Weekly Economic Update: May 17th, 2022

Presented by Nicholas Wealth Management

May 17th, 2022

 

Weekly Market Update

In this week’s recap: Inflation takes center stage.

 

The Week on Wall Street

In a volatile trading week, stocks extended their losses as economic growth and inflation concerns soured investor sentiment.

The Dow Jones Industrial Average dropped 2.14%, while the Standard & Poor’s 500 lost 2.41%. The Nasdaq Composite index fell 2.80% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 3.21%.1,2,3

 

A Turbulent Week

Inflation moved to center stage last week with the release of April’s Consumer Price Index (CPI) and the Producer Price Index. Both numbers came near their 40-year highs but were lower than March’s year-over-year numbers. The results heightened investor anxiety about future Fed monetary tightening and its impact on economic growth.

In recent weeks, technology stocks have borne the brunt of the downdraft as investors lightened up on risk exposures, with some of the mega-cap tech names getting swept up in the selling pressure. Cooling import price increases buoyed spirits on Friday, helping spark a rally that reduced the week’s losses.

 

Inflation Stays Hot

Investors were greeted with a mixed CPI report, looking for signs that inflation may be cooling. Year-over-year costs rose 8.3%, slower than the previous month but faster than consensus estimates. Excluding food and energy, core inflation climbed 6.2%. Buried beneath the headline number was a 5.1% yearly increase in shelter costs, the most significant increase since 1991. Shelter costs account for one-third of the CPI.4

Inflation has been a weight on markets all year. Investors are concerned that the persistence of higher prices may tip the economy into recession as increased spending on essential needs crimps consumers’ spending power.

 

Tip of the Week

If you’re thinking about selling a business, consider contacting a business broker, one that represents companies like yours. It may make finding an appropriate buyer easier.

 

Radio

Time Change! Retire Ready with David Nicholas will now be airing on Saturdays at 6:00 PM on 95.5 WSB. Be sure to tune in this weekend! If you missed this past weekend’s show, CLICK HERE to listen!

 

Media

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

1️⃣ 10-year U.S. Treasury yield has yet to stabilize. 2️⃣  VIX has yet to take out its March and April highs. David Nicholas joined Stuart Varney on Fox Business last Tuesday, 5/10, to discuss why the bottom is not in yet for markets.

 

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CITATIONS:

  1. The Wall Street Journal, May 13, 2022
  2. The Wall Street Journal, May 13, 2022
  3. The Wall Street Journal, May 13, 2022
  4. CNBC, May 11, 2022

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