Dogwood Wealth Management | Weekly Newsletter (Week Ending 12/9/22)
InvestingWeek In Review
Economy
We had limited economic data out this week as the Fed was in a quiet period leading up to the final FOMC meeting of the year. Jobless claims rose slightly last week but continue to be near the pre-pandemic levels. In the month of November, there were 263,000 job openings, bringing the year-to-date figure to more than 4.3 million.
It's going to be a jam-packed week of data for our fellow econ nerds. On deck we have the November inflation report due out Tuesday morning at 7:30 AM Central. Then we'll get the Fed's next rate increase on Wednesday afternoon, followed by comments from Fed chair Jerome Powell.
Markets
Stocks traded lower this week, unable to build on the gains we've had the last couple of weeks. The S&P 500 closed the week lower by 3.4%. The headlines suggested the market was concerned the Fed would continue to raise rates in 2023 in response to stubbornly-strong economic data (wages, job openings, inflation, etc.). However, the CME FedWatch Tool still suggests the strongest probability of rates peaking between 5-5.25% by next summer.
The last inflation (CPI) report was released on November 10. The data was better-than-expected, and the market rose by more than 5% that day. Here's a list of the days the CPI reports have been released this year, and the daily performance of the S&P 500.
Source: BLS, YCharts
We've had some pretty significant daily changes in the market in response to CPI data this year, both to the upside and downside, especially over the last 6 months. Historically the average daily percent change in the stock market is +/- 1%. This year on a CPI day, the average is more than a 2% change.