Weekly Market Insights header image

Weekly Market Insights

The Markets (as of market close January 21, 2022)

Volatility has engulfed the markets this month and is showing no signs of letting up, impacted by a more hawkish Federal Reserve stance, economic disruptions from Omicron, and risks to company profits due to rising costs. Fourth-quarter 2021 corporate earnings season has begun with uneven results so far. Inflation continues to hover over investors as they anticipate a bump in interest rates for the first time in three years, with the first increase likely coming in March. Demand for 10-year Treasuries has driven prices higher, sending yields lower for the first time in five weeks. With last week's losses, both the Nasdaq and the Russell 2000 have declined nearly 12.0% in January. The Nasdaq is in correction territory, down over 10.0% from its November peak, hitting its lowest level since June 2021.

Wall Street continued its January swoon last Tuesday, falling lower to start the holiday-shortened trading week. The Nasdaq dropped 2.6%, recording its lowest close since October. The Russell 2000 fell 3.1%, the S&P 500 dipped 1.8%, the Dow declined 1.5%, and the Global Dow lost 1.1%. Investors continued to weigh the anticipated interest-rate hikes by the Federal Reserve, which meets this week. Ten-year Treasury yields jumped nine basis points to 1.86%. The dollar gained 0.5%. Crude oil prices rose to $85.89 per barrel. Among the market sectors, energy was the only gainer. Information technology (-2.5%), financials (-2.3%), and communication services (-2.0%) fell the most.

The slide continued for stocks last Wednesday. Each of the benchmark indexes listed here lost value. The Nasdaq extended losses, dropping more than 10.0% from a November high, falling into correction territory. The small caps of the Russell 2000 declined 1.5%, followed by the Nasdaq (-1.2%), the Dow and the S&P 500 (-1.0%), and the Global Dow (-0.8%). Ten-year Treasury yields dipped, despite projections that yields will cross the 2.0% threshold, possibly within the first six months of the year. The dollar also slipped lower. Crude oil prices continued to climb, reaching $86.50 per barrel. Consumer staples and utilities were the only market sectors to gain ground. Consumer discretionary and financials each fell 1.7%.

Higher-than-expected jobless claims didn't help investor confidence, as equities dipped lower again last Thursday. Dip buyers sent stocks higher earlier in the day, but the rally did not last as each of the benchmark indexes listed here gave back any gains to close in the red. The Russell 2000 (-1.9%) led the declines, followed by the Nasdaq (-1.3%), the S&P 500 (-1.1%), the Dow (-0.9%), and the Global Dow (-0.3%). Crude oil prices moved slightly lower on Thursday, down 0.7% to around $86.29 per barrel. Ten-year Treasury yields and the dollar crept higher.

Stocks fell again last Friday, with tech shares leading the sell off following shaky corporate earnings data. The S&P 500, which slid 1.9%, closed below its 200-day moving average for the first time since 2020. The Nasdaq dropped 2.7% and the Russell 2000 lost 1.8%. The Dow (-1.3%) and the Global Dow (-1.6%) also ended the day in the red. Ten-year Treasury yields, the dollar, and crude oil prices also declined to end the week.

Market/Index

2021 Close

Prior Week

As of 1/21

Weekly Change

YTD Change

DJIA

36,338.30
35,911.81 34,265.37 -4.58% -5.70%

Nasdaq

15,644.97

14,893.75 13,768.92
-7.55%

-11.99%

S&P 500

4,766.18

4,662.85 4,397.94 -5.68%

-7.73%

Russell 2000

 2,245.31 2,162.46

1,987.92

-8.07% -11.46%

Global Dow

4,137.63

4,293.85

4,145.33 -3.46%

 

0.19%

Fed. Funds target rate

0.00%-0.25%

0.00%-0.25%

0.00%-0.25%

0 bps

0 bps

10-year Treasuries

1.51%

1.77%

1.74%

-3 bps

23 bps

US Dollar-DXY

95.64

95.17

95.64

0.49% 0.00%

Crude Oil-CL=F

$75.44 $84.23 $84.76 0.63% 12.35%

Gold-GC=F

$1,830.30

$1,816.50 $1,831.60 0.83%

 

