Holiday-Shortened Week – Monday Morning Market Memo – December 20, 2021

Holiday-Shortened Week – Monday Morning Market Memo – December 20, 2021

Good morning,

The financial markets will be closed this Friday (the 24th), in observance of Christmas Day. Before the long holiday weekend however, investors will be busy with a full plate. Economic data out this week includes November’s read on Leading Indicators, PCE Price Index (inflation), Consumer Confidence, Personal Income & Personal Spending, Existing-home Sales, New-home Sales, and Durable Goods Orders. We’ll also get a handful of notable earnings reports, with companies including Nike, Micron Technology, BlackBerry, Paychex, and General Mills reporting.

Markets will also continue to digest updated Federal Reserve Policy during the holiday-shortened week. The Fed clearly made a hawkish pivot last week (hawks are generally more willing to have higher interest rates to fight inflation). To this end, the Fed announced plans to speed up their reduction in asset purchases, which results in the program now ending earlier (in March instead of June). Further, the central bank is now penciling in three interest rate hikes for 2022, focusing more on combating inflation. In addition to news out of the Fed, investors have been monitoring developments with the pandemic – resulting in volatile trading last week.

For last week as a whole, the major stock market averages ended in negative territory – the Dow Jones Industrial Average fell 1.7% to 35,365, the NASDAQ Composite fared the worst, shedding 3% to 15,170, and the Standard & Poor’s 500 Index declined 1.9% to 4,621. Looking at an important earnings report from last week, as the company is considered by many to be an economic bellwether – shares of FedEx rose nearly 5% after both earnings and revenues came in better-than-expected.

Stocks opened lower this morning, with the major indices all down about 1.5%, as investors continue to wrestle with the Fed’s shift away from easy (stimulative) monetary policy and the jump in Covid cases. Add in the above data points to be released throughout the week and it will be an active few days before the long Christmas weekend!

All the best – Southport Station Financial Management, LLC