John Hancock: Weekly Market Recap Week Ended December 16th

Tightening trend

The U.S. Federal Reserve had plenty of company in lifting interest rates by a half percentage point, as central banks in the European Union, the United Kingdom, and Switzerland also raised borrowing costs by the same amount. The U.K.’s Bank of England said that it believes the economy is in a recession.

Shopping slowdown

A worse-than-expected U.S. retail sales report weighed on stocks on Thursday and added to fears that further interest-rate increases could tip the economy into a recession. Sales fell 0.6% in November, reversing course from the previous month’s gain and recording the biggest decline in 11 months.

2022 earnings

Entering the final two weeks of the year, Wall Street analysts expect that 2022’s earnings growth rate for S&P 500 companies will average 5.1%, according to FactSet. If that year-over-year forecast is achieved, it would mark a big slowdown from 2021’s growth rate of 47.9%. Over the past 10 years, earnings growth has averaged 8.5%.

Price check ahead

A report scheduled to be released on Friday will be closely watched for any signs that U.S. inflation continued to moderate in November. The government will update its Personal Consumption Expenditures Price Index, the Fed’s preferred gauge for tracking inflation. The most recent report showed that PCE inflation excluding food and energy prices rose 5.0% in October from a year earlier, down from 5.2% the previous month.

Source: https://wmr.jhinvestments.com/