Weekly Economic Update – 12/14

The Week on Wall Street

A more benign reassessment of the possible economic risk posed by Omicron sent stocks sharply higher last week.

The Dow Jones Industrial Average picked up 4.02%, while the Standard & Poor’s 500 advanced 3.82%. The Nasdaq Composite index gained 3.61% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.74%.^1,2,3

Assessing Omicron

Though much is still unknown about the Omicron variant, reports of potentially milder health effects and the efficacy of booster shots ignited optimism that its economic impact would be less severe than originally feared.

Stocks rallied higher each of the first three days, with strong gains in many of the reopening stocks, such as airlines, travel and leisure, financials, and energy. The performance of high-valuation growth companies was a bit more erratic as they rose and fell sharply throughout much of the week. Weakening Thursday, stocks turned higher on Friday despite a hot inflation number, pushing the S&P 500 to a new record high.⁴

Inflation Factor

November’s Consumer Price Index (CPI) came in at a nearly 40-year high, rising 0.8% from the previous month and 6.8% from a year ago. It is the 6th-consecutive month that inflation has exceeded 5%. Core inflation (excluding the more volatile food and energy prices) came in lower, but still posted its sharpest jump since 1991.⁵

Economists have attributed this elevated inflation rate to strong consumer demand, a shortage of goods due to supply chain constraints, and strong wage growth. How long this high level of inflation persists is unknown, but the Fed has begun considering policy steps to manage it.

T H E W E E K L Y R I D D L E

I never ask you questions, yet you answer me all the time. What am I?

LAST WEEK’S RIDDLE: You sit down to play chess. Out of the 16 pieces you have at your disposal, how many of them could be used to make your first move?

ANSWER: 10 (eight pawns and two knights).

Posted on December 13, 2021

Update your will. It is just as important as having one. If you drafted a will years ago, the information is likely in need of some adjustments. Be sure to revisit your will often and keep it up to date.

Market Index	Close	Week %	YTD %
DJIA	35,970.99	+4.02%	+17.53%
NASDAQ	15,630.60	+3.61%	+21.28%
S&P 500	4,712.02	+3.82%	+25.45%
Treasury	Close	Week %	YTD %
10 Year Note	1.48%	+0.13%	+0.55%

Sources: wsj.com, treasury.gov –

Citations

CITATIONS:

The Wall Street Journal, December 10, 2021
The Wall Street Journal, December 10, 2021
The Wall Street Journal, December 10, 2021
CNBC, December 10, 2021
The Wall Street Journal, December 10, 2021

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