Recession fears and concerns that the Fed may consider a longer rate-hike cycle sent stocks lower for the week.
The Dow Jones Industrial Average dropped 2.77%, while the Standard & Poor’s 500 fell 3.37%. The Nasdaq Composite index lost 3.99% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 1.09%.1,2,3
Stocks were under pressure much of the week due to resurgent recession fears and concerns that Fed rate hikes may go higher for longer than current expectations. There was some good news last week on the economic front and out of China, which started to loosen COVID restrictions. But it was a week where good news was considered bad news, as any signs of economic resilience stoked worries of a longer rate-hike cycle.
Higher continuing jobless claims signaled economic softness, triggering a Thursday rally. But stock prices were under pressure Friday following a disappointing Producer Price Index (PPI) number.
Producer Inflation Disappoints
The Labor Department reported that the PPI rose 0.3% in November and 7.4% from a year ago. Though wholesale prices inflation rose at the slowest 12-month pace since May 2021, they exceeded market expectations. Price pressures were felt most in the services sector, where costs rose 0.4% after a 0.1% increase the month before. Goods inflation eased to a rise of 0.1%, a sharp drop from its October gain of 0.6%.4
Though the PPI number dented the optimism around cooling inflation, November’s PPI report represented an improvement from its 11.7% peak in March.5
This Week: Key Economic Data
Tuesday: Consumer Price Index (CPI).
Wednesday: Federal Open Market Committee (FOMC) Meeting Announcement.
Thursday: Jobless Claims. Retail Sales. Industrial Production.
Friday: Purchasing Managers’ Index (PMI) Composite.
Source: Econoday, December 9, 2022
This Week: Companies Reporting Earnings
Thursday: Adobe, Inc. (ADBE).
Friday: Darden Restaurants, Inc. (DRI).
Source: Zacks, December 9, 2022
Footnotes and Sources
2. The Wall Street Journal, December 9, 2022
3. The Wall Street Journal, December 9, 2022
4. CNBC, December 9, 2022
5. CNBC, December 9, 2022
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Berthel Fisher Market Insights 12-12-2022
December 12, 2022