12/12: Weekly Economic Update from PMG Wealth Mgmt.2

December 12, 2022

THE WEEK ON WALL STREET

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 SLIDE

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

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Consumer Price Index (CPI) Composite.

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

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

______________________________________

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Thursday: Adobe, Inc. (ADBE).

Friday: Darden Restaurants, Inc. (DRI).

Source: Zacks, December 9, 2022

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Phil Guerrero, CFP®

President

Wealth Advisor

phil@pmgwealth.com

George Maroudas

Wealth Advisor

george@pmgwealth.com

Terry Maziarka

Client Service Manager

terry@pmgwealth.com

847.550.6100

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WEEKLY QUOTE

"The winter of the spirit must be journeyed through, and it must not only be conquered but the benefits used. Yet without it maturity cannot arrive."

Jane Roberts

WEEKLY TIP

Have you had the same internet passwords for years? Change them! In order to keep accounts secure, you should change your passwords often, never share or write them down, and make them difficult. Never use your birth or anniversary dates as a password.

WEEKLY RIDDLE

What item binds two people yet touches only one?

LAST WEEK'S RIDDLE

A train moving as fast as it can go strikes a man's hand, yet he is uninjured, and the train goes off its tracks. Under what circumstances could this happen?

ANSWER: The train that strikes the man is a toy train running around on a model set.

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All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.

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CITATIONS:

1. The Wall Street Journal, December 9, 2022

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