Easing on Rate Hikes and Job Numbers Cheer Markets – Weekly Update
December 5, 2022 | By Steven DiGregorio
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
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.
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.
This Week: 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.
Footnotes and Sources
1. The Wall Street Journal, December 2, 2022
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
6. IRS.gov, July 11, 2022
7. WebMD, May 6, 2021
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Tags: DJIA, Employment numbers, Inflation, NASDAQ, Powell, Rate Increases, S&P 500
