Presented by Nicholas Wealth Management
December 6th, 2021
Weekly Market Update
In this week’s recap: Market copes with unpleasant news; Powell surprises, Omicron concerns, and a less than stellar jobs report disappoints.
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%.1,2,3
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.4
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.5
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 2022.5
Tip of the Week
If you’re trying to save money or track your spending, consider using cash. Cash is real. You can see it, and you know when you’re out of it. Money becomes more abstract when you use a credit or debit card, leaving you more open to financial choices you may later regret.
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1. The Wall Street Journal, December 3, 2021
2. The Wall Street Journal, December 3, 2021
3. The Wall Street Journal, December 3, 2021
4. The Wall Street Journal, December 1, 2021
5. Reuters.com, November 30, 2021
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