Weekly Market Commentary – 12/23/2022

-Darren Leavitt, CFA

The S&P 500 incurred its third straight weekly loss as investors assessed the increasing likelihood of a global recession and its impact on current earnings estimates.  Markets also had to contend with a surprise move from the Bank of Japan that expanded its yield curve control policy in the 10-year JGB to +/- 50 basis points from +/- 25 basis points.  The BOJ left its policy rate at -.10%.  The tightening move put a massive bid into the Yen, which gained nearly 4% against the US Dollar and catalyzed a strong sell-off in US Treasuries.  The week saw Congress pass a 1.7 trillion dollar government funding bill that President Biden will sign into law this week. There was also plenty of economic data to digest throughout the week.

The S&P 500 lost 0.2% this week, the Dow gained 0.9%, the NASDAQ shed 1.9, and the Russell 2000 gave up 0.1%.  The US Treasury curve steepened, with the 2-year yield increasing by eleven basis points to 4.31% while the 10-year yield increased by twenty-seven basis points to 3.75%.   Oil prices increased by 7% or $5.29 to $79.60 a barrel.  Gold prices were little changed, advancing $3.20 to 1804.20 an Oz. Copper prices increased by $0.04 to $3.81 an Lb.

The housing market continued to cool even as Housing Starts and New Home sales data surprised to the upside.  Housing Permits and Existing Home Sales data were weaker than expected.  The third estimate of Q3 GDP came in much stronger than anticipated at 3.2%, with the GDP deflator increasing by 4.4%.  Personal Income and Spending came in line with expectations at 0.4% and 0.1%, respectively.  The Leading Economic Index was weaker than expected at -1% versus the consensus estimate of -0.5%.  Consumer Confidence and Sentiment data came in higher than anticipated at 108.3 and 59.7, respectively.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.