Winthrop Partners’ Market and Economic Update 10-20-21

The Markets (as of market close December 17, 2021)

Omicron, escalating prices, and the tightening of monetary policy by central banks in the United States and around the world took center stage last week. The prospect of higher interest rates in 2022 could make it less appealing to own riskier investments. All of the stock market indexes ended the week in the red, with the tech-heavy Nasdaq taking the biggest hit. Ten-year Treasury yields fell 8 basis points, and the price of gold increased, as some investors took a more defensive stance. The dollar rose and crude oil prices fell, albeit slightly.

Worries about the fast-spreading COVID-19 variant caused U.S. stocks to fall back from a record high on Monday. The Nasdaq and the Russell 2000 led the retreat, both falling 1.4%, while the S&P 500 and the Dow fell 0.9%. The Global Dow was flat. Ten-year Treasury yields dropped to close at 1.42%, and crude oil prices declined slightly, while the dollar advanced. The market sectors were also mixed, with real estate, utilities, and consumer staples showing strength, while energy, consumer discretionary, and information technology lagged.

Stocks dropped again last Tuesday, as a larger-than-expected jump in producer prices caused investors to fret about the potential for more aggressive Fed action against inflation. The Nasdaq posted the largest loss (-1.1%), followed by the Russell 2000 (-1.0%), the S&P 500 (-0.8%), the Dow (-0.3%), and the Global Dow (-0.2%). Crude oil prices slipped after the International Energy Agency announced that the global oil market has returned to surplus due to fast-spreading Omicron and the resulting reduction in oil demand.

On Wednesday, news that a more hawkish Federal Reserve now expects to wind down stimulus and raise interest rates more rapidly than previously thought was well received by investors. Each of the benchmark indexes listed here posted gains, led by the Nasdaq, which bounced back 2.2%. The Russell 2000 gained 1.7%, followed by the S&P 500 (1.6%), the Dow (1.1%), and the Global Dow (0.3%). The 10-year Treasury yield inched up to 1.46%.

A sharp drop in the shares of large technology companies dragged the U.S. stock market lower last Thursday. The Nasdaq dropped 2.5%, marking the fourth consecutive day that prices swung more than 1% in either direction. The Russell 2000 (-2.0%), the S&P 500 (-0.9%), and the Dow (-0.1%) also fell, while the Global Dow rose (1.0%). Information technology and consumer discretionary suffered the largest declines. Despite losses in the major benchmark indexes, 8 of the market’s 12 sectors saw gains, led by financials and materials. Treasury yields ticked down, the dollar weakened, and crude oil prices rose.

Equities generally closed lower after a volatile week on Friday. The Russell 2000 stood out by posting a 1.0% gain. The Dow declined 1.5%, followed by the S&P 500 (-1.0%) and the Global Dow (-0.9%). The Nasdaq was flat. Treasury yields dipped, crude oil prices dropped, and the dollar advanced. All of the market sectors lost ground, with financials (-2.3%) and energy (-2.2%) tumbling the furthest.

The national average retail price for regular gasoline was $3.315 per gallon on December 13, $0.026 per gallon less than the prior week’s price but $1.157 higher than a year ago. Gasoline production increased during the week ended December 10, averaging 10.0 million barrels per day. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended December 10 — 115,000 barrels per day less than the previous week’s average. Refineries operated at 89.8% of their operable capacity, the same level as the prior week.  Click here for full article: Winthrop Partners Market and Economic Update 12-20-21