Tag: investment

The Markets (as of market close January 27, 2023)

Wall Street ended last week higher on favorable inflation, economic, and corporate earnings data. Investors now must await the Federal Reserve’s meeting this week to see whether the Fed will soften its policy of aggressive interest-rate hikes. Fourth-quarter corporate earnings season is wide open with roughly 68% of the companies comprising the S&P 500 reporting earnings ahead of consensus estimates. Each of the benchmark indexes listed here posted solid gains by the end of last week, led by the tech-heavy Nasdaq. Heading into the final two trading days of January, the Nasdaq has gained 11.0%, while the Russell 2000 and the Global Dow are up over 8.0%. Crude oil prices closed the week lower ahead of the upcoming OPEC+ committee meeting coupled with the European Union’s ban on Russian oil products. Ten-year Treasury yields inched higher, while the dollar and gold prices slipped.

Tech shares led a stock market rally last Monday ahead of earnings reports from several major technology companies. The Nasdaq gained 2.0%, with the Russell 2000 adding 1.3% and the S&P 500 climbing 1.2%. The Dow and the Global Dow rose 0.8%. Ten-year Treasury yields gained 4.1 basis points, closing at 3.52%. Crude oil prices continued to advance, reaching $81.69 per barrel. The dollar was flat, while gold prices advanced.

The stock rally ended last Tuesday as only the Dow and the Global Dow were able to post modest gains. The Nasdaq and the Russell 2000 slid 0.3%, while the S&P 500 dipped 0.1%. Bond prices advanced, pulling yields lower. Ten-year Treasury yields closed at 3.46%, after falling 5.6 basis points. Crude oil prices ended the day at around $80.10 per barrel, down $1.52 from the previous day. The dollar fell marginally, while gold prices continued to advance, gaining $9.70 to reach $1,938.30 per ounce.

Stocks ended last Wednesday mixed as investors sifted through a boatload of corporate earnings data. The Russell 2000 and the Global Dow eked out 0.3% gains, the Dow and the S&P 500 ended close to where they began, while the Nasdaq dipped 0.2%. The yield on 10-year Treasuries was flat, the dollar slipped lower, while gold prices climbed to $1,946.40 per ounce. Crude oil prices rose marginally to $80.49 per barrel.

Wall Street ended a choppy session higher last Thursday, with each of the benchmark indexes posting gains. The Nasdaq led the charge, adding 1.8%, followed by the S&P 500 (1.1%), the Russell 2000 (0.7%), and the Dow and the Global Dow (0.6%). Ten-year Treasury yields rose to 3.49%. Crude oil prices rose nearly $1.00 to $81.10 per barrel. The dollar inched higher, while gold prices fell for the first time in several sessions.

Stocks reversed course from the previous day, closing last Friday higher. The Nasdaq gained 1.0% to lead the benchmark indexes listed here, followed by the Russell 2000 and the Global Dow, which added 0.4%. The S&P 500 rose 0.3% and the Dow inched up 0.1%. The yield on 10-year Treasuries gained 2.5 basis points to close at 3.51%. Crude oil prices slid $1.60, the first decline in several sessions, closing the week at $79.41 per barrel. The dollar gained marginally, while gold prices fell for the second consecutive day.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 1/27	Weekly Change	YTD Change
DJIA	33,147.25	33,375.49	33,978.08	1.81%	2.51%
Nasdaq	10,466.48	11,140.43	11,621.71	4.32%	11.04%
S&P 500	3,839.50	3,972.61	4,070.56	2.47%	6.02%
Russell 2000	1,761.25	1,867.34	1,911.46	2.36%	8.53%
Global Dow	3,702.71	3,927.89	4,004.70	1.96%	8.16%
Fed. Funds target rate	4.25%-4.50%	4.25%-4.50%	4.25%-4.50%	0 bps	0 bps
10-year Treasuries	3.87%	3.48%	3.51%	3 bps	-36 bps
US Dollar-DXY	103.48	101.97	101.92	-0.05%	-1.51%
Crude Oil-CL=F	$80.41	$81.40	$79.46	-2.38%	11.18%
Gold-GC=F	$1,829.70	$1,928.90	$1,928.20	-0.04%	5.38%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The advance estimate of the fourth-quarter gross domestic product showed the economy accelerated at an annualized rate of 2.9%. GDP rose 3.2% in the previous quarter, after falling 1.6% and 0.6% in the first and second quarters, respectively. Personal consumption expenditures, a measure of consumer spending and a main contributor to GDP, rose 2.1% in the fourth quarter, largely due to a 2.6% increase in spending on services. Consumer spending on goods rose 1.1%. Fixed investment fell 6.7% in the fourth quarter, pulled lower by a 26.7% dip in residential fixed investment. Exports dipped 1.3% in the fourth quarter, while imports fell 4.6%. The personal consumption expenditures price index, a measure of inflation, increased 3.2%, compared with an increase of 4.7% in the third quarter.
• According to the latest report on personal income and outlays, consumer prices rose 0.1% in December, the same increase as in November. Excluding food and energy, consumer prices increased 0.3%. In December, prices for goods decreased 0.7%, while prices for services increased 0.5%. Food prices increased 0.2% and energy prices decreased 5.1%. From the same month one year ago, prices for December increased 5.0%. Prices for goods increased 4.6% and prices for services increased 5.2%. Food prices increased 11.2% and energy prices increased 6.9%. Excluding food and energy, consumer prices increased 4.4% from December 2021. Also, according to the latest personal income and outlays report for December, personal income and consumer spending slowed from November. Personal income increased 0.2% (0.3% in November), disposable personal income rose 0.3% (the same as in November), and consumer spending (as measured by personal consumption expenditures) fell 0.2% after decreasing 0.1% in November.
• Sales of new single-family homes increased for the second consecutive month in December, climbing 2.3% over the November pace. However, sales are down 26.6% from December 2021. The median sales price of new houses sold in December was $442,100, while the average sales price was $528,400. Inventory of new single-family homes for sale in December represented a supply of 9.0 months at the current sales pace.
• The international trade in goods deficit for December was $90.3 billion, up 8.8% from the November deficit. Exports of goods for December were $166.8 billion, 1.6% less than November exports. Imports of goods for December were $257.1 billion, 1.9% more than November imports. The goods deficit decreased 10.2% from December 2021.
• New orders for manufactured durable goods rose $15.3 billion, or 5.6%, in December. Excluding transportation, new orders decreased 0.1%. Excluding defense, new orders increased 6.3%. Transportation equipment, up four of the last five months, drove the increase, climbing $15.5 billion, or 16.7%. Durable goods orders increased 10.5% in 2022.
• Regular retail gas prices continued to rise across the country last week, according to the U.S. Energy Information Administration. The national average retail price for regular gasoline was $3.415 per gallon on January 23, $0.105 per gallon above the prior week’s price and $0.092 higher than a year ago. Also, as of January 23, the East Coast price increased $0.125 to $3.384 per gallon; the Gulf Coast price dipped $0.120 to $3.092 per gallon; the Midwest price climbed $0.099 to $3.304 per gallon; the West Coast price increased $0.041 to $4.008 per gallon; and the Rocky Mountain price advanced $0.142 to $3.434 per gallon. Residential heating oil prices averaged $4.706 per gallon on January 23, $0.108 above the previous week’s price and $1.035 per gallon more than a year ago.
• For the week ended January 21, there were 186,000 new claims for unemployment insurance, a decrease of 6,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 14 was 1.2%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 14 was 1,675,000, an increase of 20,000 from the previous week’s level, which was revised up by 8,000. States and territories with the highest insured unemployment rates for the week ended January 7 were New Jersey (2.5%), Rhode Island (2.4%), Alaska (2.3%), Minnesota (2.3%), California (2.2%), Massachusetts (2.1%), Montana (2.1%), Puerto Rico (2.1%), Illinois (2.0%), and New York (1.9%). The largest increases in initial claims for unemployment insurance for the week ended January 14 were in California (+3,867), Kentucky (+2,599), Puerto Rico (+713), Virginia (+698), and Maryland (+446), while the largest decreases were in New York (-17,408), Michigan (-5,504), Georgia (-4,823), Wisconsin (-4,055), and New Jersey (-3,822).

Eye on the Week Ahead

The Federal Open Market Committee meets at the beginning of the week. Most observers suggest the Fed will raise interest rates by 50 basis points, although recent economic indicators have shown inflationary pressures are slowing, which could prompt a slowdown in rate hikes. Also out this week is the January employment report. Job growth has been relatively steady over the past 12 months, with 223,000 new jobs added in December.

The Markets (as of market close January 20, 2023)

Last week saw stocks slide lower, despite a rally last Friday. Only the tech-heavy Nasdaq was able to post a gain among the benchmark indexes listed here. Throughout the week, investors had to balance data that showed inflation was waning with the impact rising interest rates may have on the economy. Several Federal Reserve officials indicated that now was not the time to stop interest-rate increases, but it may be appropriate to slow the pace of those hikes. While stock values slipped last week, Treasury yields declined, with 10-year Treasury yields falling for the third week in a row. Crude oil prices climbed higher for the second straight week on optimism over China’s anticipated increase in demand. The dollar held relatively steady, while gold prices increased $7.00 per ounce.

Stocks ended a four-day rally last Tuesday, with the Dow falling 1.1%. The S&P 500 dipped 0.1% and the Russell 2000 slid 0.2%. The Global Dow ended the day flat, while the Nasdaq eked out a 0.1% gain. Ten-year Treasury yields added 2.4 basis points to close at 3.53%. The dollar moved very little, while gold prices fell more than $10.00 per ounce. Crude oil prices rose $1.18 to hit $81.04 per barrel.

Last Wednesday saw stocks continue to decline as investors tried to balance favorable inflation data with weak economic information and hawkish Federal Reserve comments. The Dow fell 1.8%, ending its worst session of the new year. The Russell 2000 and the S&P 500 slipped 1.6%, the Nasdaq dropped 1.2%, while the Global Dow lost 0.8%. Bond prices jumped higher, pulling yields lower. Ten-year Treasury yields ended the day 16.0 basis points lower, falling to 3.37%. Crude oil prices fell for the first time in several sessions, closing at around $79.14 per barrel. The dollar was flat, while gold prices dipped less than 0.2%.

Stocks fell for the third straight day last Thursday as investors continued to fret about the economic impact of rising interest rates. The Global Dow led the declining benchmark indexes, falling 1.2%, followed by the Russell 2000 and the Nasdaq, which dipped 1.0%. The S&P 500 and the Dow fell 0.8%. Crude oil prices increased $0.42 to hit $80.75 per barrel. The dollar edged higher, while gold prices rose $8.00 to $1,931.90 per ounce. Ten-year Treasury yields inched up to 3.39%.