0.07%
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

  • According to the latest data from the Census Bureau, the number of building permits issued in December for privately owned housing units rose by 9.1% over the November estimate. Permits issued for single-family construction increased 2.0% in December. Overall, the number of building permits issued in 2021 was 17.2% above the 2020 figure. Housing starts also increased in December, climbing 1.4% higher than the November rate. Single-family housing starts in December were 2.3% below the November figure. Housing starts increased 15.6% in 2021 compared to the previous year. Housing completions dipped in December, falling 8.7% below the November total. However, single-family home completions increased 3.9% in December. For 2021, housing completions increased 4.0% compared to 2020.
  • Sales of existing homes broke a three-month series of gains, falling 4.6% in December. Year over year, existing home sales dipped 7.1%. According to the National Association of Realtors®, the December pullback was more attributable to supply constraints than weakened demand for housing. However, existing home sales may continue to slow in the coming months due to anticipated higher mortgage rates. Unsold inventory sits at a 1.8-month supply at the current sales pace, down from November's 2.1-month supply. The median existing home price for all housing types was $358,000 in December, up 1.2% from the November price of $353,900 and 15.8% above the December 2020 figure ($309,200). Sales of existing single-family homes also fell in December, down 4.3% from November's total and off 6.8% from a year ago. The median existing single-family home price in December was $364,300, 0.5% above the November price ($362,600) and 16.1% higher than the December 2020 price.
  • The national average retail price for regular gasoline was $3.306 per gallon on January 17, $0.011 per gallon more than the prior week's price and $0.927 higher than a year ago. The Gulf Coast price increased nearly $0.04 to $2.96 per gallon, the East Coast price increased more than $0.01 to $3.24 per gallon, and the West Coast price increased less than $0.01, remaining virtually unchanged at $4.16 per gallon. The Rocky Mountain price decreased nearly $0.02 to $3.33 per gallon, and the Midwest price decreased less than $0.01, remaining virtually unchanged at $3.11 per gallon. As of January 17, residential heating oil prices averaged almost $3.61 per gallon, nearly $0.15 per gallon above last week's price and $1.05 per gallon higher than last year's price at this time. Residential propane prices averaged nearly $2.73 per gallon, more than $0.02 per gallon above last week's price and more than $0.54 per gallon above last year's price.
  • For the week ended January 15, there were 286,000 new claims for unemployment insurance, an increase of 55,000 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 January 8 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 8 was 1,635,000, an increase of 84,000 from the prior week's level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended January 1, were Alaska (3.1%), Minnesota (2.8%), Kentucky (2.7%), New Jersey (2.6%), New York (2.6%), Rhode Island (2.5%), California (2.4%), Connecticut (2.4%), Massachusetts (2.3%), and Oregon (2.3%). The largest increases in initial claims for the week ended January 8 were in California (+11,295), New York (+10,639), Texas (+10,437), Kentucky (+8,476), and Missouri (+7,768), while the largest decreases were in Massachusetts (-2,079), Connecticut (-1,437), Michigan (-1,158), New Hampshire (-424), and Rhode Island (-424).

Eye on the Week Ahead

There's plenty of economic news to watch for this week. The first estimate of the fourth-quarter 2021 gross domestic product is out. The economy advanced at an annualized rate of 2.3% in the third quarter, well off the 6.7% growth rate in the second quarter. The December figures on personal income and spending are available this week. Personal income rose 0.4% in November, consumer spending advanced 0.6%, while prices for consumer goods and services climbed 0.6% for the month and 5.7% since November 2020. Aside from these important economic reports, all eyes will be focused on the Federal Reserve, which meets this week. It is expected that the Fed will continue to address rising inflation by further reducing stimulus and projecting interest-rate increases beginning this March.

 

The Markets (as of market close January 14, 2022)

Equities closed generally lower last week, with only the Global Dow ending the week in the black. Inflation, or more likely the Federal Reserve's response to rising prices, may have influenced investors. Markets are still adjusting to the anticipated tighter monetary policy from the Fed, which is planning on raising interest rates several times this year. The central bank is also considering reducing the size of its balance sheet, which means less demand for bonds. Ten-year Treasury yields ended the week flat. The dollar dipped lower, while crude oil prices rose nearly 7.0%, reaching $84.23 per barrel. Gold advanced, but remains marginally below its 2021 year-end price.

