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Weekly Market Insights header image

Weekly Market Insights

The Markets (as of market close January 14, 2022)

Equities closed generally lower last week, with only the Global Dow ending the week in the black. Inflation, or more likely the Federal Reserve's response to rising prices, may have influenced investors. Markets are still adjusting to the anticipated tighter monetary policy from the Fed, which is planning on raising interest rates several times this year. The central bank is also considering reducing the size of its balance sheet, which means less demand for bonds. Ten-year Treasury yields ended the week flat. The dollar dipped lower, while crude oil prices rose nearly 7.0%, reaching $84.23 per barrel. Gold advanced, but remains marginally below its 2021 year-end price.

Stocks continued their slide last Monday, despite a marginal surge in tech shares. Several of the major indexes declined, with the Dow (-0.5%), the S&P 500 (-0.1%), the Russell 2000 (-0.4%), and the Global Dow (-0.2%) ending the day in the red. Only the Nasdaq was able to close ahead, but only by 0.1%. The Federal Reserve's monetary policy in response to rising inflation continued to dominate the market. Ten-year Treasury yields climbed higher as bond prices fell. Crude oil prices dropped to $78.43 per barrel. The dollar rose against a basket of currencies. Health care, communication services, and information technology were the only market sectors to advance.

Last Tuesday saw stocks rebound after Federal Reserve Chair Jerome Powell stated that the Fed would do whatever is needed to control rising inflation. Tech stocks followed Monday's increase with another strong performance, sending the Nasdaq up 1.4% on the day. The Russell 2000 jumped 1.1%, followed by the S&P 500 and the Global Dow (0.9%), and the Dow (0.5%). The dollar and 10-year Treasury yields fell, while crude oil prices rose to $81.42 per barrel. Energy, materials, communication services, and information technology led the market sectors.

Stocks closed last Wednesday generally higher, despite rising inflation. The benchmark indexes listed here posted gains, with the S&P 500 (0.3%) and the Nasdaq (0.2%) finishing ahead of the Dow (0.1%). Only the Russell 2000 failed to add value, closing down 0.5%. The Consumer Price Index rose 0.5% in December, ending 2021 with its largest annual increase in nearly 40 years, increasing the likelihood that the Federal Reserve will move to quell inflationary pressures. Ten-year Treasury yields dipped lower, as did the dollar. Crude oil prices rose to $82.70 per barrel.

The Nasdaq dropped 2.5% last Thursday amid tech stock losses. With the growing likelihood that interest rates will be rising soon, investors may be moving from growth shares to value stocks. Also last Thursday, investors saw an increase in weekly unemployment claims and wholesale price inflation. The S&P 500 fell 1.4%, the Russell 2000 dipped 0.8%, and the Dow slipped 0.5%. The Global Dow inched up 0.1%. Ten-year Treasury yields, the dollar, and crude oil prices slid lower. Consumer discretionary and information technology declined more than 2.0%.

Stocks were mixed last Friday, with the Nasdaq (0.6%), the Russell 2000 (0.1%), and the S&P 500 (0.1%) ending the day higher, while the Dow (-0.6%) and the Global Dow (-0.2%) closed lower. Crude oil prices, the dollar, and 10-year Treasuries climbed higher on the day. Fourth-quarter earnings reports from a few major banks were released last week, with mixed results. A slew of banks and financial companies will be reporting their fourth-quarter earnings data this week.

Market/Index

2021 Close

Prior Week

As of 1/14

Weekly Change

YTD Change

DJIA

36,338.30
36,231.66 35,911.81 -0.88% -1.17%

Nasdaq

15,644.97

14,935.90 14,893.75
-0.28%

-4.80%

S&P 500

4,766.18

4,677.03 4,662.85 -0.30%

-2.17%

Russell 2000

 2,245.31 2,179.81

2,162.46

-0.80% -3.69%

Global Dow

4,137.63

4,232.87

4,293.85 1.44%

 

3.78%

Fed. Funds target rate

0.00%-0.25%

0.00%-0.25%

0.00%-0.25%

0 bps

0 bps

10-year Treasuries

1.51%

1.77%

1.77%

0 bps

26 bps

US Dollar-DXY

95.64

95.75

95.17

-0.61% -0.49%

Crude Oil-CL=F

$75.44 $78.95 $84.23 6.69% 11.65%

Gold-GC=F

$1,830.30

$1,795.30 $1,816.50 1.18%

 