In what is likely the result of dip buying, stocks ended their three-day decline last Friday, closing higher to end the week. Tech shares led the rally, with the Nasdaq finishing the session up 2.7%, followed by the S&P 500 (1.9%), the Russell 2000 (1.6%), the Global Dow (1.2%), and the Dow (1.0%). Bond prices slid lower, driving yields higher, with 10-year Treasury yields adding 8.7 basis points to 3.48%. Crude oil prices rose to $81.40 per barrel. The dollar was flat, while gold prices continued to climb higher, reaching $1,928.90 per ounce.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 1/20	Weekly Change	YTD Change
DJIA	33,147.25	34,302.61	33,375.49	-2.70%	0.69%
Nasdaq	10,466.48	11,079.16	11,140.43	0.55%	6.44%
S&P 500	3,839.50	3,999.09	3,972.61	-0.66%	3.47%
Russell 2000	1,761.25	1,887.03	1,867.34	-1.04%	6.02%
Global Dow	3,702.71	3,954.10	3,927.89	-0.66%	6.08%
Fed. Funds target rate	4.25%-4.50%	4.25%-4.50%	4.25%-4.50%	0 bps	0 bps
10-year Treasuries	3.87%	3.51%	3.48%	-3 bps	-39 bps
US Dollar-DXY	103.48	102.18	101.97	-0.21%	-1.46%
Crude Oil-CL=F	$80.41	$79.96	$81.40	1.80%	1.23%
Gold-GC=F	$1,829.70	$1,921.90	$1,928.90	0.36%	5.42%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Prices producers received for goods and services declined 0.5% in December, according to the latest information from the Bureau of Labor Statistics. This is the first monthly decline in producer prices since August. Prices for goods fell 1.6% in December, while prices for services rose 0.1%. Producer prices less foods, energy, and trade inched up 0.1% last month. Prices for foods decreased 1.2%, energy prices fell 7.9%, while margins received by wholesalers and retailers for trade services rose 0.3%. Overall, producer prices rose 6.2% in 2022 after rising 10.0% in 2021.
• Retail sales decreased 1.1% in December after falling 1.0% in November. Retail prices rose 9.2% in 2022. In December, retail trade sales were down 1.2% from November, but up 5.2% from December 2021. Nonstore (online) retailer sales were up 13.7% from December 2021, while sales at food services and drinking places were up 12.1% from last year. A decrease in consumer spending will negatively impact the gross domestic product.
• Industrial production decreased 0.7% in December and 1.7% at an annual rate in the fourth quarter. In December, manufacturing output fell 1.3% amid widespread declines across the sector. The index for utilities jumped 3.8%, as cold temperatures boosted the demand for heating, while the index for mining moved down 0.9%. Total industrial production in December was 1.6% above its level from a year ago.
• The number of residential building permits issued in December was 1.6% below the November figure, and 29.9% under the December 2021 rate. Issued building permits for single-family homes declined 6.5% in December from a month earlier. In December, privately-owned housing starts were 1.4% below the November estimate and 21.8% behind the December 2021 pace. Single-family housing starts in December were 11.3% above the November figure. Housing completions were 8.4% below the November estimate, but 6.4% above the December 2021 rate. Single-family housing completions in December were 8.0% under the November rate.
• Re-sales of existing homes fell for the 11th straight month in December, down 1.5% from the November figure. Since December 2021, sales of existing homes dropped 34.0%. Unsold inventory sits at a 2.9-month supply at the current sales pace, down from 3.3 months in November but up from 1.7 months in December 2021. The median existing-home price for all housing types in December was $366,900, down from $372,000 in November but up 2.3% from December 2021 ($358,800), marking the 130th consecutive month of year-over-year price increases. Sales of single-family homes declined 1.1% in December from the previous month and 33.5% from December 2021. The median existing single-family home price was $372,700 in December, down 1.6% from the November price of $378,700 but up 2.0% from December 2021 ($365,300).
• Prices at the pump moved higher across the country last week, according to the U.S. Energy Administration. The national average retail price for regular gasoline was $3.310 per gallon on January 16, $0.051 per gallon above the prior week’s price but $0.004 lower than a year ago. Also, as of January 16, the East Coast price increased $0.043 to $3.259 per gallon; the Gulf Coast price dipped $0.082 to $2.972 per gallon; the Midwest price climbed $0.060 to $3.205 per gallon; the West Coast price increased $0.006 to $3.967 per gallon; and the Rocky Mountain price advanced $0.170 to $3.292 per gallon. Residential heating oil prices averaged $4.606 per gallon on January 16, $0.060 above the previous week’s price and $1.006 per gallon more than a year ago.
• For the week ended January 14, there were 190,000 new claims for unemployment insurance, a decrease of 15,000 from the previous week’s level. Initial claim filings haven’t been this low since September 24, 2022. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 7 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 7 was 1,647,000, an increase of 17,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended December 31 were New Jersey (2.6%), Rhode Island (2.6%), Alaska (2.4%), Minnesota (2.3%), Massachusetts (2.1%), Montana (2.1%), New York (2.1%), California (2.0%), and Puerto Rico (2.0%). The largest increases in initial claims for unemployment insurance for the week ended January 7 were in California (+17,447), New York (+17,285), Texas (+10,178), Georgia (+8,494), and Florida (+3,209), while the largest decreases were in New Jersey (-4,064), Connecticut (-2,202), Iowa (-1,891), Massachusetts (-1,585), and Oregon (-1,525).

Eye on the Week Ahead

There’s plenty of important economic data available this week. The first estimate of the fourth-quarter 2022 gross domestic product is available. The third-quarter GDP showed the economy advanced at a rate of 3.2% after regressing in each of the first two quarters. Also out this week is the December release of the personal income and outlays report. Included in this information is the personal consumption expenditures price index, an inflation indicator favored by the Federal Reserve. The PCE price index inched up 0.1% in November.

The Markets (as of market close January 13, 2023)

Stocks advanced for the second week in a row to kick off 2023. Investors were encouraged by inflation data that showed prices slid lower in December. The interest-rate-sensitive Nasdaq posted gains for six consecutive sessions, its longest streak since 2021, while the Nasdaq and the S&P 500 enjoyed their biggest weekly gains in nearly two months. China’s economic reopening boosted prospects for increased energy demand, sending crude oil prices higher. The dollar declined last week, which helped gold prices surge to the highest level since April.

Last Monday saw stocks end the day with mixed results. Among the benchmark indexes listed here, the Nasdaq and the Global Dow gained 0.6%, while the Russell 2000 advanced 0.2%. The large caps of the Dow (-0.3%) and the S&P 500 (-0.1%) ended the session lower after trending up most of the day. Investors’ hopes for a softening of interest-rate hikes were dampened by a few Federal Reserve officials who suggested that interest rates could hit 5.0%. Bond prices advanced pulling yields lower, with 10-year Treasury yields falling 5.2 basis points to 3.51%. Crude oil prices rose to $74.81 per barrel. The dollar slid lower, while gold prices rose more than a quarter of a percent to $1,875.70 per ounce.

Stocks jumped higher last Tuesday on hopes that the consumer price index for December will show further softening, which could prompt the Federal Reserve to slow the pace of its interest-rate hikes. The Russell 2000 led the benchmark indexes, gaining 1.5%, followed by the Nasdaq (1.0%), the S&P 500 (0.7%), the Dow (0.6%), and the Global Dow (0.2%). As stock values rose, bond prices fell, pushing yields higher, with 10-year Treasury yields adding 10.4 basis points to close at 3.62%. Crude oil prices changed little from the previous day. The dollar and gold prices advanced.

Equities advanced last Wednesday for a second consecutive day as investors seemed to be betting that inflation would continue to soften, strengthening the case for a Federal Reserve pullback on interest-rate hikes. The Nasdaq led the benchmark indexes, gaining 1.8%. The S&P 500 jumped 1.35, followed by the Russell 2000 (1.1%), the Dow (0.8%), and the Global Dow (0.7%). Ten-year Treasury yields fell 6.7 basis points to 3.55%. Crude oil prices rose 3.4% to $77.65 per barrel, supported by expectations of stronger demand from China. The dollar inched higher, while gold prices continued to rally, adding $4.10 per ounce to reach $1,880.60 per ounce.

Not surprisingly, investors were encouraged after the release of the latest consumer price index (see below). Stocks advanced for the third consecutive day last Thursday, led by the Russell 2000 (1.7%) and the Global Dow (1.4%). The Dow and the Nasdaq rose 0.6%, while the S&P 500 gained 0.3%. Ten-year Treasury yields fell 10.5 basis points to 3.44%. Crude oil prices rose to $78.34 per barrel. The dollar edged lower, while gold prices climbed higher, hitting $1,900.80 per ounce.

Stocks continued their rally last Friday. The Nasdaq and the Global Dow gained 0.7%, while the Russell 2000 rose 0.6%, the S&P 500 advanced 0.4%, and the Dow climbed 0.3%. Ten-year Treasury yields added 6.2 basis points to close at 3.51%. Crude oil prices advanced $1.57 to reach $79.96 per barrel. The dollar slipped for the second consecutive day, while gold prices vaulted up 1.3% to $1,921.90 per ounce.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 1/13	Weekly Change	YTD Change
DJIA	33,147.25	33,630.61	34,302.61	2.00%	3.49%
Nasdaq	10,466.48	10,569.29	11,079.16	4.82%	5.85%
S&P 500	3,839.50	3,895.08	3,999.09	2.67%	4.16%
Russell 2000	1,761.25	1,792.80	1,887.03	5.26%	7.14%
Global Dow	3,702.71	3,829.24	3,954.10	3.26%	6.79%
Fed. Funds target rate	4.25%-4.50%	4.25%-4.50%	4.25%-4.50%	0 bps	0 bps
10-year Treasuries	3.87%	3.56%	3.51%	-5 bps	-36 bps
US Dollar-DXY	103.48	103.90	102.18	-1.66%	-1.26%
Crude Oil-CL=F	$80.41	$73.66	$79.96	8.55%	-0.56%
Gold-GC=F	$1,829.70	$1,872.30	$1,921.90	2.65%	5.04%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Good news on the inflation front. The December consumer price index fell 0.1%. Excluding food and energy, the CPI rose 0.3% last month. In December, prices for food rose 0.3% (0.5% in November), energy prices fell 4.5% (-1.6% in November), while prices for shelter rose 0.8% (0.6% in November). Over the last 12 months ended in December, the CPI has increased 6.5%, the smallest increase since the period ended in October 2021. For the 12 months ended in December, core prices (less food and energy) rose 5.7%, energy prices increased 7.3%, and food prices advanced 10.4%. All of these increases were smaller than for the 12-month period ended in November.
• Import prices rose 0.4% in December after declining 0.6% in November. Export prices fell 2.6%, following a 0.3% drop the previous month. The increase in import prices was the first since June 2022. Import prices increased 3.5% since December 2021. Fuel import prices rose 0.6% in December, while nonfuel prices increased 0.4%. Export prices haven’t increased since June 2022. Prices for exports rose 5.0% for the 12 months ended in December, the smallest 12-month advance since January 2021.
• The Treasury budget deficit for December was $85.0 billion, well above the $21.0 billion deficit of a year ago but well under the November deficit of $248.5 billion. For the first three months of the 2023 fiscal year, the deficit sat at $421.4 billion, up from $377.7 billion over the same period in fiscal year 2022. Compared to the same period last fiscal year, government expenditures increased $17.4 billion, while government receipts are down $26.3 billion.
• According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.259 per gallon on January 9, $0.036 per gallon above the prior week’s price but $0.036 lower than a year ago. Also, as of January 9, the East Coast price increased $0.006 to $3.216 per gallon; the Gulf Coast price dipped $0.001 to $2.890 per gallon; the Midwest price climbed $0.095 to $3.145 per gallon; the West Coast price increased $0.022 to $3.961 per gallon; and the Rocky Mountain price advanced $0.079 to $3.122 per gallon. Residential heating oil prices averaged $4.545 per gallon on January 9, $0.118 below the previous week’s price but $1.085 per gallon more than a year ago. Looking ahead, U.S. crude oil production is forecast to reach record highs in 2023 (12.4 million barrels per day) and 2024 (12.8 million barrels per day), which would surpass the previous annual record high of 12.3 million barrels per day.
• For the week ended January 7, there were 205,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 31 was 0.1%, a decrease of one percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 31 was 1,634,000, a decrease of 63,000 from the previous week’s level, which was revised up by 3,000. States and territories with the highest insured unemployment rates for the week ended December 24 were Alaska (2.3%), New Jersey (2.2%), Minnesota (2.2%), California (2.0%), Montana (2.0%), Rhode Island (2.0%), Puerto Rico (1.9%), Massachusetts (1.9%), Washington (1.8%), Illinois (1.7%), and New York (1.7%). The largest increases in initial claims for unemployment insurance for the week ended December 31 were in New Jersey (+4,514), Michigan (+3,322), New York (+3,169), Massachusetts, (+2,670), and Pennsylvania (+2,401), while the largest decreases were in Kentucky (-3,808), Illinois (-3,439), Texas (-3,252), Missouri (-2,882), and Minnesota (-880).

