Presented by Nicholas Wealth Management
THIS WEEK ON WALL STREET
Markets started the new year lower, with the volatility index increasing on continued recession concerns. We are looking at the jobs report that will be released on Thursday to give direction for potential changes to the Federal Reserve policy.
LAST WEEK ON WALL STREET
In a holiday-shortened week, erratic trading left stocks marginally down for the week.
The Dow Jones Industrial Average lost 0.17%, while the Standard & Poor’s 500 slipped 0.14%. The Nasdaq Composite index fell 0.30%. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.61% higher.1,2,3
STOCKS END LOWER
Steps by China to move past its zero-Covid policies triggered concerns that its economic reopening might aggravate inflation pressures, sending stocks lower and bond yields higher to begin the week. Technology stocks saw the most significant hit.
With dimming prospects of a Santa Claus rally (the historical tendency of stocks to rise in the final trading days of the year and the first two days of the new year), stocks rebounded strongly on Thursday to erase the losses of the previous two days. However, stocks again turned lower to end the week with small losses.
LOWER RISK APPETITE AMID UNCERTAINTY
In an otherwise slow week for news, two monthly reports were released highlighting the market’s headwinds. The first was State Street’s Investor Confidence Index, which measures the risk appetite of institutional investors. The December report showed the confidence of large asset managers in investing in risk assets, like stocks, has dropped over the past two months, explaining, in part, why stocks may have struggled of late.4
Meanwhile, the Atlanta Fed released its Survey of Business Uncertainty, which reflected both declining expectations around sales growth and employment, along with growing uncertainty about revenue and employment growth over the next 12 months.5
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Purchasing Managers’ Index (PMI)-Manufacturing. Institute of Supply Management (ISM) Manufacturing. Job Openings and Labor Turnover Survey (JOLTS).
Thursday: Jobless Claims. Automated Data Processing (ADP) Employment Report. Purchasing Managers’ Index (PMI)-Services.
Friday: Employment Situation.
Source: Econoday, December 30, 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.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Thursday: Constellation Brands, Inc. (STZ), Walgreens Boots Alliance, Inc. (WBA), Conagra Brands (CAG).
Source: Zacks, December 30, 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.
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CITATIONS:
1. The Wall Street Journal, December 16, 2022
2. The Wall Street Journal, December 16, 2022
3. The Wall Street Journal, December 16, 2022
4. CNBC, December 13, 2022
5. The Wall Street Journal, December 14, 2022
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