THIS WEEK'S UPDATE

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%.
 

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 they 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. 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.
 

This Week: 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.
 

This Week: Notable 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).
 

Final Thoughts

The biggest news this week will be the Producer Price Index (PPI) release Friday morning.  

This reflects inflation for producers.  The Consumer Price Index (CPI) comes out next week.

That is the biggie for the month.  PPI could move the market a little, but CPI is the main

event for the month along with the Fed decision and press conference.  
 

For the moment the market is consolidating some of its recent gains.  This is not uncommon

at all after such a large move off the October lows.  I would expect more of the same until

Friday when PPI comes out and then the main event for the month of December is next

Tuesday (CPI) and Wednesday (Fed).  Is Santa Clause comin' to town?

Stay tuned.