The markets close the week with a drop plus interest rate rises next year
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It was a story of two halves this week, with stocks rising at the start of the week before reversing course on Wednesday afternoon on hawkish sentiment from the Federal Reserve. As expected, the central bank raised interest rates by 50 basis points, bringing the interest rate on overnight loans to a target range between 4.25% and 4.5%. But what irritated the markets was Fed Chairman Jerome Powell’s indication that the Fed might continue raising rates longer to control inflation. The S&P 500 lost about 2.25% for the week, closing Friday down more than 1%. At the same time, the US government released its monthly Consumer Price Index (CPI) this week, showing that prices rose at a slower pace than expected for November, another sign that inflation may have eased. hit ceiling. But even with rising data points showing inflation easing, we think the Fed could still raise rates to 5.5% next year. The central bank needs to see inflation not just slow but recede, with a reduction in wage inflation paramount so the Fed can ease monetary policy. Under the hood, the consumer discretionary sector led lower this week, followed by financials and technology. Energy was the only sector to close higher for the week. Meanwhile, the US dollar index is holding just below the 105 level. The price of gold is holding at around $1,800 an ounce. West Texas Intermediate (WTI) crude prices are hovering around $74 a barrel, while the 10-year Treasury yield is hovering around 3.5%. Looking back No company in the portfolio reported earnings this week. On the macro front: Consumers cut spending in November, with retail sales falling 0.6%, the US Department of Labor reported Thursday. That was a steeper drop than the 0.3% drop. forecast by Wall Street. Also on Thursday, the Fed released data showing US factory output declined from June, by 0.2%. Initial jobless claims for the week ending December 10 came in at 211,000, a decrease of 20,000 from the previous week and below expectations of 232,000. What’s Coming Earnings season is drawing to a close and there will be no Club holdings reported next week. Here are some other earnings reports and economic numbers to watch in the coming week: Monday, December 19 After the bell: Heico Corp (HEI), Steelcase (SCS) Tuesday, December 20 Before the bell: General Mills (GIS) , FactSet (FDS), Embecta (EMBC) After the bell: Nike (NKE), FedEx (FDX), Worthington Industries (WOR), CalAmp (CAMP), BlackBerry (BB), AAR Corp (AIR) 8:30 am ET: Housing begins Wednesday, December 21 Before the bell: Carnival (CCL), Cintas (CTAS), Rite Aid (RAD), Toro Co (TTC) After the bell: Micron (MU), MillerKnoll (MLKN) 10:00 am ET : Existing Home Sales Thursday, December 22 Before the bell: Paychex (PAYX), CarMax (KMX), Apogee Enterprises (APOG) After the bell: Mission Produce (AVO) 8:30 am ET: Initial Jobless Claims 8:30 am ET: Gross Domestic Price Friday, December 23 8:30 am ET: Durable Goods Orders 8:30 am ET: Personal Income & Expenses 10:00 am ET: Home Sales New Trades (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR WAIVER. NO LIABILITY OR FIDUCIARY DUTY SHALL EXIST OR BE CREATED BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR BENEFIT IS GUARANTEED.
The Federal Reserve Building is seen before the Federal Reserve board is expected to signal plans to raise interest rates in March as it focuses on fighting inflation in Washington, on January 26, 2022.
Joshua Roberts | Reuters
It was a story of two halves this week, with stocks rising at the start of the week before turning around on Wednesday afternoon on hawkish sentiment from the Federal Reserve.