Stocks continued their slide last Monday, despite a marginal surge in tech shares. Several of the major indexes declined, with the Dow (-0.5%), the S&P 500 (-0.1%), the Russell 2000 (-0.4%), and the Global Dow (-0.2%) ending the day in the red. Only the Nasdaq was able to close ahead, but only by 0.1%. The Federal Reserve's monetary policy in response to rising inflation continued to dominate the market. Ten-year Treasury yields climbed higher as bond prices fell. Crude oil prices dropped to $78.43 per barrel. The dollar rose against a basket of currencies. Health care, communication services, and information technology were the only market sectors to advance.

Last Tuesday saw stocks rebound after Federal Reserve Chair Jerome Powell stated that the Fed would do whatever is needed to control rising inflation. Tech stocks followed Monday's increase with another strong performance, sending the Nasdaq up 1.4% on the day. The Russell 2000 jumped 1.1%, followed by the S&P 500 and the Global Dow (0.9%), and the Dow (0.5%). The dollar and 10-year Treasury yields fell, while crude oil prices rose to $81.42 per barrel. Energy, materials, communication services, and information technology led the market sectors.

Stocks closed last Wednesday generally higher, despite rising inflation. The benchmark indexes listed here posted gains, with the S&P 500 (0.3%) and the Nasdaq (0.2%) finishing ahead of the Dow (0.1%). Only the Russell 2000 failed to add value, closing down 0.5%. The Consumer Price Index rose 0.5% in December, ending 2021 with its largest annual increase in nearly 40 years, increasing the likelihood that the Federal Reserve will move to quell inflationary pressures. Ten-year Treasury yields dipped lower, as did the dollar. Crude oil prices rose to $82.70 per barrel.

The Nasdaq dropped 2.5% last Thursday amid tech stock losses. With the growing likelihood that interest rates will be rising soon, investors may be moving from growth shares to value stocks. Also last Thursday, investors saw an increase in weekly unemployment claims and wholesale price inflation. The S&P 500 fell 1.4%, the Russell 2000 dipped 0.8%, and the Dow slipped 0.5%. The Global Dow inched up 0.1%. Ten-year Treasury yields, the dollar, and crude oil prices slid lower. Consumer discretionary and information technology declined more than 2.0%.

Stocks were mixed last Friday, with the Nasdaq (0.6%), the Russell 2000 (0.1%), and the S&P 500 (0.1%) ending the day higher, while the Dow (-0.6%) and the Global Dow (-0.2%) closed lower. Crude oil prices, the dollar, and 10-year Treasuries climbed higher on the day. Fourth-quarter earnings reports from a few major banks were released last week, with mixed results. A slew of banks and financial companies will be reporting their fourth-quarter earnings data this week.

Market/Index

2021 Close

Prior Week

As of 1/14

Weekly Change

YTD Change

DJIA

36,338.30
36,231.66 35,911.81 -0.88% -1.17%

Nasdaq

15,644.97

14,935.90 14,893.75
-0.28%

-4.80%

S&P 500

4,766.18

4,677.03 4,662.85 -0.30%

-2.17%

Russell 2000

 2,245.31 2,179.81

2,162.46

-0.80% -3.69%

Global Dow

4,137.63

4,232.87

4,293.85 1.44%

 

3.78%

Fed. Funds target rate

0.00%-0.25%

0.00%-0.25%

0.00%-0.25%

0 bps

0 bps

10-year Treasuries

1.51%

1.77%

1.77%

0 bps

26 bps

US Dollar-DXY

95.64

95.75

95.17

-0.61% -0.49%

Crude Oil-CL=F

$75.44 $78.95 $84.23 6.69% 11.65%

Gold-GC=F

$1,830.30

$1,795.30 $1,816.50 1.18%

 