Eye on the Week Ahead

There’s plenty of potentially market-moving economic data out this week. The producer price index, which measures the change in prices from the perspective of the seller of goods and services, is an important inflation indicator. Producer prices rose 0.3% in November and were up 7.4% for the year. The retail sales report for December is also out this week. Retail sales fell 0.6% in November. The Federal Reserve’s report on industrial production for December is on tap for release this week. Industrial production slid 0.2% in November. The housing sector waned for much of 2022. The December figures for housing starts, completions, and issued building permits are available this week as is the December report on existing home sales.

The Markets (as of market close January 6, 2023)

Last Friday’s rally helped drive stocks higher to end the first full week of January. Investors apparently saw a deceleration in November and December average hourly earnings (see jobs report below) as a sign that the aggressive monetary policy followed by the Federal Reserve may actually be slowing inflation. Traders will await this week’s consumer price index to get a better gauge on the direction of inflationary pressures. Nevertheless, stocks closed last week higher, led by the Global Dow. The large caps of the Dow and the S&P 500 boasted solid gains, as did the small caps of the Russell 2000. Ten-year Treasury yields fell on rising bond prices. Crude oil prices declined nearly $7.00 per barrel. The dollar rose marginally, while gold prices advanced.

Stocks finished the first trading session of 2023 lower. Wall Street was closed last Monday in observance of New Year’s day. However, investors weren’t in a spending mood last Tuesday, particularly with respect to megacap stocks. The Nasdaq continued its 2022 downward spiral, declining 0.8%. The Russell 2000 slid 0.6%, the S&P 500 lost 0.4%, while the Dow ended the day flat. The Global Dow was able to eke out a 0.2% gain. Bond prices rose, driving the yield on 10-year Treasuries down 8.6 basis points to 3.79%. The dollar advanced the most in nearly three weeks, while gold prices reached their highest values since mid-June. Crude oil prices lost nearly 4.0%, falling to $77.15 per barrel.

Wall Street snapped a two-day losing streak last Wednesday. The Global Dow led the benchmark indexes listed here, gaining 1.4%, followed by the S&P 500 (0.8%), the Nasdaq (0.7%), the Russell 2000 (0.6%), and the Dow (0.4%). Ten-year Treasury yields fell 8.4 basis points, closing at 3.70%, as long-term bond values rose for the second consecutive day. Weakening demand sent crude oil prices lower to $73.24 per barrel. The dollar slipped lower, while gold prices notched a second consecutive strong performance.

Stocks ended last Thursday’s session lower as investors grappled with the prospect of another strong labor report, due out the following day. The Federal Reserve has focused, in part, on the strength of the labor sector. A strong December jobs report would likely give the Fed room to keep up its aggressive policy aimed at stemming rising inflation. Among the indexes listed here, the Nasdaq fell the furthest, losing 1.5%, followed by the S&P 500 (-1.2%), the Russell 2000 (-1.1%), the Dow (-1.0%), and the Global Dow (-0.5%). Ten-year Treasury yields inched up to 3.72%. The dollar added nearly 0.9%, while gold prices fell 1.1%. Crude oil prices rose less than $1.00 to close at about $73.75 per barrel.

Wall Street enjoyed its first major rally of 2023 last Friday. Each of the benchmark indexes listed here gained more than 2.0%, led by the Nasdaq (2.6%), followed by the S&P 500 (2.3%), the Russell 2000 and the Global Dow (2.2%), and the Dow (2.1%). Bond prices jumped higher, pulling yields lower. Ten-year Treasury yields fell 15.1 basis points to close the week at 3.56%. Crude oil prices ended the day flat, remaining at $73.66 per barrel. The dollar dipped lower, while gold prices recouped the prior day’s losses after gaining 1.72%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 1/6	Weekly Change	YTD Change
DJIA	33,147.25	33,147.25	33,630.61	1.46%	1.46%
Nasdaq	10,466.48	10,466.48	10,569.29	0.98%	0.98%
S&P 500	3,839.50	3,839.50	3,895.08	1.45%	1.45%
Russell 2000	1,761.25	1,761.25	1,792.80	1.79%	1.79%
Global Dow	3,702.71	3,702.71	3,829.24	3.42%	3.42%
Fed. Funds target rate	4.25%-4.50%	4.25%-4.50%	4.25%-4.50%	0 bps	0 bps
10-year Treasuries	3.87%	3.87%	3.56%	-31 bps	-31 bps
US Dollar-DXY	103.48	103.48	103.90	0.41%	0.41%
Crude Oil-CL=F	$80.41	$80.41	$73.66	-8.39%	-8.39%
Gold-GC=F	$1,829.70	$1,829.70	$1,872.30	2.33%	2.33%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Employment increased by 223,000 in December, according to the latest report from the Bureau of Labor Statistics. It is worth noting that employment gains in October and November were revised lower to 263,000 (from 284,000) and 256,000 (from 263,000), respectively. Notable job gains occurred in leisure and hospitality, health care, construction, and social assistance. Employment rose by 4.5 million in 2022 (an average monthly gain of 375,000), less than the increase of 6.7 million in 2021 (an average monthly gain of 562,000). The unemployment rate edged down 0.1 percentage point to 3.5%. The unemployment rate has remained within a range of 3.5%-3.7% since March. The number of unemployed persons decreased by 278,000 to 5.7 million. The employment-population ratio increased by 0.2 percentage point over the month to 60.1%. The labor force participation rate edged up 0.1 percentage point to 62.3%. Both measures have shown little net change since early 2022. In December, average hourly earnings rose by $0.09, or 0.3%, to $32.82. Over the past 12 months ended in December, average hourly earnings have increased by 4.6%, which is lower than the 12-month increase from November 2021 (5.1%). The average work week decreased by 0.1 hour in December to 34.3 hours. Wages have decelerated in November and December, which could be a sign that inflation is easing. However, statistically, there are nearly two available jobs for every unemployed person, so job growth is likely to continue.
• According to the latest information from the Census Bureau, the international trade in goods and services deficit was $61.5 billion in November, $16.3 billion less than the October deficit. The November trade deficit was the lowest since July 2020. November exports were $251.9 billion, $5.1 billion less than October exports. November imports were $313.4 billion, $21.5 billion less than October imports. Overall, the November decline in both imports and exports may indicate weakening domestic and foreign demand entering the holiday shopping season. Year to date, the goods and services deficit increased $120.1 billion, or 15.7%, from the same period in 2021. Exports increased $439.4 billion, or 18.9%. Imports increased $559.5 billion, or 18.1%.
• The number of job openings was little changed at 10.5 million on the last business day of November, according to the latest Job Openings and Labor Turnover report from the U.S. Bureau of Labor Statistics. Over the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively. Within separations, quits, layoffs, and discharges changed little.
• The results of the survey of purchasing managers revealed manufacturing declined at the fastest rate since May 2020, and was one of the sharpest reductions since 2009. The S&P Global US Manufacturing PMI™ was 46.2 in December, down from 47.7 in November. A reading of less than 50.0 indicates a decrease in manufacturing. Survey respondents indicated that the decline stemmed from weak client demand, which decreased new orders and output. Employment waned and backlogs of work fell sharply. Companies noted that weak client demand stemmed from economic uncertainty and inflationary pressures, leading to lower purchasing power among customers.
• Business suffered a sharp decline in the services sector in December, according to the latest survey of purchasing managers. The S&P Global US Services PMI Business Activity Index registered 44.7 in December, down from 46.2 in November. The rate of decline in services output accelerated for the third month running and was the second-fastest since May 2020. Lower business activity was attributed to a reduction in new orders, as client demand weakened due to the impact of higher interest rates and inflation on customer spending.
• Retail prices for regular gasoline rose for the first time in several weeks. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.223 per gallon on January 2, $0.132 per gallon above the prior week’s price but $0.058 lower than a year ago. Also, as of January 2, the East Coast price increased $0.139 to $3.210 per gallon; the Gulf Coast price rose $0.207 to $2.891 per gallon; the Midwest price climbed $0.151 to $3.050 per gallon; the West Coast price increased $0.029 to $3.939 per gallon; and the Rocky Mountain price advanced $0.041 to $3.043 per gallon. Residential heating oil prices averaged $4.663 per gallon on January 2, $0.025 above the previous week’s price and $1.273 per gallon more than a year ago.
• For the week ended December 31, there were 204,000 new claims for unemployment insurance, a decrease of 19,000 from the previous week’s level, which was revised down by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 24 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 24 was 1,694,000, a decrease of 24,000 from the previous week’s level, which was revised up by 8,000. States and territories with the highest insured unemployment rates for the week ended December 17 were Alaska (2.3%), New Jersey (2.1%), Minnesota (2.0%), California (1.9%), Puerto Rico (1.9%), Montana (1.8%), Massachusetts (1.8%), Rhode Island (1.8%), New York (1.7%), and Washington (1.6%). The largest increases in initial claims for unemployment insurance for the week ended December 24 were in Missouri (+4,974), Kentucky (+4,133), Washington (+2,197), New York (+2,097), and Ohio (+2,026), while the largest decreases were in California (-3,234), Georgia (-1,568), Texas (-1,455), Florida (-1,090), and North Carolina (-888).

Eye on the Week Ahead

The first full week of 2023 kicks off with important inflationary data, with the release of the consumer price index and the report on import and export prices. Inflation may be showing signs that it has peaked. The CPI in November rose 0.1% and 7.1% from November 2021.

Overview

The year 2022 may best be described by one word: inflation. The economies of the United States and the world were influenced by rising inflation, its causes, and the policies aimed at curtailing it. While inflationary pressures began to mount in 2021, they were exacerbated by continuing supply shortages; the ongoing effects of the COVID-19 pandemic, both here and abroad; the Russian invasion of Ukraine; and a global energy crisis.

Early in 2022, the Federal Reserve expected inflation to reach 2.6% by the end of the year, not much above their 2.0% target. Federal officials expected supply bottlenecks to ease, economies to re-open after relaxing COVID-related restrictions, and economic activity to return to something close to normal.

Unfortunately, the Fed underestimated how rising wages, federal aid, and expanded savings would lead to increased consumer spending, which continued to outpace supply, and drive prices higher. Most importantly, Fed officials didn’t foresee the impact the Russian invasion of Ukraine would have on world trade in energy, food commodities, and resources such as natural gas and crude oil. And inflation was not just felt in the U.S. but throughout world economies as well. The International Monetary Fund expects worldwide inflation to hit 8.8%, the highest rate since 1996. In response, the Federal Reserve began the most aggressive policy of interest-rate hikes in more than 15 years.

Consumer price indexes in the 19 countries that use the euro currency rose to 10.0% or higher in November from a year earlier, while prices for food rose at a faster pace. Inflationary pressures also impacted world economies in the Middle East, Africa, South America, Canada, and Mexico. Rising inflation made countries’ imports more expensive and forced central banks to raise interest rates. The U.S. dollar surged in value against most world currencies, weakening foreign currencies and contributing to rising prices for goods and services.

While overall inflationary pressures may have peaked as we close out 2022, food and energy prices remain elevated. Energy prices led the price surge at the beginning of the year. Crude oil prices rose to more than $110.00 per barrel for the first time since 2011. Energy prices, which were already rising at the end of 2021, were sent soaring following the Russian invasion of Ukraine as Russian refining capacity diminished amidst sanctions and trade restrictions imposed by several countries.

