Weekly Recap | December 27, 2022

December 19-23, 2022 Recap

S&P 500 Declines Third Week

Rate and Recession Fears Abound
U.S. stocks ended mostly lower last week with the S&P 500 and Nasdaq Composite recording their third consecutive weekly declines. The Dow Industrials ended the final full trading week of the year with a modest gain.  Investor sentiment remains challenged by worries over the future outlook for interest rates and the increased likelihood of a 2023 recession. Late Friday, the U.S. House passed a $1.7 Trillion spending bill, mainly along a 225-201 party-line vote, that funds the government through September 2023 and averted a Christmas Eve partial government shutdown. The U.S. Senate previously passed the legislation in a 68-29 vote.

For the Week…
The S&P 500 slipped 0.21%, the Dow Jones Industrial Average gained 0.86%, and the tech-heavy Nasdaq Composite lost 1.93%. Value stocks outperformed with gains under 1% versus losses in growth stocks.

Consumer Confidence Jumps
Consumer confidence bounced back in December, with the Conference Board’s key confidence index climbing sharply to 108.3 from 101.4 in November. After consecutive declines in October and November, the index now stands at its highest level since April. Similarly, the Expectations Index improved to 82.4 from 76.7, led by falling gas prices and declining inflation expectations.

Energy Again Dominates Gainers
Only four of the 11 major S&P 500 sector groups posted losses last week. Energy (+4.44%), Utilities (+1.45%), and Financials (+1.40%) led the way, while Consumer Discretionary (-3.10%), Technology (-2.02%), and Communication Services (-0.39%) fell the most. Energy is poised to end 2022 with the most substantial gains, up 64.73% YTD as of Friday, December 23.

Treasury Yields Climb
The 10-year U.S. Treasury notes yield surged over 0.26% to end the week at 3.747%. U.S. WTI crude oil futures surged over 7% this week to end Friday at $79.56/barrel, up $5.27 for the week.

The Latest from @CeteraIM

Personal Consumption Rises

Megacap Dominance Fades

Jobless Claims Inch Upward

Economic Calendar

Monday, December 26
Christmas Day Holiday, All Markets Closed.

Tuesday, December 27
Goods-only Trade Balance, S&P Case-Shiller Home Prices.

Wednesday, December 28
Mortgage Activity. Pending Home Sales.

Thursday, December 29
Jobless Claims.

Friday, December 30
Chicago PMI.

The Leading Economic Index (LEI) fell 1% in November, declining for the ninth straight month. The LEI is 4.5% lower year-over-year. Declines of this magnitude occurred either right before or during the last eight U.S. recessions. The outlook for the economy is weak based on leading indicators.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}