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Dogwood Wealth Management | Weekly Newsletter (Week Ending 12/16/22) Thumbnail

Dogwood Wealth Management | Weekly Newsletter (Week Ending 12/16/22)

Investing

Week In Review

Before we get into the economic and market data, we wanted to update you on our inaugural toy drive for the children at Sunflower House. We were blown away at the generosity of all who sent or dropped off toys, books, and games. Some gifts arrived without the sender's information, so if we didn't personally thank you, please consider this a message of gratitude. We took the gifts over to Sunflower House this week and the staff were excited to see them. There was a girl there in the lobby who was probably 10 years old or so, and I couldn't help but notice the smile on her face. From the bottom of my heart, we are grateful for all who participated this year. We'll need a bigger tree next year!


Economy

Some good news first. On Tuesday, the much anticipated inflation data for November was released, and for the second month in a row, came in much better than expected. Analysts and experts were predicting a 0.3% month-over-month increase, and we got an increase of just 0.1%. This brings the rolling 1-year inflation rate down to 7.1%.

Then on Wednesday, the Fed announced a 0.5% interest rate increase. This increase was widely expected, and represents a slowing of the Fed's pace of rate hikes (the last 4 increases were by 0.75% each). But what grabbed Wall Street's attention was the latest suggestion from the Fed that interest rates will likely need to remain higher for longer than previously estimated throughout 2023.

Markets

We expected a busy week for the stock market and that is exactly what was delivered. Between the November inflation report, the Fed's rate hike, and Jerome Powell's press conference, we had a lot of movement in the market. For the week, the S&P 500 finished down by 2%, but if you were following the market day-by-day, you might think it felt worse than that. Between Tuesday morning when the market opened and Friday afternoon, the index fell by more than 4%. It was as if Wall Street shifted its focus from falling inflation to the risk of economic recession in 2023-24.

For the year, the S&P 500 is now down 19%. The low for the year was on October 12 when the index was down nearly 25%.

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