-0.75%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

  • Inflationary pressures continued to increase in December. According to the latest data, the Consumer Price Index rose 0.5% last month after increasing 0.8% in November. The CPI advanced 7.0% in 2021, the highest annual increase since 1982. Food prices rose 0.5% in December (6.3% for the year). Energy prices dipped 0.4% last month, but increased 29.3% in 2021, led by a 49.6% rise in gasoline prices. December saw prices increase for new vehicles (1.0%) and used cars and trucks (3.5%). For 2021, automobile prices rose markedly, with new vehicle prices advancing 11.8%, while prices for used cars and trucks climbed 37.3%. A rise in prices for apparel (1.7%) and shelter (0.4%) also contributed to the increase in the December CPI.
  • The Producer Price Index increased 0.2% in December after climbing 1.0% in November. The PPI moved up 9.7% in 2021, the largest calendar-year increase since data was first collected in 2010. A 0.5% increase in prices for services drove the overall December increase, as prices for goods decreased 0.4%. Over half of the December advance in prices for services is attributable to margins for final demand trade services, which moved up 0.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the December decline in goods prices was a decrease in energy prices, which fell 3.3%. Prices for foods fell 0.6% in December.
  • Retail sales fell 1.9% in December after advancing 0.2% in November. Nevertheless, retail sales rose 19.3% in 2021. Weakness in sales was broad-based in December, with only a few exceptions. Last month saw clothing and clothing accessories stores sales dip 3.1%, motor vehicle and parts dealers sales fall 0.4%, and nonstore (online) sales drop 8.7%. Many factors may have contributed to the decrease in December sales, including lack of inventory and reluctance to spend on big-ticket items that were not discounted; some shoppers may have started their buying earlier than usual. While December sales may have dropped off, most businesses saw sales increase in 2021 compared to the previous year's totals. Sales for motor vehicle and parts dealers rose 23.6%, furniture and home furnishings sales increased 26.4%, electronics and appliance stores sales rose 25.2%, clothing and clothing accessories stores sales jumped 48.4%, and gasoline stations sales advanced 36.6%.
  • Both import and export prices surprisingly declined in December. Import prices fell 0.2% after advancing 0.7% in November, as lower fuel prices more than offset higher nonfuel imports. Despite the December drop, import prices increased 10.4% for 2021, the largest calendar-year rise since import prices increased 10.6% in 2007. Export prices dropped 1.8% last month after increasing 1.0% in November. The December decline in export prices was the largest one-month drop since a 3.5% price decline in April 2020. Export prices rose 14.7% from December 2020 to December 2021, marking the largest calendar-year increase since data was first published in 1984.
  • Industrial production declined 0.1% in December. Losses of 0.3% for manufacturing (+3.5% for 2021) and 1.5% for utilities were mostly offset by a gain of 2.0% for mining. For the fourth quarter as a whole, total industrial production rose at an annual rate of 4.0%. Total industrial production in December was 3.7% higher than it was at the end of 2020 and 0.6% above its pre-pandemic (February 2020) reading.
  • The federal budget deficit was $21.3 billion for December. Government receipts were $486.7 billion, while outlays totaled $508.0 billion. The total government deficit through the first three months of fiscal year 2022 is $377.7 billion, $195.2 billion lower than the deficit over the same period in fiscal year 2021.
  • The national average retail price for regular gasoline was $3.295 per gallon on January 10, $0.014 per gallon more than the prior week's price and $0.978 higher than a year ago. Gasoline production increased during the week ended January 7, averaging 8.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ended January 7 — 293,000 barrels per day less than the previous week's average. Refineries operated at 88.4% of their operable capacity.
  • For the week ended January 8, there were 230,000 new claims for unemployment insurance, an increase of 23,000 from the previous week's level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 1 was 1.1%, a decrease of 0.2 percentage point from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended January 1 was 1,559,000, a decrease of 194,000 from the prior week's level, which was revised down by 1,000. This is the lowest level for insured unemployment since June 2, 1973, when it was 1,556,000. States and territories with the highest insured unemployment rates for the week ended December 25, 2021, were Alaska (3.2%), Minnesota (2.6%), California (2.5%), New Jersey (2.4%), Illinois (2.3%), New York (2.3%), Massachusetts (2.1%), Rhode Island (2.1%), Connecticut (2.0%), and Oregon (1.9%). The largest increases in initial claims for the week ended January 1 were in New York (+8,812), Pennsylvania (+6,772), Connecticut (+6,020), Washington (+4,626), and Michigan (+3,923), while the largest decreases were in Missouri (-1,086), Tennessee (-674), Puerto Rico (-329), Rhode Island (-288), and New Mexico (-101).

Eye on the Week Ahead

This week's economic news focuses on the housing sector, with the December data on housing starts and existing home sales. The number of building permits rose 3.6% in November, while housing starts jumped 11.8% — both signs that new home construction is on the upswing. Sales of existing homes have also been on the rise since September 2021. November saw existing home sales increase 1.9%, another indication that the demand for housing is solid.

