Weekly Recap | November 28, 2022

November 21-25, 2022 Recap

Stocks See-Saw Positive

Fed Sees Progress in Slowing Inflation
U.S. stocks rebounded last week, more than fully retracing prior week losses after minutes from the Federal Reserve’s November policy meeting signaled policymakers would ratchet down its aggressive stance on rate hikes. The meeting minutes revealed that “a substantial majority of (Fed) participants judged that a slowing in the pace of increases would likely soon be appropriate.” A 0.50% interest rate increase in December is now widely expected, following four straight 0.75% prior increases.

For the Week…
The S&P 500 rose 1.56%, the Dow Jones Industrial Average advanced 1.78% and the tech-heavy Nasdaq Composite gained the least, up 0.73%. The S&P 500 bolstered its November MTD gain to 4.15% and its quarter-to-date advance to 12.59%.

Consumer Sentiment Weakens
The University of Michigan’s index of consumer sentiment fell to 56.8 in November from 59.9 in October. The 5.2% monthly decline offsets about one-third of sentiment gains from its historic low in June. Consumer views on the economy are weighed down mostly by rising borrowing costs, declining values on assets and weakening labor market expectations.

Leaderboard Headliner: Utilities
All 11 S&P 500 sector groups advanced last week, with Utilities (+3.15%), Materials (+2.98%) and Financials (+2.19%) gaining the most. Technology (+0.99%) and Energy (+0.26%) were the smallest gainers.

Treasury Yields Ratchet Lower
The yield on benchmark 10-year U.S. Treasury notes declined along with expectations of a less aggressive Fed rate hike outlook. The yield on 10-year Treasury notes declined to 3.686% on Friday from 3.813% the week prior.

The Latest from @CeteraIM

Air Travel Rises

Thanksgiving Dinner Inflation: +20%

Where Breadth is Strongest

Economic Calendar

Monday, November 28
No Major Releases.

Tuesday, November 29
S&P Case-Shiller Home Prices, Consumer Confidence.

Wednesday, November 30
Mortgage Activity, ADP Private Jobs, 3Q GDP Revision, JOLTS Job Openings, Goods Trade Balance, Chicago PMI, Pending Home Sales, Beige Book.

Thursday, December 1
Jobless Claims, Personal Consumption/PCE Prices, Construction Spending, S&P Global US Mfg PMI, ISM Mfg.

Friday, December 2
Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings.

Inflation hit a 40-year high this year, but the bond market is pricing in lower long-term inflation. The 5 and 10-year breakeven inflation rates are both around 2.3%, near the Fed’s long run target of 2%. The Fed is hiking interest rates at a fast clip, and they aren't done yet. Bond investors are confident that inflation will not stay high for long like it did in the 1970s.

^{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.}