In Markets "In a Nutshell"

Markets “In a Nutshell” for December 12, 2022

Investment Week at a Glance

Stocks finished lower for the week.  The Dow Jones Industrial Average fell (2.74%), the S&P 500 was down (3.45%), and the NASDAQ fell (3.98%). Foreign stocks (MSCI EAFE) were also down, falling (0.22%).  Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 3.57%.  (Data source: Wall Street Journal)

Slow Start to December

After a strong November, stocks and bonds were both down for the first full week of December.  The Dow Jones is still up nearly over 20% since its lows in October and just 9% away from a new all-time high. While the S&P 500 is still down 17% for the year, it is still 10% above the October lows.  Despite the fact that bond prices were down slightly for the week, the yield on the 10-year treasury of 3.57% is still well off the highs of over 4.2%.  The slow start in December can largely be attributed to a stronger than expected Producer Price Index (PPI).  Wholesale priced increased 0.03 for the month of October, and 7.4% from a year ago.  Market watchers will now turn their attention to the more closely watched Consumer Price Index (CPI) this Tuesday morning.

More Rate Hikes Ahead

The Federal Reserve is expected to raise rates again when they meet this Wednesday.  This would make the seventh rate hike this year.  The consensus is that the Fed will raise rates by 0.50% in comparison to the 0.75% hikes in each of the past 4 meetings.  Some say this could be a sign that the Fed could be reaching its’ target rate.  By raising rates by 0.50%, this would bring the benchmark borrowing rates to a target range of 4.25% to 4.5%.  Increasing rates makes borrowing more expensive for homes, automobiles, credit cards and student loans.  At the same time, those consumers who have liquid cash will see higher rates on savings.



Historically, what month is the most volatile month for the stock market? (Scroll Down for Answer)

  1.    January
  2.    April
  3.    October
  4.    December



























Answer below.



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3)    This is often referred to as the October Effect.  Some argue that the reason is because two of the largest declines in stock market history (1929 and 1987) occurred in October.