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
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
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?
THIS WEEK'S UPDATE
December 06, 2022|