However, energy prices have since stabilized somewhat. Helping to stem surging oil prices was a notable retreat in Chinese energy demand amidst COVID-related restrictions; the stabilization of Russian crude output; increased U.S. oil production; and a release of oil from the Strategic Petroleum Reserve.

The U.S. economy saw a slowdown in growth for much of 2022. Gross domestic product contracted in the first two quarters of the year after advancing at an annualized rate of 5.9% in 2021. But GDP rebounded in the third quarter, climbing 3.2%. Although inflation has cut into consumers’ purchasing power, they have continued to spend during difficult economic times, supported by rising wages, job growth, and access to savings accumulated during the pandemic.

Industrial production lagged through the summer months, only to rebound during the latter part of 2022, ultimately exceeding its pace from a year earlier. The housing sector was hit particularly hard by rising mortgage rates and diminished inventory. Existing home sales were more than 35.0% below their pace in 2021, while sales of new single-family homes lagged by more than 15.0%.

Inflation also impacted the stock market, both at home and abroad. Several market sectors that had led the bull surge since 2008 suffered notable pullbacks. Information technology and communication services ended up as two of the worst performing sectors in 2022. Retail stocks also took a tumble as inflation drove up nondiscretionary items like food and energy, leaving less for consumers to spend on discretionary products and services. Also plaguing retailers were rising costs associated with products, services, and labor.

This past year was not only a difficult one for stocks and bonds, but also for “alternative assets” such as crypto. Rising interest rates impacted the viability of crypto. Couple this with revelations of fraud and abuse, and crypto assets have fallen precipitously.

Nevertheless, as 2022 draws to a close, there are some positives to consider entering the new year. The GDP expanded for the first time in the third quarter, and crude oil and gas prices reversed course and dipped lower. Primary inflationary indicators, such as the consumer price index and the personal consumption expenditures price index, trended lower at the end of the year. Ultimately, the economic outlook for 2023 will likely depend on the path of inflation and whether the economies of the U.S. and the world can avoid a recession as prices are driven lower.

Market/Index	2021 Close	As of 9/30	2022 Close	Month Change	Q4 Change	2022 Change
DJIA	36,338.30	28,725.51	33,147.25	-4.17%	15.39%	-8.78%
Nasdaq	15,644.97	10,575.62	10,466.48	-8.73%	-1.03%	-33.10%
S&P 500	4,766.18	3,585.62	3,839.50	-5.90%	7.08%	-19.44%
Russell 2000	2,245.31	1,664.72	1,761.25	-6.64%	5.80%	-21.56%
Global Dow	4,137.63	3,168.34	3,702.71	-2.12%	16.87%	-10.51%
Fed. Funds	0.00%-0.25%	3.00%-3.25%	4.25%-4.50%	50 bps	125 bps	425 bps
10-year Treasuries	1.51%	3.80%	3.87%	17 bps	7 bps	236 bps
US Dollar-DXY	95.64	112.17	103.48	-2.40%	-7.75%	8.20%
Crude Oil-CL=F	$75.44	$79.67	$80.41	0.00%	0.93%	6.59%
Gold-GC=F	$1,830.30	$1,670.50	$1,829.70	2.62%	9.53%	-0.03%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Snapshot 2022

The Markets

• Equities: Stocks began 2022 on a sour note, ending January and February in the red. Unfortunately, things didn’t get much better for the remainder of the year. Following a bull market that lasted more than 10 years, stocks experienced a sizeable pullback. The benchmark indexes listed here declined in each of the first three quarters of 2022. The Nasdaq lost more than 33.0% on the year, negatively impacted by the Federal Reserve’s aggressive, inflation-fighting policy, which hampered tech and growth stocks. While Wall Street showed some resilience in the fourth quarter, stocks suffered their worst year since the financial crisis of 2008.
• On the last day of the year, each of the benchmark indexes listed here ended the year lower, despite a solid fourth quarter. Among the market sectors, only energy advanced, gaining a robust 59.04%. The remaining market sectors lost value, led by communication services (-40.4%) and followed by consumer discretionary (-37.6%), information technology (-28.9%), real estate (-28.5%), materials (-14.1%), financials (-12.4%), industrials (-7.1%), health care (-3.6%), consumer staples (-3.2%), and utilities (-1.4%).
• Bonds: Historically, when stocks are down investors move to bonds. However, for most investors that paradigm did not hold true in 2022, as both stocks and bonds suffered double-digit losses. The Bloomberg (formerly, Barclays/Lehman) Aggregate Bond Index realized the worst return in its history after declining nearly 13.0%. The yield on 10-year Treasuries rose by more than 230 basis points, as bond prices sank (bond prices and yields move in opposite directions). The U.S. Treasury yield curve (the difference between short-term bond interest rates and long-term rates) has been inverted for much of the year. Currently, the difference between the 3-month bond and the 10-year bond is roughly -0.65%, indicating an inverted yield curve. Historically, an inverted yield curve has often signaled a recession. However, other economic indicators seem to indicate that a full-blown recession is unlikely.

• Oil: Crude oil prices rode a wave of volatility throughout 2022. An energy crisis, rising demand, and the Russian invasion of Ukraine sent prices soaring, hitting a high of more than $122.00 per barrel in early June. However, demand waned, particularly in China, where COVID-related lockdowns stifled requirements for crude oil. Crude oil prices were also driven lower by additional U.S. output, including the release of crude oil from the Strategic Petroleum Reserve. By the end of the year, crude oil prices rose by about 7.0%.
• Prices at the pump climbed higher to begin the year. However, as crude oil prices declined, so did retail gasoline prices. The national average retail price for regular gasoline was $3.281 per gallon to begin 2022. Gas prices steadily increased throughout the first half of the year, reaching a high of $5.006 in June. Gas prices trended lower for the remainder of 2022, closing out the year at $3.091 per gallon for the week ended December 26.
• FOMC/interest rates: The target range for the federal funds rate began the year at 0.00%-0.25% and ended 2022 at 4.25%-4.50%, an increase of 425 basis points. Inflation began to climb in 2021, as strong consumer demand collided with pandemic-related supply constraints, which drove prices up, reaching a 39-year high in November 2021. The Fed initially termed the rapid rise in prices “transitory,” expecting that the factors driving inflation upward would subside. However, inflationary pressures did just the opposite for much of 2022, particularly following the Russian invasion of Ukraine in February. In an effort to combat rising inflation, the Fed began hiking the federal funds target range. The first rate hike came in March (25 basis points), followed by four consecutive 75-basis point interest-rate increases. At its last meeting of 2022 in December, the Fed announced a 50-basis point rate hike. Following its last meeting in December, the Fed’s economic projections showed the personal consumption expenditures price to end 2022 at 5.6%, with prices not anticipated to settle at or near the Fed’s target goal of 2.0% until 2025.
• US Dollar-DXY: Since June, the value of the U.S. dollar has been increasing relative to most foreign currencies, particularly the British pound and the Euro. Despite slipping at the end of the year, the dollar remained on track for its biggest annual gain since 2015. In 2022, the dollar has gained about 8.5% against a basket of currencies. The aggressive policy adopted by the Fed to combat rising inflation sent the dollar soaring, reaching a high of about 18.0% in September. The expectation that the Fed will be less hawkish in 2023 has cut into the dollar’s value during the last quarter of 2022.
• Gold: Gold prices began the year at $1,830.30 and closed 2022 at $1,829.70, a decrease of about 0.3%. During the first quarter of 2022, gold prices spiked to $2,053.00 per ounce, following the start of the Russia/Ukraine war. However, by the end of the first quarter, gold prices settled in the $1,930.00 per ounce range. By the third quarter, weakness in the stock market coupled with a surging dollar sent gold prices down to a 30-month low of $1,691.00 per ounce. For the remainder of the year, gold prices hovered between $1,750.00 and $1,800.00 per ounce.

Last Month’s Economic News

• Employment: Job growth remained strong in November with the addition of 263,000 new jobs after adding 284,000 (revised) new jobs in October. Monthly job growth has averaged 392,000 thus far in 2022, compared with 562,000 per month in 2021. Despite federal interest-rate hikes aimed at slowing the economy and inflation, there is little evidence that the supply of labor is peaking. In November, the unemployment rate was unchanged at 3.7% and has remained in the range of 3.5%-3.7% since March. The number of unemployed persons was essentially unchanged at 6.0 million. Both the unemployment rate and the number of unemployed persons are in line with their levels prior to the coronavirus pandemic (3.5% and 5.7 million, respectively, in February 2020). Among the unemployed, the number of workers who permanently lost their jobs rose by 127,000 to 1.4 million in November (1.9 million in November 2021). The labor force participation rate dipped 0.1 percentage point to 62.1% in November (61.9% a year earlier). The employment-population ratio decreased by 0.1 percentage point to 59.9% in November (59.5% in November 2021). In November, average hourly earnings increased by $0.18 to $32.82. Over the past 12 months ended in November, average hourly earnings rose by 5.1% (average hourly earnings in November 2021 were $31.23). The average workweek decreased by 0.1 hour to 34.4 hours in November, down from 34.8 hours in November 2021.
• There were 225,000 initial claims for unemployment insurance for the week ended December 24, 2022. During the same period, the total number of workers receiving unemployment insurance was 1,710,000. Over the course of the year, initial weekly claims moved up and down, but generally remained within a range of 166,000-261,000. By comparison, there were 211,000 initial claims for unemployment insurance for the week ended December 25, and the total number of claims paid was 1,805,000.
• FOMC/interest rates: The Federal Open Market Committee met in December and increased the target range for the federal funds rate 50 basis points to 4.25%-4.50%. In support of its decision, the FOMC noted that inflation levels remain elevated due to supply and demand imbalances related to the pandemic, higher food and energy prices, broader price pressures, and the ongoing Russia/Ukraine war.

• GDP/budget: The economy, as measured by gross domestic product, accelerated at an annual rate of 3.2% in the third quarter. GDP declined in the first and second quarters, 1.6% and 0.6%, respectively. Consumer spending, as measured by the personal consumption expenditures index, rose 2.3% in the third quarter, marginally higher than in the second quarter (2.0%) and the first quarter (1.3%). Spending on services rose 3.7% in the third quarter compared with a 4.6% increase in the second quarter. Consumer spending on goods actually decreased 0.4% in the third quarter. Fixed investment fell 3.5% in the third quarter (-5.0% in the second quarter), pulled lower by a 27.1% drop in residential fixed investment. Nonresidential (business) fixed investment rose 6.2% in the third quarter. Exports rose 14.6% in the third quarter, compared with a 13.8% increase in the previous quarter. Imports, which are a negative in the calculation of GDP, fell 7.3% in the third quarter, after advancing 2.2% in the second quarter. Consumer prices increased 4.3% in the third quarter (6.5% in the second quarter). Excluding food and energy, consumer prices advanced 4.6% in the third quarter (7.1% in the second quarter).
• November saw the federal budget deficit come in at $248.5 billion, up roughly 30.0% from the November 2021 deficit. The deficit for the first two months of fiscal year 2023, at $336.4, is $20.0 billion lower than the first two months of the previous fiscal year. For fiscal year 2022, which runs through September 2022, the government deficit was $1.4 trillion, which was $1.4 trillion lower than the government deficit for fiscal year 2021. For fiscal year 2022, government outlays declined $550.0 billion, while government receipts increased $850.1 billion. Individual income tax receipts rose by $587.8 billion, and corporate income tax receipts increased by $53.0 million.

