Holiday-Shortened Week – Monday Morning Market Memo – November 21, 2022

Holiday-Shortened Week – Monday Morning Market Memo – November 21, 2022

Beginning with a look at last week: The major stock market averages lost ground – the Dow Jones Industrial Average (holding up the best) dipped just .01% to 33,746 – the Standard & Poor’s 500 Index fell .7% to 3,965 – while the NASDAQ Composite (which fared the worst) dropped 1.6% to 11,146.  Sentiment in the market turned negative last week after Federal Reserve officials offered hawkish outlooks, indicating the Fed is not done raising rates/tightening monetary policy.

Federal Reserve Bank of Saint Louis President James Bullard stated, “the policy rate is not yet in a zone that may be considered sufficiently restrictive,” and indicated the appropriate zone for the federal funds rate could be in the 5 -7% range.  That range is higher than what the financial markets have been expecting, and the comments weighed on equity prices, and turned to the mood negative.

For a little housekeeping pertaining to the week ahead: The financial markets are closed Thursday in observance of Thanksgiving Day, and close early on Friday – with the stock exchanges ringing the closing bell at 1 p.m. and the bond market closing at 2 p.m.

Then it’s on to Black Friday, which marks the beginning of the holiday shopping season and is known as the busiest day for retailers.  According to the National Retail Federation, an estimated 166.3 million people are expected to shop from Thanksgiving Day through Cyber Monday, with overall holiday retail sales are expected to grow by 6-8% this year.  Beyond the health of the consumer, and corporate earnings, which in aggregate came in better-than-feared for the latest quarter, investors will continue to focus on inflation and interest rates.

Probabilities are over 85% the Federal Reserve will raise interest rates by ½ percentage point at their December 14th meeting, according to the CME FedWatch Tool.  Big picture, the market continues to be pushed and pulled by its outlook and interpretation of Federal Reserve monetary policy – so after a pause in this week’s trading for Thanksgiving – investors will return to watching for a pause in interest rate hikes!

All the best – Southport Station Financial Management, LLC