Weekly Economic Update: January 3rd, 2022

Presented by Nicholas Wealth Management

January 3rd, 2022

Weekly Market Update

In this week’s recap: Despite Omicron concerns, stocks end year are mostly positive, with strong holiday sales figures.

The Week on Wall Street

Stocks closed out the year on a mostly positive note, adding to the year’s gains as concerns about the economic issues of Omicron infections receded.  

The Dow Jones Industrial Average rose 1.08%, while the Standard & Poor’s 500 picked up 0.85%. The Nasdaq Composite index was flat (-0.05%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, posted an increase of 0.80%.^1,2,3

Stocks Notch Record Highs

The end of the year is historically a strong period for stocks–a seasonal pattern dubbed “The Santa Claus Rally.” This year’s final week of trading did not disappoint as stocks posted healthy gains to kick off the week, despite a global increase in Omicron infections. Investors were buoyed by data that showed fewer associated hospitalizations, which helped ease fears of the variant’s economic impact. 

The S&P 500 set multiple fresh record highs, with Wednesday’s new high representing the 70th such high in 2021, while the Dow Industrials recorded its first new record since November. Stocks drifted on low trading volume in the final two trading days of the year, capping a good week, a solid month, and a strong year for investors.⁴

Robust Holiday Sales

The market got off to a good start last week in part due to a strong holiday sales report. A major credit card issuer reported that consumer holiday spending rose 8.5% from last year’s levels, driven by an 11.0% gain in online sales. It was the biggest annual increase in 17 years. The spending by consumers exceeded pre-pandemic sales by 10.7%. The retail categories that experienced the highest sales increases were apparel (+47.3%) and jewelry (+32.0%).⁵

It was a particularly robust number in view of investor concerns about supply chain disruptions, port congestion, labor shortages, and wavering consumer confidence.

Tip of the Week

Media

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!

The market’s overreaction to Omicron has created opportunities for investors.

Southwest Airlines: Strong balance sheet & business model

Best Buy: Supply chain woes easing

David Nicholas joined Ashley Webster on Fox Business last week to discuss stocks positioned for growth in 2022.

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CITATIONS:

1. The Wall Street Journal, December 31, 2021
2. The Wall Street Journal, December 31, 2021
3. The Wall Street Journal, December 31, 2021
4. CNBC, December 29, 2021
5. CNBC, December 27, 2021