• Inflation/consumer spending: According to the latest Personal Income and Outlays report, personal income and disposable personal income rose 0.4% in November after increasing 0.7% in October. Consumer spending advanced 0.1% in November after increasing 0.9% the previous month. Consumer prices inched up 0.1% in November after advancing 0.4% in October. Consumer prices have risen 5.5% since November 2021.
• The Consumer Price Index for November may offer more evidence that inflation may be peaking. The CPI rose 0.1% after advancing 0.4% in October. Over the 12 months ended in November, the CPI rose 7.1%, down from 7.7% in October, falling to its lowest 12-month advance since December 2021. Excluding food and energy prices, the CPI rose 0.2% in November and 6.0% for the year ended in November. Although energy prices fell 1.6% in November, food prices rose 0.5% and prices for shelter rose 0.6%. For the 12 months ended in November, energy prices increased 13.1% (despite the recent decrease), while food prices rose 10.6% (food at home prices increased 12.0%). New vehicle prices advanced 7.2%, prices for transportation services rose 14.2%, and prices for shelter increased 7.1%.
• Prices that producers receive for goods and services rose 0.3% in November following a 0.2% October jump. Producer prices increased 7.4% for the 12 months ended in November. Producer prices less foods, energy, and trade services rose 0.3% in November, while prices excluding foods and energy increased 0.4%. In November, prices for services increased 0.4%, while prices for goods inched up 0.1%. For the 12 months ended in November, prices less foods, energy, and trade services moved up 4.9%, while prices less foods and energy increased 6.2%.
• Housing: Sales of existing homes decreased 7.7% in November, marking the tenth consecutive monthly decline. Existing home sales dropped 35.4% from November 2021. The median existing-home price was $370,700 in November, lower than the October price of $378,800 but 3.5% higher than the November 2021 price of $358,200. Unsold inventory of existing homes represents a 3.3-month supply at the current sales pace, unchanged from October but well above the 2.1-month supply in November. Sales of existing single-family homes dropped 7.6% in November and have not recorded an increase since January 2022. Over the 12 months ended in November, sales of existing single-family homes are down 35.2%. The median existing single-family home price was $376,700 in November, down from $384,600 in October but higher than the November 2021 price of $365,000.
• New single-family home sales advanced in November, climbing 5.8% and marking the second consecutive monthly increase. However, sales are down 15.3% from November 2021. The median sales price of new single-family houses sold in November was $421,700 ($484,700 in October). The November average sales price was $543,600 ($533,400 in October). The inventory of new single-family homes for sale in November represented a supply of 8.6 months at the current sales pace, down from the October estimate of 9.3 months.

• Manufacturing: Industrial production declined 0.2% in November, following a 0.1% decrease in October. Manufacturing decreased 0.6% in November, mining fell 0.7%, while utilities rose 3.6%. Over the past 12 months, total industrial production in November was 2.5% above its year-earlier reading. Although manufacturing fell in November, it remained 1.2% above its November 2021 rate.
• November saw new orders for durable goods decrease 2.1%, after increasing in each of the previous three months. Durable goods orders advanced 0.7% in October. New orders for durable goods rose 10.5% since November 2021. Excluding transportation, new orders increased 0.2% in November. Excluding defense, new orders decreased 2.6%. Transportation equipment, down following three consecutive monthly increases, led the November decrease, falling 6.3%.

• Imports and exports: Both import and export prices declined in November. Import prices fell 0.6% after decreasing 0.4% in the prior month. Prices for imports have not increased since June 2022. Import prices declined 4.6% from June to November, after rising 8.1% in the first half of 2022. Despite the recent decreases, prices for U.S. imports rose 2.7% over the past year, the smallest 12-month advance since January 2021. Prices for import fuel fell 2.8% in November following a decline of 2.7% in October. Import fuel prices have not recorded a monthly increase since a 5.6% advance in June 2022. Export prices declined 0.3% in November and have not recorded a 1-month increase since rising 1.1% in June 2022. Prices for exports advanced 6.3% from November 2021 to November 2022, the smallest 12-month increase since February 2021.
• The international trade in goods deficit was $83.3 billion in November, down $15.5 billion, or 15.6%, from October. Exports of goods were $168.9 billion in November, $5.3 billion less than in October. Imports of goods were $252.2 billion in November, $20.8 billion less than in October. The November drop in exports was widespread, with only automotive vehicles and consumer goods increasing. Each category of imports decreased, led by consumer goods (-13.0%), automotive vehicles (-8.9%), and industrial supplies (-6.0%).
• The latest information on international trade in goods and services, released December 6, is for October and shows that the goods and services trade deficit was $78.2 billion, an increase of $4.0 billion from the September deficit. October exports were $256.6 billion, 0.7%, less than September exports. October imports were $334.8 billion, 0.6%, more than September imports. Year to date, the goods and services deficit increased $136.9 billion, or 19.1%, from the same period in 2021. Exports increased $415.3 billion, or 19.8%. Imports increased $552.2 billion, or 19.8%.
• International markets: The impact of inflation was felt throughout much of the world. Most countries saw double-digit increases in prices for goods and services during the year. In 2022, the consumer price index advanced 10.0% in Germany, 10.7% in the United Kingdom, 10.1% in the Eurozone, and 6.8% in Canada. Japan (3.8%) and China (1.6%) were not significantly impacted by rising inflation. However, gross domestic product in both Japan (-0.8%) and China (2.8% through the third quarter) retreated from the prior year. Stock markets of several countries were also hit hard. For 2022, the STOXX Europe 600 Index declined 12.4%; the United Kingdom’s FTSE advanced 0.9%; Japan’s Nikkei 225 Index fell 9.4%; and China’s Shanghai Composite Index lost 15.1%.
• Consumer confidence: The Conference Board Consumer Confidence Index® increased in December following two consecutive monthly declines. The index stands at 108.3, up from 101.4 in November. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose to 147.2 in December, up from 138.3 in the previous month. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — improved to 82.4 in December from 76.7 in November.

Eye on the Year Ahead

The battle against rising inflation will likely continue to dominate much of the economy and stock market in 2023. If and when the Federal Reserve scales back its aggressive interest-rate hikes, investors might be more inclined to return to equities, particularly tech shares. However, the war in Ukraine and new COVID cases will also have an impact. If nothing else, 2023 should be very interesting.

The Markets (as of market close December 30, 2022)

A late-week surge in dip buying wasn’t enough to save stocks from closing the last week of 2022 in the red. Only the Russell 2000 and the Global Dow managed to eke out minimal gains. The Nasdaq, S&P 500, and the Dow all ended the week lower. Treasury yields rose, as bond prices fell. The dollar slid lower, but ended the year up over 8.0%. Crude oil prices ended the week up by nearly 1.0%, closing above $80.00 per barrel.

Stocks began the holiday-shortened week mostly lower, with only the Dow and the Global Dow ticking up 0.1%. The tech-heavy Nasdaq fell 1.4%, while the Russell 2000 (-0.7%) and the S&P 500 (-0.4%) edged lower. Ten-year Treasury yields added 10.9 basis points to close at 3.86%. Crude oil prices were flat, hovering around $79.72 per barrel. The dollar dipped lower, while gold prices rose nearly 1.0%, jumping to their highest level in six months. The Friday before Christmas marked the start of the so-called Santa Clause rally period, which includes the last five trading days of the outgoing year and the first two trading days of the new year. On average, this period has historically produced positive results for stocks. However, poor returns are often seen as a negative indicator.

Equities continued their tailspin last Wednesday, dampening hopes for a year-end rally. The S&P 500 fell to its lowest level since November as fears of rising COVID cases followed the end of China’s lockdown. Several countries, including the United States, will require COVID testing for all air passengers originating from China. The Russell 2000 (-1.6%) and the Nasdaq (-1.4%) led the declining indexes, followed by the S&P 500 (-1.2%), the Dow (-1.1%), and the Global Dow (-0.8%). Bond prices slipped lower, driving yields higher with 10-year Treasury yields climbing to 3.88%. Crude oil prices fell by nearly $1.00, reaching $78.64 per barrel. The dollar advanced, while gold prices declined.

Stock and bond prices rose in a late-day rally last Thursday. The S&P 500 notched its largest gain of December, and the tech-heavy Nasdaq also outperformed. Overall, each of the benchmark indexes listed here posted solid gains, with the Nasdaq and the Russell 2000 advancing 2.6% to lead the charge. The S&P 500 added 1.8%, the Dow and the Global Dow climbed 1.0%. Ten-year Treasury yields fell 5.2 basis points to 3.70%. Crude oil prices moved little from the previous day, closing at around $78.67 per barrel. The dollar dipped, while gold prices advanced.

Wall Street closed 2022 on a downbeat, closing out the worst year in more than a decade. Each of the benchmark indexes listed here ended last Friday in the red, led by the Russell 2000 and the S&P 500, which fell 0.3%. The Dow and the Global Dow dipped 0.2%, while the Nasdaq slipped 0.1%. Ten-year Treasury yields added 4.4 basis points to close the week at 3.87%. Crude oil prices advanced 2.5% to reach $80.41 per barrel. The dollar declined, while gold prices advanced.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 12/30	Weekly Change	YTD Change
DJIA	36,338.30	33,203.93	33,147.25	-0.17%	-8.78%
Nasdaq	15,644.97	10,497.86	10,466.48	-0.30%	-33.10%
S&P 500	4,766.18	3,844.82	3,839.50	-0.14%	-19.44%
Russell 2000	2,245.31	1,760.93	1,761.25	0.02%	-21.56%
Global Dow	4,137.63	3,693.09	3,702.71	0.26%	-10.51%
Fed. Funds target rate	0.00%-0.25%	4.25%-4.50%	4.25%-4.50%	0 bps	425 bps
10-year Treasuries	1.51%	3.75%	3.87%	12 bps	236 bps
US Dollar-DXY	95.64	104.33	103.48	-0.81%	8.20%
Crude Oil-CL=F	$75.44	$79.65	$80.41	0.95%	6.59%
Gold-GC=F	$1,830.30	$1,805.20	$1,829.70	1.36%	-0.03%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The international trade in goods deficit shrunk $15.5 billion, or 15.6% in November. Exports of goods fell 3.1% and imports of goods declined 7.6%.
• Retail prices for regular gasoline continued to slide last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.091 per gallon on December 26, $0.029 per gallon below the prior week’s price and $0.184 lower than a year ago. Also, as of December 26, the East Coast price decreased $0.047 to $3.071 per gallon; the Gulf Coast price rose $0.043 to $2.684 per gallon; the Midwest price declined $0.012 to $2.899 per gallon; the West Coast price dropped $0.073 to $3.910 per gallon; and the Rocky Mountain price decreased $0.084 to $3.002 per gallon. Residential heating oil prices averaged $4.639 per gallon on December 26, $0.042 above the previous week’s price and $1.273 per gallon more than a year ago.
• For the week ended December 24, there were 225,000 new claims for unemployment insurance, an increase of 9,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 17 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 17 was 1,710,000, an increase of 41,000 from the previous week’s level, which was revised down by 3,000. States and territories with the highest insured unemployment rates for the week ended December 10 were Alaska (2.3%), California (2.1%), New Jersey (2.1%), Puerto Rico (2.0%), Montana (1.8%), Minnesota (1.8%), Rhode Island (1.7%), New York (1.6%), Massachusetts (1.6%), and Washington (1.6%). The largest increases in initial claims for unemployment insurance for the week ended December 17 were in Massachusetts (+1,505), New Jersey (+1,258), Missouri (+1,040), Rhode Island (+522), and Pennsylvania (+460), while the largest decreases were in California (-2,268), Ohio (-1,806), Texas (-941), Georgia (-760), and Washington (-704).

Eye on the Week Ahead

The first week of 2023 includes some important economic data for the last month of 2022. The purchasing managers’ indexes for manufacturing and services are available this week. November saw the PMIs for both manufacturing and services contract. The employment figures for December are available at the end of the week. The employment sector remained strong in November, with over 260,000 new jobs added and hourly earnings increasing 0.6% from the previous month.

