2022 | November 28

The Market

Stocks Fall

U.S. stock indexes posted weekly gains of around 1% to 2%, with the Dow and the S&P 500 again outpacing the NASDAQ to widen the latter index’s year-to-date underperformance gap versus its peers. With its latest weekly result, the S&P 500 has risen more than 12% from a recent low in mid-October.

Wednesday’s release of minutes from the most recent U.S. Federal Reserve policy meeting showed that most Fed officials were inclined to slow the pace of interest-rate increases. A “substantial majority” believed that a slowdown “would likely soon be appropriate,” according to the minutes from the Fed’s early November meeting. In each of the past four meetings, officials have approved rate hikes of three-quarters of a percentage point.

The price of U.S. crude oil fell nearly 5% in the latest week, trading below $77 per barrel on Friday after data showed that U.S. gasoline stocks rose more than expected. Oil was down more than 17% from a recent high of nearly $93 on November 3.

An index that measures investors’ expectations of short-term U.S. stock market volatility fell for the fifth week out of the past six. The CBOE Volatility Index (VIX) fell about 11% for the latest week; on Friday it was down about 40% from a recent high on October 11.

Concern about potential global supply-chain disruptions grew after China reported a surge in COVID-19 infections in Beijing and some other major cities. The rising case count from new COVID variants means that China’s government could bring back some of the tight public health restrictions that weighed on its economy earlier in the pandemic.

The short-term outlook for U.S. retail sales was mixed as of Black Friday, the unofficial start of the U.S. holiday shopping season. The National Retail Federation expected holiday sales during November and December to rise between 6% to 8% from last year. However, those figures would indicate a decline when factoring in the effect of inflation.

The U.S. dollar was little changed overall for the week versus a basket of major foreign currencies, interrupting a recent weakening of the greenback. As of Friday, the dollar had declined more than 5% from a recent high on November 3. The dollar has been weakened by indications that that U.S. Federal Reserve could slow the pace of interest-rate increases.

A monthly U.S. labor market update due out on Friday will show whether the strong—but moderating—jobs growth recorded in recent months extended into November. In October, the economy generated a better-than-expected 261,000 new jobs—down from 315,000 in September—while the unemployment rate rose to 3.7% from 3.5%.

Source: John Hancock Investment Management

Santa Pictures

Short Takes

The Federal Reserve’s pivot wasn’t the only interesting event last week. Here are some other occurrences that may prove to be of interest to investors.

A cure for the “Royal disease”. In the 1800s and early 1900s, royalty in Britain, Germany, Russia and Spain suffered from hemophilia, a genetic disorder that prevents blood from clotting. Last week, the U.S. Food and Drug Administration approved the first gene therapy treatment for hemophilia. The treatment, which is administered once, has a price tag of $3.5 million. Cell and gene therapies are expected to change the way disease is treated, but the price begs the question: Could Royals even have afforded it?

Ready, set, shop! About two-thirds of American holiday shoppers – and the National Retail Federation (NRF) anticipate that number will be more than 166 million this year – planned to shop in brick-and-mortar to stores over Thanksgiving weekend. More than a third were planning to go online on Cyber Monday. The NRF estimates sales will be up 6% to 8% over November and December. It remains to be seen how holiday deals will affect companies’ profits.

Pandemic redux. The number of daily COVID-19 cases in China reached a record high last week, affecting the cities of Beijing, Chongqing and Guangzhou. “Cities are once again expanding their testing efforts and building makeshift hospitals to quarantine the growing number of people who are infected. Though no city-wide lockdowns have been announced, the widespread restrictions are increasingly paralyzing economic activities, even as authorities pledge to make their responses more targeted and less disruptive,” reported Bloomberg News.

We hope you stay healthy and achieve all your shopping goals during the holidays!