Market Watch: Dec. 17

U.S. indexes ended modestly lower on Tuesday after Labor Department data showed the producer price index for final demand in the 12 months through November shot up 9.6%, its largest gain since November 2010. That followed an 8.8% increase in October. In Canada, the TSX dropped 100 points, once again on declining crude prices.

U.S. stocks climbed Wednesday after Fed officials approved plans to increase the pace of the central bank’s tapering efforts. The move to respond to high inflation clears a path for interest-rate hikes beginning in the spring. By Wednesday’s close, the Dow jumped 383 points, while the S&P 500 and Nasdaq rose 76 and 328 points, respectively. In Canada, the TSX added 120 points. In economic news, U.S. retail sales rose by a seasonally adjusted 0.3% in November, slightly off from October’s pace. In Canada, the country’s inflation rate remained at 4.7% in November, matching October’s number.

U.S. stocks fell Thursday as weakness in prominent tech names dragged down the three major indexes. The Nasdaq took the biggest hit, dropping 385 points, while the Dow and S&P 500 were off 30 and 41, respectively. In Canada, the TSX dropped 29 points.

North American Markets Lose Ground

For the four trading days covered in this report, the Dow lost 73 points to close at 35,898, the S&P 500 dropped 43 points to settle at 4,669, while the tech-heavy Nasdaq plunged 450 points to close at 15,180. In Canada, the TSX declined 150 points to end at 20,740.

Strategy

First time applications for U.S. state unemployment benefits rose to 206,000 for the week ending Dec 11th

First time applications for U.S. state unemployment benefits increased by 18,000 from the previous week’s revised level, while continuing claims, reported on a one-week lag, recorded a new pandemic-era low of 1.845 million (1.943 million expected), a decrease of 154,000. Although initial claims rose from last week’s 52-year low, recent readings have been particularly volatile due to challenges around adjusting the data for seasonal factors during the holidays. Still, the trend since the beginning of the year shows a broader improvement in the labour market as easing restrictions and the broader economic reopening have prompted employers to ramp up hiring in order to meet robust consumer demand. Despite pronounced wage increases, however, employers have struggled to hire and retain new workers as worker shortages persist and the labour market remains tight. In its latest meeting, the Fed had attributed broad improvements in employment data as one of the reasons for doubling the pace of its asset purchase reduction, however, the new Omicron variant threatens to disrupt further progress in the labour market as certain states have seen an uptick in Covid-related hospitalizations.

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by Scotia Wealth Management - The Zukiwsky Group

Market Watch: Dec. 17

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