Weekly Market Commentary – 11/25/2022

-Darren Leavitt, CFA

Investors pushed US equities and Treasuries higher in light volume trade. The holiday-shortened week was packed with all kinds of news.

A spike in Covid cases in China increased lockdown measures and brought their major cities to a standstill. Protests within China’s “Apple City” increased concerns regarding Apple’s supply chain, which will likely lead to lower-than-expected holiday sales of higher-end iPhones.

In other corporate news, Disney announced Bob Chapek’s resignation and Bob Iger’s return. Investors cheered the report and sent Disney shares higher. The tail end of earnings produced solid results from Deere and better-than-expected results from BestBuy and Abercrombie and Fitch.

In Europe, leaders debated a price cap on Russian oil. The issue was left unresolved, but most expect a price cap to come in around $65 to $70 a barrel. Russia has countered the notion of a price cap, saying it will not sell oil to any country involved with the sanction.

Economic news focused on the release of the Federal Open Market Committee’s notes. The notes did not produce any surprises and reiterated that the majority of the committee thought at some point it would be prudent to pull back to the pace of rate hikes. It’s already widely expected that the Fed will raise its policy rate by 50 basis points rather than 75 at the December 14th meeting. A downtick in PMI manufacturing and services data fostered the idea that the economy is slowing. Manufacturing fell into contraction with a preliminary reading of 47.6%, down from the prior month’s 50.4%. Services fell further into contraction with a print of 46.1% versus the previous reading of 47.8%. Initial claims ticked higher, coming in at 240k, while continuing claims increased to 1551k from the prior reading of 1503k. New home sales surprised to the upside coming in at 632k versus the consensus estimate of 555k. Durable Goods orders were also better, coming in at 1% on the headline and up 0.5% ex-autos. The final reading of the University of Michigan’s Consumer Sentiment survey showed an increase in sentiment to 56.8 from the prior level of 54.7.

The S&P 500 gained 1.5%, the Dow rose 1.8%, the NASDAQ increased by 0.7%, and the Russell 2000 added 1.1%. The US Treasury curve flattened as longer-tenured Treasury yields fell more than the front end of the curve. The 2-year yield fell by two basis points to 4.48%, while the 10-year yield fell by thirteen basis points to 3.69%. Oil prices continued to struggle, with WTI falling 4.5% or $3.64 to $76.42 a barrel. Gold prices increased by $4.70 to $1755.5 an Oz.  Copper prices were little changed, closing at 3.615 an Lb.

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.