The Markets (as of market close December 23, 2022)

Stocks ended a turbulent week generally lower as investors digested the latest inflation data and the Federal Reserve’s possible response. Of the benchmark indexes listed here, only the Dow and the Global Dow managed to eke out gains by the end of last week. Inflation rose by only 0.1% in November, according to the latest data from the Bureau of Economic Analysis (see below). Investors are hoping this is the latest sign that inflationary pressures have peaked, which could influence the Fed to scale back its interest-rate hikes. However, news that China is experiencing another surge in COVID cases could prompt more government-imposed lockdowns, which would impact the global economy. Ten-year Treasury yields advanced the most since early April. The dollar edged lower, while gold prices climbed higher. Crude oil prices increased for the second week in a row, nearing $80.00 per barrel.

Stocks closed last Monday lower for the fourth straight session. The S&P 500 hit its lowest level in more than a month after declining 0.9%. The Nasdaq dropped 1.5%, the Russell 2000 fell 1.4%, the Dow dipped 0.5%, and the Global Dow slid 0.2%. Bond prices fell, driving the yield on 10-year Treasuries up 9.9 basis points to 3.58%. Crude oil prices rose nearly 2.0% to reach $75.67 per barrel. The dollar was flat, while gold prices fell marginally.

Last Tuesday saw stocks barely snap a four-day losing streak. The Global Dow (0.7%) and the Russell 2000 (0.5%) led the benchmark indexes listed here, followed by the Dow (0.3%) and the S&P 500 (0.1%). The tech-heavy Nasdaq ended the day flat. Ten-year Treasury yields added 10.3 basis points to close at 3.66%. The dollar slipped lower, while gold prices advanced. Crude oil prices gained marginally, ending the session at about $76.02 per barrel.

Stocks rallied for the second straight day last Wednesday. The S&P 500 rose for the second day in a row, while the Nasdaq had its best day since late November. Improvement in consumer confidence and some strong earnings supported risk sentiment. Among the benchmark indexes listed here, only the Global Dow (1.1%) did not advance at least 1.5% by the close of trading. Ten-year Treasury yields were flat, crude oil prices climbed higher for the third day in a row, the dollar advanced, while gold prices dipped marginally lower.

Wall Street saw its mini-rally end last Thursday as each of the benchmark indexes listed here lost value. Solid economic data increased worries that the Federal Reserve will extend its aggressive monetary policy longer than hoped. The Nasdaq led the declining indexes, falling 2.2%, followed by the S&P 500 (-1.4%), the Russell 2000 (-1.3%), the Dow (-1.1%), and the Global Dow (-0.7%). Ten-year Treasuries edged lower, while the dollar moved higher. Crude oil prices ended their rally, dipping minimally to $78.26 per barrel. Gold prices lost 1.4% on the day.

Stocks closed last Friday on an uptick, with each of the benchmark indexes listed here claiming gains. The S&P 500 advanced 0.6% to lead the indexes, followed by the Dow (0.5%), the Russell 2000 (0.4%), the Global Dow (0.3%), and the Nasdaq (0.2%). Ten-year Treasury yields added 8.2 basis points to close at 3.75%. The dollar edged lower, while gold prices rose nearly 0.5%. Crude oil prices gained $2.16 to close at around $79.65 per barrel.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 12/23	Weekly Change	YTD Change
DJIA	36,338.30	32,920.46	33,203.93	0.86%	-8.63%
Nasdaq	15,644.97	10,705.41	10,497.86	-1.94%	-32.90%
S&P 500	4,766.18	3,852.36	3,844.82	-0.20%	-19.33%
Russell 2000	2,245.31	1,763.42	1,760.93	-0.14%	-21.57%
Global Dow	4,137.63	3,650.73	3,693.09	1.16%	-10.74%
Fed. Funds target rate	0.00%-0.25%	4.25%-4.50%	4.25%-4.50%	50 bps	425 bps
10-year Treasuries	1.51%	3.48%	3.75%	27 bps	224 bps
US Dollar-DXY	95.64	104.81	104.33	-0.46%	9.09%
Crude Oil-CL=F	$75.44	$74.31	$79.65	7.19%	5.58%
Gold-GC=F	$1,830.30	$1,802.90	$1,805.20	0.13%	-1.37%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The final estimate for third-quarter gross domestic product showed the economy accelerated at an annual rate of 3.2%, exceeding expectations. GDP declined 1.6% and 0.6%, respectively, in the first and second quarters. The increase in GDP was driven in part by advances in exports; federal, state, and local government spending; consumer spending; and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a negative in the calculation of GDP, decreased. The personal consumption expenditures price index, a measure of inflation, increased 4.3% in the third quarter, lower than the 7.1% advance in the second quarter.
• Personal income and disposable (after-tax) income rose 0.4% in November, according to the latest data from the Bureau of Economic Analysis. Consumer spending, as measured by personal consumption expenditures, rose 0.1%. Consumer prices edged up 0.1% in November. Prices, less food and energy, increased 0.2%. Since November 2021, consumer prices have increased 5.5%, lower than the 12 months ended in October (6.1%).
• The housing sector continued to weaken in November. Sales of existing homes fell for the tenth consecutive month after declining 7.7% in November. Year over year, sales are down 35.4%. Single-family homes sales also dropped in November, falling 7.6% from the previous month and 35.2% since November 2021. According to the National Association of Realtors®, the rapid increase in mortgage rates coupled with low inventories have hurt housing affordability and brought sales activity to levels resembling those that existed during the COVID-19 lockdown. Total housing inventory in November represented a supply of 3.3 months, unchanged from October. The median existing home price for all housing types in November was $370,700, a decrease of 2.2% from October ($378,800) but 3.5% above the November 2021 price ($358,200). The median existing single-family home price was $376,700 in November, down from $384,600 in October but up from the November 2021 price of $365,000.
• Sales of new single-family homes increased for the second straight month in November, advancing 5.8% above the revised October rate. However, sales are down 15.3% from November 2021. Inventory of available single-family homes for sale stood at 8.6 months, down from the October rate of 9.3 months. The median sales price of new single-family homes sold in November was $471,200 ($484,700 in October), while the average sales prices was $543,600 ($533,400) in October.
• The number of issued building permits and housing starts declined in November from the previous month. Authorized building permits were 11.2% below the October rate and 22.4% under the November 2021 pace. In November, issued building permits for single-family home construction were 7.1% under the October figure. Housing starts in November were 0.5% below the October estimate and 16.4% under the November 2021 rate. Single-family housing starts were 4.1% less than the previous month’s tally. Home completions rose by 10.8% in November and were 6.0% higher than the prior year’s total.  In November, single-family home completions were 9.5% above the October rate. 
• New orders for manufactured durable goods decreased 2.1% in November following three consecutive monthly increases. Excluding transportation, new orders increased 0.2%. Excluding defense, new orders decreased 2.6%. Transportation equipment drove the decrease in new orders, falling 6.3% following three consecutive monthly increases.
• Retail prices for regular gasoline continued to slide last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.120 per gallon on December 19, $0.119 per gallon below the prior week’s price and $0.175 lower than a year ago. Also as of December 19, the East Coast price decreased $0.107 to $3.118 per gallon; the Gulf Coast price fell $0.086 to $2.641 per gallon; the Midwest price declined $0.123 to $2.911 per gallon; the West Coast price dropped $0.164 to $3.983 per gallon; and the Rocky Mountain price decreased $0.141 to $3.086 per gallon. Residential heating oil prices averaged $4.606 per gallon on December 19, $0.261 above the previous week’s price and $1.262 per gallon more than a year ago.
• For the week ended December 17, there were 216,000 new claims for unemployment insurance, an increase of 2,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 10 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 10 was 1,672,000, a decrease of 6,000 from the previous week’s level, which was revised up by 7,000. States and territories with the highest insured unemployment rates for the week ended December 3 were Alaska (2.3%), Puerto Rico (2.1%), California (2.0%), New Jersey (2.0%), Montana (1.7%), Minnesota (1.7%), New York (1.6%), Rhode Island (1.6%), Massachusetts (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended December 10 were in Connecticut (+471), the District of Columbia (+237), Nevada (+157), Kentucky (+153), and Illinois (+138), while states with the largest decreases were in New York (-7,134), California (-4,830), Georgia (-4,273), Texas (-3,954), and Pennsylvania (-2,669).

Eye on the Week Ahead

There is very little economic data released during the week between Christmas and New Year’s Day. In addition, trading is customarily muted as investors take a break while preparing for the new year.

The Markets (as of market close December 16, 2022)

Wall Street saw stocks end last week lower as investors worried that the Federal Reserve’s push to slow rising inflation may lead the economy into a recession. Early in the week, investors were buoyed by softer-than-expected inflation data, which preceded the Fed’s expected 50-basis-point interest-rate hike. However, Federal Reserve officials were clear that interest rate increases will continue until it is evident that inflation has been controlled. After beginning last week on a high note, equities endured three straight days of losses. The Nasdaq, the Global Dow, and the S&P 500 each fell more than 2.0%. The Russell 2000 and the Dow also declined. Crude oil prices advanced, but remain subdued on recession fears. Ten-year Treasury yields slid lower by the end of the week. The dollar and gold prices dipped lower.

Stocks rallied to kick off the week last Monday as investors awaited upcoming inflation data and the results from the Federal Reserve meeting. Bargain hunters took advantage of depressed stock values from the previous week. Among the benchmark indexes listed here, the Dow jumped 1.6%, followed by the S&P 500 (1.4%), the Nasdaq (1.3%), the Russell 2000 (1.2%), and the Global Dow (0.3%). Crude oil prices ($73.45 per barrel), the dollar, and 10-year Treasuries (3.61%) climbed higher. Gold prices slid lower.

Last Tuesday, investors tried to gauge the impact a lower-than-expected consumer price index (see below) might have on the Federal Reserve’s aggressive policy to corral inflation. Stocks ended higher following a volatile session. The Global Dow (1.1%) and the Nasdaq (1.0%) led the benchmark indexes listed here, followed by the Russell 2000 (0.8%), the S&P 500 (0.7%), and the Dow (0.3%). Yields on 10-year Treasuries fell 11.0 basis points to close at 3.50%. Crude oil prices climbed to their highest levels in more than a week reaching $75.43 per barrel on cold weather forecasts. The dollar fell by more than 1.0%, while gold prices gained more than $30.00 to hit $1,822.40 per ounce.

Stocks ended a two-day rally last Wednesday after the Federal Reserve hiked interest rates by another 50 basis points, while indicating that its “restrictive policy” will continue for some time in order to ensure price stability. The Nasdaq slid 0.8%, followed by the S&P 500 and the Russell 2000, which declined 0.6%. The Dow dropped 0.4% and the Global Dow edged down 0.3%. Ten-year Treasury yields ended flat. Crude oil prices continued to advance, reaching $77.39 per barrel by late afternoon. The dollar and gold prices fell. While Fed Chair Jerome Powell indicated that the Fed intends to maintain its aggressive policy aimed at bringing inflation down, he did say that the cycle could be near an end.

Last Thursday saw stocks continue to fall, with each of the benchmark indexes listed here falling at least 1.5%. The Nasdaq slid 3.2%, the Russell 2000 lost 2.6%, the S&P 500 dipped 2.5%, the Global Dow declined 2.4%, and the Dow fell 2.3%. Ten-year Treasury yields fell to 3.45%. Crude oil prices ended a mini-rally, falling to $76.14 per barrel. The dollar advanced, while gold prices declined.