-0.75%
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

  • Inflationary pressures continued to increase in December. According to the latest data, the Consumer Price Index rose 0.5% last month after increasing 0.8% in November. The CPI advanced 7.0% in 2021, the highest annual increase since 1982. Food prices rose 0.5% in December (6.3% for the year). Energy prices dipped 0.4% last month, but increased 29.3% in 2021, led by a 49.6% rise in gasoline prices. December saw prices increase for new vehicles (1.0%) and used cars and trucks (3.5%). For 2021, automobile prices rose markedly, with new vehicle prices advancing 11.8%, while prices for used cars and trucks climbed 37.3%. A rise in prices for apparel (1.7%) and shelter (0.4%) also contributed to the increase in the December CPI.
  • The Producer Price Index increased 0.2% in December after climbing 1.0% in November. The PPI moved up 9.7% in 2021, the largest calendar-year increase since data was first collected in 2010. A 0.5% increase in prices for services drove the overall December increase, as prices for goods decreased 0.4%. Over half of the December advance in prices for services is attributable to margins for final demand trade services, which moved up 0.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the December decline in goods prices was a decrease in energy prices, which fell 3.3%. Prices for foods fell 0.6% in December.
  • Retail sales fell 1.9% in December after advancing 0.2% in November. Nevertheless, retail sales rose 19.3% in 2021. Weakness in sales was broad-based in December, with only a few exceptions. Last month saw clothing and clothing accessories stores sales dip 3.1%, motor vehicle and parts dealers sales fall 0.4%, and nonstore (online) sales drop 8.7%. Many factors may have contributed to the decrease in December sales, including lack of inventory and reluctance to spend on big-ticket items that were not discounted; some shoppers may have started their buying earlier than usual. While December sales may have dropped off, most businesses saw sales increase in 2021 compared to the previous year's totals. Sales for motor vehicle and parts dealers rose 23.6%, furniture and home furnishings sales increased 26.4%, electronics and appliance stores sales rose 25.2%, clothing and clothing accessories stores sales jumped 48.4%, and gasoline stations sales advanced 36.6%.
  • Both import and export prices surprisingly declined in December. Import prices fell 0.2% after advancing 0.7% in November, as lower fuel prices more than offset higher nonfuel imports. Despite the December drop, import prices increased 10.4% for 2021, the largest calendar-year rise since import prices increased 10.6% in 2007. Export prices dropped 1.8% last month after increasing 1.0% in November. The December decline in export prices was the largest one-month drop since a 3.5% price decline in April 2020. Export prices rose 14.7% from December 2020 to December 2021, marking the largest calendar-year increase since data was first published in 1984.
  • Industrial production declined 0.1% in December. Losses of 0.3% for manufacturing (+3.5% for 2021) and 1.5% for utilities were mostly offset by a gain of 2.0% for mining. For the fourth quarter as a whole, total industrial production rose at an annual rate of 4.0%. Total industrial production in December was 3.7% higher than it was at the end of 2020 and 0.6% above its pre-pandemic (February 2020) reading.
  • The federal budget deficit was $21.3 billion for December. Government receipts were $486.7 billion, while outlays totaled $508.0 billion. The total government deficit through the first three months of fiscal year 2022 is $377.7 billion, $195.2 billion lower than the deficit over the same period in fiscal year 2021.
  • The national average retail price for regular gasoline was $3.295 per gallon on January 10, $0.014 per gallon more than the prior week's price and $0.978 higher than a year ago. Gasoline production increased during the week ended January 7, averaging 8.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ended January 7 — 293,000 barrels per day less than the previous week's average. Refineries operated at 88.4% of their operable capacity.
  • For the week ended January 8, there were 230,000 new claims for unemployment insurance, an increase of 23,000 from the previous week's level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 1 was 1.1%, a decrease of 0.2 percentage point from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended January 1 was 1,559,000, a decrease of 194,000 from the prior week's level, which was revised down by 1,000. This is the lowest level for insured unemployment since June 2, 1973, when it was 1,556,000. States and territories with the highest insured unemployment rates for the week ended December 25, 2021, were Alaska (3.2%), Minnesota (2.6%), California (2.5%), New Jersey (2.4%), Illinois (2.3%), New York (2.3%), Massachusetts (2.1%), Rhode Island (2.1%), Connecticut (2.0%), and Oregon (1.9%). The largest increases in initial claims for the week ended January 1 were in New York (+8,812), Pennsylvania (+6,772), Connecticut (+6,020), Washington (+4,626), and Michigan (+3,923), while the largest decreases were in Missouri (-1,086), Tennessee (-674), Puerto Rico (-329), Rhode Island (-288), and New Mexico (-101).

Eye on the Week Ahead

This week's economic news focuses on the housing sector, with the December data on housing starts and existing home sales. The number of building permits rose 3.6% in November, while housing starts jumped 11.8% — both signs that new home construction is on the upswing. Sales of existing homes have also been on the rise since September 2021. November saw existing home sales increase 1.9%, another indication that the demand for housing is solid.

 

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2022.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

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