Weekly Recap | December 12, 2022

December 5-9, 2022 Recap

Stocks Give Back Gains

Fed Rate Jitters Stir Angst
U.S. stocks more than retraced prior week gains, with the Dow posting its largest weekly loss since September. Despite mostly positive economic readings, negative sentiment prevailed amidst caution ahead of this week’s key consumer inflation report for November and Wednesday’s Federal Reserve policy and interest rate decisions. Investor sentiment had also soured after November producer prices ran a bit hotter-than-expected.

For the Week…
The S&P 500 slumped 3.35%, the Dow Jones Industrial Average fell 2.77% and the tech-heavy Nasdaq Composite sank nearly 4%.

Consumer Sentiment Improves
The University of Michigan’s Consumer Sentiment Index rose to a preliminary December reading of 59.1, up from 56.8 in November and ahead of projections for 56.5. The early December reading is still down 16.3% from its year-ago level of 70.6 with Michigan’s survey now forecasting one-year inflation down from 4.9% to 4.6%, the lowest reading in over a year.

All S&P Sectors Post Negative Returns
All 11 S&P 500 major sectors ended negative last week with defensive-oriented groups falling the least, including Utilities (-0.27%) and Healthcare (-1.28%). With oil prices falling steeply, Energy (-8.30%) fell the most followed by Communication Services (-5.39%) and Consumer Discretionary (-4.47%).

Treasury Yields Rebound
The yield on 10-year U.S. Treasury notes ended the week at 3.562%, up 0.05% week-over-week. The Federal Reserve will likely raise its primary Fed Funds lending rate this Wednesday by a smaller 0.50%, down from the last 0.75% rate hikes. U.S. WTI crude oil futures ended Friday at $71.02/barrel, down a sharp 11.2% from a week ago.

The Latest from @CeteraIM

Stocks & Bonds Correlation

November Producer Prices Top Forecasts

Crude Oil Now Negative YTD

Economic Calendar

Monday, December 12
NY Fed Inflation Outlook, Federal Budget Balance.

Tuesday, December 13
Small Business Optimism, Consumer Prices, FOMC Meeting Begins.

Wednesday, December 14
Mortgage Activity, Import/Export Prices, FOMC Rate & Policy Decisions.

Thursday, December 15
Jobless Claims, Retail Sales, Empire State Mfg., Industrial Production, Business Inventories.

Friday, December 16
S&P Global U.S. Mfg. & Services PMIs.

Initial jobless claims edged higher to 230,000 for the week ending December 3, an increase of 4,000 from the week prior. Initial jobless claims have been in a relatively tight range since the summer. Continuing jobless claims, on the other hand, are on an upward trajectory. Continuing unemployment claims jumped 62,000 to 1.671 million, which is a 10-month high.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}