Stocks fell for the third consecutive session last Friday. Each of the benchmark indexes listed here ended the day in the red, with the S&P 500 dropping 1.1%, while the Global Dow and the Nasdaq slid 1.0%. The Dow fell 0.9% and the Russell 2000 declined 0.6%. Ten-year Treasury yields added 3.2 basis points to reach 3.48%. Crude oil prices retreated, ending the week at about $74.32 per barrel. The dollar and gold prices advanced.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 12/16	Weekly Change	YTD Change
DJIA	36,338.30	33,476.46	32,920.46	-1.66%	-9.41%
Nasdaq	15,644.97	11,004.62	10,705.41	-2.72%	-31.57%
S&P 500	4,766.18	3,934.38	3,852.36	-2.08%	-19.17%
Russell 2000	2,245.31	1,796.66	1,763.42	-1.85%	-21.46%
Global Dow	4,137.63	3,732.00	3,650.73	-2.18%	-11.77%
Fed. Funds target rate	0.00%-0.25%	3.75%-4.00%	4.25%-4.50%	50 bps	425 bps
10-year Treasuries	1.51%	3.56%	3.48%	-8 bps	197 bps
US Dollar-DXY	95.64	104.97	104.81	-0.15%	9.59%
Crude Oil-CL=F	$75.44	$71.53	$74.31	3.89%	-1.50%
Gold-GC=F	$1,830.30	$1,807.90	$1,802.90	-0.28%	-1.50%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The Federal Open Market Committee hiked the federal funds rate by 50 basis points to a target rate range of 4.25%-4.50%, ending a string of 75 basis-point rate increases. In support of its decision, the Committee noted that spending and production have experienced modest growth, job gains have been robust, the unemployment rate remaines low, and inflation levels remain elevated due to supply and demand imbalances related to the pandemic, higher food and energy prices, broader price pressures, and the ongoing Russia/Ukraine war. Reiterating its stated goals of maximum employment and inflation at the rate of 2.0% over the longer run, the FOMC expects that the pace of ongoing rate increases will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. The Committee will adjust its stance if risks emerge that could impede the attainment of the aforementioned goals.
• Inflationary pressures finally may be easing. The consumer price index for November advanced 0.1% after increasing 0.4% in the previous month. Prices less food and energy rose 0.2% in November, the smallest increase since August 2021. Over the 12 months ended in November, the CPI has increased 7.1%, the slowest 12-month pace since December 2021. Among the items contributing to the November increase were prices for food (0.5%), fuel oil (1.7%), apparel (0.2%), and shelter (0.6%). In November, prices decreased in medical care services (-0.7%), used cars and trucks (-2.9%), energy (-1.6%), and gasoline (-2.0%).
• Retail sales fell 0.6% in November after advancing 1.3% in October. Year to date, retail sales are up 6.5%. Retail trade sales slid 0.8% last month but are 5.4% above the November 2021 rate. In November, the decline in retail sales was broad based, with sales notably declining at motor vehicle and parts dealers (-2.3%); furniture and home furnishings stores (-2.6%); electronics and appliance stores (-1.5%); building material, garden equipment, and supplies dealers (-2.5%); gasoline stations (-0.1%); clothing and clothing accessories stores (-0.2%); department stores (-2.9%); and nonstore, or online, retailers (-0.9%). Retail sales increased at food and beverage stores (0.8%), food and drinking places (0.9%), and health and personal care stores (0.7%).
• In another sign that inflationary pressures may have peaked, both import and export prices declined in November. Import prices dipped 0.6% following a 0.4% decrease in October. Despite the recent decreases, prices for U.S. imports rose 2.7% over the past year, the smallest 12-month advance since January 2021. Export prices dropped 0.3% after decreasing 0.4% the previous month. Export prices haven’t recorded an increase since June 2022. Prices for U.S. exports advanced 6.3% from November 2021 to November 2022, the smallest 12-month increase since February 2021.
• Total industrial production fell for the second consecutive month in November after declining 0.2% in October. Decreases of 0.6% for manufacturing and 0.7% for mining were partly offset by a rebound of 3.6% for utilities following three months of declines. Since November 2021, total industrial production is up 2.5%.
• The Treasury budget deficit for November was $248.5 billion, well above the October monthly deficit of $87.9 billion and the November 2021 deficit of $191.3 billion. In November 2022, total government receipts were $252.1 billion ($318.5 billion in October), while government expenditures totaled $500.6 billion ($406.4 billion in October). For the first two months of fiscal year 2023, the deficit sits at $336.4 billion compared to the $356.4 billion deficit over the same period in fiscal year 2022.
• Prices at the pump finally dipped below their 2021 levels last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.239 per gallon on December 12, $0.151 per gallon below the prior week’s price and $0.076 lower than a year ago. Also as of December 12, the East Coast price decreased $0.129 to $3.225 per gallon; the Gulf Coast price fell $0.081 to $2.727 per gallon; the Midwest price declined $0.178 to $3.034 per gallon; the West Coast price dropped $0.222 to $4.147 per gallon; and the Rocky Mountain price decreased $0.177 to $3.227 per gallon. Residential heating oil prices averaged $4.558 per gallon on December 12, $0.297 below the previous week’s price but $1.208 per gallon more than a year ago.
• Claims for unemployment insurance declined during the last reporting period. For the week ended December 10, there were 211,000 new claims for unemployment insurance, a decrease of 20,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 3 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 3 was 1,671,000, an increase of 1,000 from the previous week’s level, which was revised down by 1,000. States and territories with the highest insured unemployment rates for the week ended November 26 were Alaska (2.2%), California (2.1%), New Jersey (2.1%), Puerto Rico (2.0%), Montana (1.7%), Minnesota (1.7%), New York (1.6%), Massachusetts (1.5%), Rhode Island (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended December 3 were in California (+15,306), New York (+8,777), Texas (+8,639), Georgia (+7,806), and Illinois (+5,083), while the only decrease was in Connecticut (-139).

Eye on the Week Ahead

As December and 2022 wind down, the latest economic data likely will influence the market and economy heading into 2023. This week, the final estimate of third-quarter gross domestic product is scheduled for release. The previous estimate showed the economy expanded at an annual rate of 2.9%. The latest data on the housing sector is also available this week with the release of the November reports on new and existing home sales. The November report in personal income and outlays will be released at the end of the week. The Federal Reserve often takes note of personal consumption expenditures (consumer spending) and the personal consumption expenditures price index, an indicator of inflation.

The Markets (as of market close December 9, 2022)

Stocks couldn’t maintain momentum from the previous two weeks, ultimately closing last week in the red. The small caps of the Russell 2000 gave back over 5.0%, while the Nasdaq dropped 4.0%. The S&P 500 fell 3.4%, the Dow declined 2.8%, and the Global Dow dipped 1.7%. Ten-year Treasury yields gained 6.0 basis points, and the dollar inched higher. Crude oil prices fell nearly 11.0%, closing at about $71.50 per barrel, which is below their 2021 closing values. Investors reacted poorly to a higher-than-expected producer price index last Friday and may anticipate a similar result when the consumer price index is released early this week.

Wall Street got off to a rough start last Monday as stocks suffered their worst daily decline in nearly a month. Energy and tech shares closed lower, helping to drag down the benchmark indexes listed here. The small caps of the Russell 2000 fell 2.8%, the Nasdaq lost 1.9%, the S&P 500 dropped 1.8%, the Dow dipped 1.4%, and the Global Dow declined 0.9%. Yields on 10-year Treasuries rose 9.3 basis points to 3.75%. Crude oil prices declined nearly 3.3%, falling to $77.33 per barrel. The dollar advanced, while gold prices lost 1.6% to close the session at $1,780.50 per ounce.

Stocks continued to trend lower last Tuesday. The Nasdaq dropped 2.0%, followed by the Russell 2000 (-1.5%) and the S&P 500 (-1.4%). The Dow and the Global Dow fell 1.0%. Crude oil prices declined 3.4%, hitting $74.33 per barrel even with OPEC+ countries cutting production and China tentatively easing COVID restrictions. The yield on 10-year Treasuries declined 8.6 basis points to 3.51%. The dollar inched higher, while gold prices rebounded.

Last Wednesday saw stocks close generally lower for the third consecutive day. Once again, the Nasdaq led the declines in the benchmark indexes, falling 0.5%. The Global Dow and the Russell 2000 lost 0.3%, while the S&P 500 lost for the fifth straight day after sliding 0.2%. The Dow ended the day flat. Crude oil prices, 10-year Treasury yields, and the dollar lost value. Crude oil prices fell to $72.40 per barrel, the lowest closing price since late December 2021. The yield on 10-year Treasuries declined 10.5 basis points to hit 3.40%. The dollar slipped marginally, down 0.42% against a basket of currencies. Gold prices rose $17.60 to $1,800.00 per ounce.

Wall Street rebounded last Thursday, likely attributable to bargain hunters and dip buyers. Tech shares moved higher, helping to drive the Nasdaq up 1.1%. The S&P 500 rose 0.8%, ending its longest losing streak in two months. The Russell 2000 added 0.6%, while the Dow and the Global Dow gained 0.6% and 0.5%, respectively. Ten-year Treasury yields climbed higher for the first time in the last three sessions, gaining 8.3 basis points to hit 3.49%. Crude oil prices slid lower, ending the session at about $71.84 per barrel. The dollar declined, while gold prices inched higher.

A late move away from risk pulled stocks lower last Friday as bond yields surged. The Dow dropped 0.9%, followed by the Nasdaq and the S&P 500, which lost 0.7%. The Russell 2000 led the declining indexes listed here, falling 1.2%. The Global Dow managed to break even. Ten-year Treasury yields added 7.6 basis points to reach 3.56%. Crude oil eked out a minimal gain. The dollar and gold prices advanced.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 12/9	Weekly Change	YTD Change
DJIA	36,338.30	34,429.88	33,476.46	-2.77%	-7.88%
Nasdaq	15,644.97	11,461.50	11,004.62	-3.99%	-29.66%
S&P 500	4,766.18	4,071.70	3,934.38	-3.37%	-17.45%
Russell 2000	2,245.31	1,892.84	1,796.66	-5.08%	-19.98%
Global Dow	4,137.63	3,797.60	3,732.00	-1.73%	-9.80%
Fed. Funds target rate	0.00%-0.25%	3.75%-4.00%	3.75%-4.00%	0 bps	375 bps
10-year Treasuries	1.51%	3.50%	3.56%	6 bps	205 bps
US Dollar-DXY	95.64	104.50	104.97	0.45%	9.76%
Crude Oil-CL=F	$75.44	$80.13	$71.53	-10.73%	-5.18%
Gold-GC=F	$1,830.30	$1,811.80	$1,807.90	-0.22%	-1.22%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Prices producers received for goods and services sold rose 0.3% in November, the same increase as in October and September. For the 12 months ended in November, producer prices have risen 7.4%, down from 8.0% over the 12 months ended in October. In November, producer prices rose 0.4% excluding food and energy, and 0.3% excluding food, energy, and trade services. For the year ended in November, producer prices excluding food and energy rose 6.2%, down from 6.7% for the year ended in October. For the third month in a row, prices for services accounted for most of the overall producer price increase in November. Prices for services climbed 0.4%, while prices for goods inched up 0.1%.
• Business activity in the services sector contracted for the second consecutive month in November. The S&P Global US Services PMI Business Activity Index registered 46.2 in November, down from 47.8 in October. A reading of 50 or above indicates business growth. A decline in new orders and client demand led to the decrease in business activity for service providers. The rate of contraction is the fastest since August. Although firms remained keen to pass on higher costs to clients through a further hike in selling prices during November, the pace of increase moderated.
• The international trade in goods and services report, released December 6, is for October. The goods and services trade deficit advanced $78.2 billion, or 5.4%, in October. Exports declined 0.7%, while imports rose 0.6%. The October increase in the goods and services deficit reflected an increase in the goods deficit of $6.1 billion and an increase in the services surplus of $2.1 billion. Year to date, the goods, and services deficit increased $136.9 billion, or 19.9%, from the same period in 2021. Both imports and exports increased 19.8%. The third-quarter figures show goods and services surpluses, in billions of dollars, with South and Central America ($28.2), Netherlands ($15.2), Singapore ($11.6), Brazil ($7.6), Australia ($7.1), Hong Kong ($6.8), United Kingdom ($6.4), Switzerland ($5.4), Belgium ($2.0), and Ireland ($0.3). Deficits were recorded with China ($94.9), Mexico ($35.2), Vietnam ($29.4), European Union ($25.6), Germany ($17.8), Canada ($15.0), Japan ($13.9), Taiwan ($13.0), India ($11.1), Italy ($10.5), South Korea ($9.0), Malaysia ($8.8), France ($2.7), Israel ($2.6), and Saudi Arabia ($0.5).
• According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.390 per gallon on December 5, $0.144 per gallon below the prior week’s price but $0.049 higher than a year ago. Also as of December 5, the East Coast price decreased $0.114 to $3.354 per gallon; the Gulf Coast price fell $0.107 to $2.808 per gallon; the Midwest price declined $0.162 to $3.212 per gallon; the West Coast price dropped $0.223 to $4.369 per gallon; and the Rocky Mountain price decreased $0.135 to $3.404 per gallon. Residential heating oil prices averaged $4.861 per gallon on December 5, $0.281 below the previous week’s price but $1.540 per gallon more than a year ago.
• Claims for unemployment insurance edged higher during the last reporting period. For the week ended December 3, there were 230,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 26 increased 0.1 percentage point to 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended November 26 was 1,671,000, an increase of 62,000 from the previous week’s level, which was revised up by 1,000. States and territories with the highest insured unemployment rates for the week ended November 19 were Alaska (2.0%), Puerto Rico (1.8%), New Jersey (1.7%), California (1.6%), Montana (1.5%), New York (1.4%), Massachusetts (1.3%), Rhode Island (1.3%), Nevada (1.2%), and Oregon (1.2%). The largest increases in initial claims for unemployment insurance for the week ended November 26 were in Wisconsin (+1,542), Connecticut (+817), Ohio (+578), Tennessee (+278), and Massachusetts (+130), while the largest decreases were in California (-11,198), Illinois (-4,968), Georgia (-4,632), Texas (-4,611), and Florida (-2,425).

