John Hancock: Weekly Market Recap Week Ended January 14th

Price pressures

December marked the third month in a row in which the annual inflation rate topped 6.0% and the seventh straight month of inflation above 5.0%. The Consumer Price Index showed that prices surged 7.0% for the latest 12-month period—the highest level since 1982. Excluding the often-volatile categories of food and energy, the rate was 5.5%.

Dividend comeback

Many S&P 500 Index companies that cut dividends in response to the pandemic’s impact in 2020 increased their payouts to shareholders last year. Net dividend changes—factoring in decreases as well as increases—totaled nearly $70 billion on the positive side in 2021, compared with a net decline of about $41 billion in 2020, according to S&P Dow Jones Indices.

Fed chair’s outlook

At a congressional hearing on his nomination to a second term as chair of the U.S. Federal Reserve, Jerome Powell said that the U.S. economy is healthy, yet also needs tighter monetary policy to address high inflation. Powell reaffirmed plans for a series of interest-rate increases this year as well as continued tapering of the Fed’s bond-purchasing program.

Earnings worries

With quarterly earnings season just starting, Wall Street analysts expect companies in the S&P 500 to report a more than 20% increase in net income compared with the prior year’s fourth quarter, according to FactSet. Of the 20 companies that had reported as of January 12, a dozen cited labor costs and shortages as a negative factor that weighed on their quarterly results.

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