal Reserve Chairman Jay Powell gave impatient investors fuel to

panic sell. The market fell about 5% from all-time highs and as of this writing is

rebounding nicely today. Undoubtedly there will be a bit more volatility as we close

out the year. However, most analysts are still looking for a Santa Claus rally into

year-end for the markets. The most likely scenario is Omicron isn’t as bad as the

media was hoping and the Fed continues to taper bond buying which should be well

priced into the markets at this time. Meanwhile consumers have a voracious

appetite as the stores are jammed and package delivery personnel are working in

high gear. I suspect this will be one of the best retail sales (both in store and online

combined) seasons we’ve ever seen.


Have a good week!

Share |