Eye on the Week Ahead

This week, the Federal Open Market Committee meets for the last time in 2022. While there’s no doubt the FOMC will hike interest rates in its ongoing effort to slow rising inflation, will the Committee scale back the increase to 50 basis points? The results of the November CPI, which is released during the FOMC meeting, may provide some indication of the course the Committee may take in December and over the next few months.

The Markets (as of market close December 2, 2022)

Wall Street extended its rally for the second consecutive week as each of the benchmark indexes listed here posted gains. As is most often the case lately, the market experienced plenty of volatility last week. Ultimately, a hotter-than-expected labor report reignited inflation concerns and the continuation of an aggressive monetary policy by the Federal Reserve. Average hourly earnings have steadily increased over the past three months, while solid monthly job gains have shown that there are more positions to be filled. Investors not only dealt with inflation concerns and the Fed’s response, but traders had to assess the impact of the ongoing Russia/Ukraine war and China’s response to rising COVID cases. Despite the tumult, stocks continued to advance. Ten-year Treasury yields fell as bond prices climbed higher. Crude oil prices rallied from a three-week lag, advancing 5.0%. The dollar slid lower, while gold prices posted gains for the second week in a row.

Last Monday, Wall Street reacted negatively to the likelihood of more interest-rate hikes and the potential economic impact of China’s COVID-related lockdowns. The small caps of the Russell 2000 dropped 2.1% to lead the declining benchmark indexes. The Nasdaq fell 1.6%, while the S&P 500 and the Dow lost 1.5%. The Global Dow slid 1.4%. Ten-year Treasury yields inched up 1.2 basis points to 3.70%. Crude oil prices and the dollar advanced marginally, while gold prices fell 0.8%. Investors were discouraged to hear several Federal Reserve officials indicate that more work has to be done to curb inflation, including more substantial interest-rate increases. China’s response to rising COVID cases has led to demonstrations, which has added to that country’s uncertain economic situation.

Stocks ended mixed last Tuesday, with the Nasdaq (-0.6%) and the S&P 500 (-0.2%) declining, while the Russell 2000 (0.4%) and the Global Dow (0.2%) eked out gains. The Dow ended the session flat. The yield on 10-year Treasuries climbed 4.5 basis points to close at 3.74%. Crude oil prices, gold prices, and the dollar advanced. Investors may have tempered their enthusiasm for risk in anticipation of Federal Reserve Chair Jerome Powell’s speech on Wednesday.

News that the Federal Reserve may soften the pace of interest-rate hikes sent stocks higher last Wednesday. The Nasdaq surged 4.4% and the S&P 500 gained 3.1% to lead the benchmark indexes listed here. The Russell 2000 advanced 2.6%, followed by the Dow (2.2%) and the Global Dow (1.7%). Crude oil prices rose for the first time in several sessions following a report that U.S. reserves declined and that China may lessen COVID-related restrictions. Long-term bond prices advanced, pulling yields lower. Ten-year Treasury yields slid 4.5 basis points to 3.70%. The dollar slid lower, while gold prices increased.

Stocks closed last Thursday mixed following the prior day’s rally as investors awaited the latest jobs report due out the following day. Of the benchmark indexes listed here, only the Nasdaq (0.1%) and the Global Dow (0.9%) closed in the black. The Dow (-0.6%) led the declining indexes, followed by the Russell 2000 (-0.3%) and the S&P 500 (-0.1%). Ten-year Treasury yields dropped 17.4 basis points to 3.52% as bond prices jumped higher. The dollar declined, while gold prices climbed notably higher, gaining $57.20 to reach $1,817.10 per ounce. Crude oil prices advanced minimally, closing at about $81.33 per barrel.

Last Friday saw stocks close with mixed results. The Russell 2000 gained 0.6%, while the Dow and the Global Dow barely eked out gains. The Nasdaq slid 0.2% and the S&P 500 dipped 0.1%. The much anticipated jobs report (see below) came in better than expected, adding to the likelihood that the Federal Reserve will keep tightening even if the pace of interest-rate hikes slows. Ten-year Treasury yields fell for the third straight session, down 2.3 basis points to close at 3.50%. Crude oil prices scaled back after a brief rally, dipping $1.10 to end the session at about $80.13 per barrel. The dollar and gold prices declined.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 12/2	Weekly Change	YTD Change
DJIA	36,338.30	34,347.03	34,429.88	0.24%	-5.25%
Nasdaq	15,644.97	11,226.36	11,461.50	2.09%	-26.74%
S&P 500	4,766.18	4,026.12	4,071.70	1.13%	-14.57%
Russell 2000	2,245.31	1,869.19	1,892.84	1.27%	-15.70%
Global Dow	4,137.63	3,751.92	3,797.60	1.22%	-8.22%
Fed. Funds target rate	0.00%-0.25%	3.75%-4.00%	3.75%-4.00%	0 bps	375 bps
10-year Treasuries	1.51%	3.69%	3.50%	-19 bps	199 bps
US Dollar-DXY	95.64	105.96	104.50	-1.38%	9.26%
Crude Oil-CL=F	$75.44	$76.28	$80.13	5.05%	6.22%
Gold-GC=F	$1,830.30	$1,754.00	$1,811.80	3.30%	-1.01%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• There were 263,000 new jobs added in November, in line with average growth over the prior three months (282,000). By comparison, 647,000 new jobs were added in November 2021. Job growth has averaged 392,000 in 2022, evidencing a slowdown in the number of new jobs added over the second half of the year. In November, notable job gains occurred in leisure and hospitality, health care, and government. Employment declined in retail trade and in transportation and warehousing. The unemployment rate, at 3.7%, was unchanged in November and has sat within a range of 3.5% to 3.7% since March. The number of unemployed persons slid by 48,000 to 6.0 million in November. Both the labor force participation rate and the employment-population ratio dipped one percentage point to 62.1% and 59.9%, respectively. In November, average hourly earnings rose by $0.18, or 0.6%, to $32.82. Over the past 12 months, average hourly earnings have increased by 5.1%. In November, the average work week declined by 0.1 hour to 34.4 hours.
• The second estimate of gross domestic product revealed that the economy accelerated at an annualized rate of 2.9% in the third quarter. The initial estimate showed the GDP advanced 2.6%. GDP decreased 0.6% in the second quarter. The increase in GDP reflected increases in exports, consumer spending, nonresidential (business) fixed investment, state and local government spending, and federal government spending that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a negative in the calculation of GDP, decreased. Personal consumption expenditures, a measure of consumer spending, rose 1.7% in the third quarter, while the personal consumption expenditures price index, a measure of inflation, increased 4.3%.
• Personal income advanced a notable 0.7% in October, according to the latest data from the Bureau of Economic Analysis. Consumers were apparently undeterred by rising prices and interest rates as personal consumption expenditures advanced 0.8% in October. The personal consumption expenditures price index, a measure of inflation, advanced 0.3% in October and 6.0% for the last 12 months, down from 6.2% for the 12 months ended in September. Core prices, excluding food and energy, rose 0.2% in October and 5.0% since October 2021, down 0.2 percentage point from the same period ended in September.
• In October, the number of job openings edged down 353,000 to 10.3 million, according to the latest Job Openings and Labor Turnover Summary. In October, job openings decreased in state and local government (excluding education), nondurable goods manufacturing, and federal government. The number of job openings increased in other services and in finance and insurance. In October, the number and rate of hires changed little at 6.0 million and 3.9%, respectively. In October, the number of total separations, which include quits, layoffs, and discharges, changed little at 5.7 million, and the rate was unchanged at 3.7%.
• The manufacturing sector weakened in November, according to the S&P Global US Manufacturing PMI™. The purchasing managers’ index posted 47.7 in November, down from 50.4 in October, marking the first decline in the manufacturing sector since June 2020. The downturn in operating conditions was widespread, with decreases in production, output, and new orders. Employment growth slowed as backlogs of work waned.
• According to the latest data from the Census Bureau, the international trade in goods deficit increased 7.7% to $99.0 billion in October. Exports fell $4.7 billion, or 2.6%, while imports increased $2.4 billion, or 0.9%.
• According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.534 per gallon on November 28, $0.114 per gallon below the prior week’s price but $0.154 higher than a year ago. Also as of November 28, the East Coast price decreased $0.070 to $3.468 per gallon; the Gulf Coast price fell $0.106 to $2.915 per gallon; the Midwest price declined $0.145 to $3.374 per gallon; the West Coast price dropped $0.187 to $4.592 per gallon; and the Rocky Mountain price decreased $0.097 to $3.539 per gallon. Residential heating oil prices averaged $5.147 per gallon on November 28, $0.284 below the previous week’s price but $1.784 per gallon more than a year ago.
• Claims for unemployment insurance declined during the last reporting period. For the week ended November 26, there were 225,000 new claims for unemployment insurance, a decrease of 16,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 19 remained at 1.1%. The advance number of those receiving unemployment insurance benefits during the week ended November 19 was 1,608,000, an increase of 57,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended November 12 were Puerto Rico (2.1%), Alaska (2.0%), New Jersey (2.0%), California (1.8%), New York (1.4%), Massachusetts (1.3%), Montana (1.3%), Rhode Island (1.3%), Minnesota (1.2%), Washington (1.2%), and Oregon (1.2%). The largest increases in initial claims for unemployment insurance for the week ended November 19 were in Illinois (+6,586), California (+4,423), Georgia (+3,717), Michigan (+3,031), and Minnesota (+2,896), while the largest decreases were in Montana (-318), North Carolina (-133), and Arkansas (-131).

Eye on the Week Ahead

The Producer Price Index for November is available at the end of this week. The PPI is a measure of the change in prices received by producers of goods and services, and is an indicator of inflation. October saw producer prices rise by 0.2%, which was below expectations. For the year, producer prices fell from 8.5% for the 12 months ended in September to 8.0% for the year ended in October.