Recession fears and concerns that the Fed may consider a longer rate-hike cycle sent stocks lower for the week.
The Dow Jones Industrial Average dropped 2.77%, while the Standard & Poor’s 500 fell 3.37%. The Nasdaq Composite index lost 3.99% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 1.09%.1,2,3
Stocks were under pressure much of the week due to resurgent recession fears and concerns that Fed rate hikes may go higher for longer than current expectations. There was some good news last week on the economic front and out of China, which started to loosen COVID restrictions. But it was a week where good news was considered bad news, as any signs of economic resilience stoked worries of a longer rate-hike cycle.
Higher continuing jobless claims signaled economic softness, triggering a Thursday rally. But stock prices were under pressure Friday following a disappointing Producer Price Index (PPI) number.
Producer Inflation Disappoints
The Labor Department reported that the PPI rose 0.3% in November and 7.4% from a year ago. Though wholesale prices inflation rose at the slowest 12-month pace since May 2021, they exceeded market expectations. Price pressures were felt most in the services sector, where costs rose 0.4% after a 0.1% increase the month before. Goods inflation eased to a rise of 0.1%, a sharp drop from its October gain of 0.6%.4
Though the PPI number dented the optimism around cooling inflation, November’s PPI report represented an improvement from its 11.7% peak in March.5
This Week: Key Economic Data
Tuesday: Consumer Price Index (CPI).
Wednesday: Federal Open Market Committee (FOMC) Meeting Announcement.
Thursday: Jobless Claims. Retail Sales. Industrial Production.
Friday: Purchasing Managers’ Index (PMI) Composite.
Source: Econoday, December 9, 2022
This Week: Companies Reporting Earnings
Thursday: Adobe, Inc. (ADBE).
Friday: Darden Restaurants, Inc. (DRI).
Source: Zacks, December 9, 2022
"The winter of the spirit must be journeyed through, and it must not only be conquered but the benefits used. Yet without it maturity cannot arrive."
– Jane Roberts
Traveling for Work? Here’s What You Need to Know About Business-Related Travel Deductions
Business travel deductions are available when employees travel away from their tax home or principal place of work for business reasons. The travel period must be substantially longer than an ordinary day's work, and a need for sleep or rest to meet the demands of the work while away.
Some examples of deductible travel expenses include:
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
Footnotes and Sources
2. The Wall Street Journal, December 9, 2022
3. The Wall Street Journal, December 9, 2022
4. CNBC, December 9, 2022
5. CNBC, December 9, 2022
6. IRS.gov, August 8, 2022
7. Yoga Basics, March 11, 2021
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Weekly Market Insights: Stocks Slide on Recession Concerns
December 12, 2022|