 

The Markets (as of market close January 7, 2022)

After beginning the week on a high note, stocks couldn't maintain that momentum, ending the week in the red. Following a record close on Monday, the S&P 500 ended the week down 1.9%, the worst start to a year since 2016. Some investors may be concerned that the Federal Reserve will raise interest rates faster than had been anticipated. The Nasdaq fell 4.5%, its worst week since February 2021. Treasury yields continued to mount in anticipation of higher interest rates. While the December employment report showed a slightly underwhelming 199,000 new jobs added, the unemployment rate fell to a pandemic-era low of 3.9%, possibly adding further fodder for the Fed to continue its hawkish bent.

Wall Street kicked off the start of 2022 in fine fashion, recording record highs last Monday. The Nasdaq and the Russell 2000 climbed 1.2%. The large caps of the Dow (0.7%) and the S&P 500 (0.6%) advanced, while the Global Dow added 0.6%. Bond prices dipped, possibly in anticipation of rising interest rates, sending 10-year Treasury yields up to 1.62%. Crude oil prices rose $76.07 per barrel, while the dollar gained 0.7%. Energy (3.1%) and consumer discretionary (2.8%) led the market sectors, while materials, real estate, and health care fell. The risk rally sent gold prices down nearly 1.5% to $1,801.90 per ounce.

Stocks were mixed last Tuesday, with the Dow reaching its second record high in 2022, while a tech rout pulled the Nasdaq down 1.3%. The Russell 2000 and the Global Dow each gained more than 1.0% on the day, while the S&P 500 was little changed. Ten-year Treasury yields jumped to 1.66%, crude oil prices rose for the second consecutive day to close at $77.00 per barrel, while the dollar stalemated. Energy, financials, and industrials climbed higher, while information technology and health care trended lower.

Equities fell last Wednesday following the release of the minutes from the Federal Reserve meeting, raising the prospect for multiple interest-rate hikes beginning in the near term. The Nasdaq and the Russell 2000 each dropped 3.3%. The S&P 500 fell 1.9%. The Dow dipped 1.1%. Ten-year Treasury yields continued to rise, closing at 1.7% as bond prices fell. Crude oil prices rose marginally to close at $77.19 per barrel. The dollar was little changed. Each of the market sectors lost value, with the biggest declines hitting information technology, real estate, communication services, and consumer discretionary.

Stocks continued to trend lower last Thursday, with only the Russell 2000 advancing by the close of trading. The Dow fell 0.5% and the Global Dow dipped 0.4%. The Nasdaq and the S&P 500 were flat. Ten-year Treasury yields rose again, climbing to 1.73%. Crude oil prices were approaching $80.00 per barrel, while the dollar was unchanged. Energy and financials advanced, while health care and materials declined.

Equities couldn't reverse course last Friday, closing the day in the red. The Russell 2000 fell 1.1%, followed by the Nasdaq (-1.0%), and the S&P 500 (-0.4%). The Dow was flat, while the Global Dow gained 0.7%. The dollar and crude oil prices fell, while 10-year Treasury yields continued to climb higher, jumping 3.8 basis points. Among the market sectors, energy, financials, and utilities advanced, while information technology and consumer discretionary fell more than 1.0%.

Market/Index

2021 Close

Prior Week

As of 1/7

Weekly Change

YTD Change

DJIA

36,338.30
36,338.30 36,231.66 -0.29% -0.29%

Nasdaq

15,644.97

15,644.97 14,935.90
-4.53%

-4.53%

S&P 500

4,766.18

4,766.18 4,677.03 -1.87%

-1.87%

Russell 2000

 2,245.31 2,245.31

2,179.81

-2.92% -2.92%

Global Dow

4,137.63

4,137.63

4,232.87 2.30%

 

2.30%

Fed. Funds target rate

0.00%-0.25%

0.00%-0.25%

0.00%-0.25%

0 bps

0 bps

10-year Treasuries

1.51%

1.51%

1.77%

26 bps

26 bps

US Dollar-DXY

95.64

95.64

95.75

0.12% 0.12%

Crude Oil-CL=F

$75.44 $75.44 $78.95 4.65% 4.65%

Gold-GC=F

$1,830.30

$1,830.30 $1,795.30 -1.91%

 

