By: Jeff Anderson, CFA
This Week: It was a rather volatile week for many companies. A number of high-flying technology stocks fell on hard times, sending some shares down 40% or more. You wouldn’t know it from looking at the returns of the major indices. The S&P 500 and Nasdaq indexes are dominated by a handful of large companies, and they have held up well. Apple’s market value is approaching $3 Trillion, essentially drowning out the noise from the smaller companies in theses indexes.
| Close | Weekly return | YTD return | |
| S&P 500 | 4,712.98 | 3.82% | 25.45% |
| Nasdaq | 15,630.6 | 3.61% | 21.28% |
| Russell 2,000 | 2,210.66 | 2.38% | 11.93% |
| US Treasury 10yr Yield | 1.488% |
Source: Wall St. Journal
Crude oil had a decent week, gaining nearly 9% to $72 per barrel, but well off its highs in October where it hovered around $82. Oil traded down to nearly $10 in April 2020 when the economy was shut down due to the pandemic. The dramatic increase in oil prices is more a function of return-to-normal price ranges.
This Issue:
- Market Update
- US Jobless Claims Fell to Lowest Level in Half a Century
- US Inflation Hits a Multi-Decade High in November
U.S. Jobless Claims Fell to Lowest Level in Half a Century
There’s a shortage of labor. The labor participation rate is almost 2% lower than pre-Covid. Economists have coined this period as “The Great Resignation”. People are leaving the workforce. Some are retiring, while others are taking time off in hopes of recharging their batteries and finding a better paying, more fulfilling career path. We could also call this post-Covid world “The Great Mobility” as many US workers were able to move thousands of miles away from their offices where they can reduce their cost of living or seek a more balanced lifestyle. Whatever the reasoning, it is increasingly harder for employers to find good employees, and when they do, it usually costs more.
US Inflation Hits a Multi-Decade High in November
The economic headlines have been dominated by inflation numbers for several months now. Despite the high reading, it was to be expected. Bond yields actually moved lower. Why is that? It’s all about expectations. Since the 6.8% print was not a surprise, there was nothing to spook the bond markets.
The broader indexes took this all-in stride, with the large cap indices all finishing higher on the day. Consumers are flush with cash and willing to spend. Unemployment is low. Wage gains are helping. Corporate profits, so far, are growing, meaning that they can pass along price increases. How much of consumer purchases is pulling forward future demand as people rush to buy goods that may cost more later remains to be seen.
