Broker Check

Market Update (December 2021)

December 18, 2021
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Omicron has continued to dominate the news cycles and worry the market. However, the beginning of December has also seen some positive economic news which in turn has helped bolster market returns.
 
Our last newsletter addressed two significant market drops driven by fears of the Omicron variant. Initial reports from early December indicated that symptoms may not be as severe as other COVID-19 variants. This news sent markets rocketing higher. 
 
Early December saw a mixed jobs report, with new job creation below expectations but also an unexpected sharp decline in unemployment, from 4.6% to 4.2%. Weekly unemployment claims continue to fall to the lowest levels in decades, while job openings remain historically high. Current openings top 11 million, while those actively looking for work number around 6 million – meaning we have nearly 5 million more open positions than people seeking work.
 
Markets were also strengthened over reports from the Federal Reserve (Fed) regarding interest rate increases. The markets had feared that the Fed would be too aggressive with rate hikes and volatility ensued. On December 15th, the Fed issued guidance that there would likely be 3 increases in 2022. That met expectations and the markets breathed a sigh of relief and posted solid gains.
 
Inflation continues to be a concern. November showed an increase to 6.8%%, which is the highest rate since 1982. November also marks the sixth month in a row that inflation topped 5%. However, if you exclude the volatile categories of food and energy, the inflation rate was 4.9% -- the highest rate since 1991.
 
As of December 15th, the markets all posted positive returns for the first half of the month. The Dow Jones Industrial Average (Dow) gained 1,444 points (4.19%), the S&P 500 grew by 143 points (3.13%) and the NASDAQ squeaked by with an increase of 28 points (0.18%).