-1.91%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

  • December saw 199,000 new jobs added, and the unemployment rate fell 0.3 percentage point to 3.9%. The total number of unemployed persons declined by 483,000 to 6.3 million. For comparison, in February 2020, the unemployment rate was 3.5% and there were 5.7 million unemployed persons. Employment has increased by 18.8 million since April 2020 but is down by 3.6 million, or 2.3%, from its pre-pandemic level in February 2020. In December, the number of workers who permanently lost jobs dipped by 202,000 to 1.8 million. The labor force participation rate was unchanged at 61.9% in December but remains 1.5 percentage point lower than in February 2020. The employment-population ratio increased by 0.2 percentage point to 59.5% in December but is 1.7 percentage point below its February 2020 level. In December, there were 5.7 million people not in the labor force who wanted a job. This total fell by 1.6 million over the year, but is 717,000 higher than in February 2020. In December, the share of employed persons who teleworked because of the coronavirus was 11.1%, little changed from November. In December, 3.1 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This level is down from 3.6 million in November. In December, average hourly earnings increased by $0.19 to $31.31. Over the past 12 months, average hourly earnings have increased by 4.7%. The average work week in December was unchanged at 34.7 hours.
  • According to the latest report from IHS Markit, the U.S. Purchasing Managers' Index for December dipped to 57.7, down from 58.3 in November. Since a reading above 50 indicates growth in the manufacturing sector, survey respondents noted growth in December, but at a slower pace than in November. With the exception of October and November, the pace of output growth in December was the slowest since October 2020 as material shortages and supplier delays continued to drag production lower. On the plus side, supply-chain bottlenecks eased as did client demand.
  • The services sector enjoyed a strong December, posting an IHS Markit U.S. Services PMI Business Activity Index of 57.6. While the rise in services activity was the slowest in the past three months, the decrease was marginal and was supported by a sharp increase in new business, as the rise in new orders was the fastest in the last five months. Although firms sought to increase their workforces to tackle strong growth in backlogs of work, labor shortages and challenges retaining staff hampered progress. Meanwhile, soaring wage bills and greater supplier prices led to the steepest increase in cost burdens on record.
  • According to the latest Job Openings and Labor Turnover Summary, November saw the number and rate of job openings decrease to 10.6 million (-529,000) and 6.6%, respectively. Job openings declined in several industries, with the largest decreases in accommodation and food services (-261,000), construction (-110,000), and nondurable goods manufacturing (-66,000). Job openings increased in finance and insurance (+83,000) and in federal government (+25,000). Over the 12 months ended in November 2021, hires totaled 74.5 million and separations totaled 68.7 million, yielding a net employment gain of 5.9 million. While the number of hires was little changed in November from the previous month, the number of total separations increased by 382,000 to 6.3 million. The number of workers who quit their respective jobs increased in November to a series high of 4.5 million, while the quits rate jumped to 3.0%.
  • The latest data shows that the goods and services trade deficit for November was $80.2 billion, up $13.0 billion from October. November exports were $224.2 billion, $0.4 billion more than October exports. November imports were $304.4 billion, $13.4 billion more than October imports. Year to date, the goods and services deficit increased $174.6 billion, or 28.6%, from the same period in 2020. Exports increased $354.4 billion, or 18.2%. Imports increased $529.0 billion, or 20.7%.
  • The national average retail price for regular gasoline was $3.281 per gallon on January 3, $0.006 per gallon more than the prior week's price and $1.032 higher than a year ago. Gasoline production decreased during the week ended December 31, averaging 8.5 million barrels per day. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended December 31 — 163,000 barrels per day more than the previous week's average. Refineries operated at 89.8% of their operable capacity.
  • Not unexpectedly, claims for unemployment insurance rose during the holiday period of Christmas through New Year's Day. For the week ended January 1, there were 207,000 new claims for unemployment insurance, an increase of 7,000 from the previous week's level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 25 was 1.3%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended December 25 was 1,754,000, an increase of 36,000 from the prior week's level, which was revised up by 2,000. Unemployment insurance claims are in line with pre-pandemic totals. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended December 18, 2021 were Alaska (3.1%), the Virgin Islands (2.6%), New Jersey (2.3%), California (2.2%), Minnesota (2.2%), Puerto Rico (2.0%), Illinois (1.9%), Massachusetts (1.9%), New York (1.8%), and Rhode Island (1.8%). The largest increases in initial claims for the week ended December 25 were in New Jersey (+4,660), Pennsylvania (+3,320), Ohio (+2,615), Michigan (+2,440), and New York (+2,287), while the largest decreases were in California (-7,320), Texas (-3,955), Virginia (-2,183), Alabama (-1,293), and Wisconsin (-1,181).

Eye on the Week Ahead

Inflation data for December is available this week with the release of the Consumer Price Index and the Producer Price Index. The CPI rose 6.8% through November, while the PPI vaulted 9.6%. Neither index is projected to decrease based on December's figures.

 

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2022.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

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