Recession Concerns, Fed Talk Keep Stocks Cold

Recession Concerns, Fed Talk Keep Stocks Cold

December 19, 2022
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Hawkish comments by the Fed and weak economic data heightened investors’ recession concerns and sent stocks lower last week.

The Dow Jones Industrial Average lost 1.66%, while the Standard & Poor’s 500 retreated 2.08%. The Nasdaq Composite index declined 2.72% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.88%.1,2,3



Stocks Under Pressure

Stocks began the week on a positive note, supported by a cooler-than-expected Consumer Price Index (CPI) report. Stocks reversed direction mid-week, however, following the Federal Open Market Committee (FOMC) meeting in which another 0.5% rate hike was announced.

The half-point increase was widely anticipated, but the increase in the terminal rate (i.e., the point at which the Fed stops raising rates) rattled investors. Continued hawkishness by Fed Chair Powell at the post-meeting press conference added to investors’ anxiety. The potential for higher rates for longer, along with disappointing economic data, particularly a sharp decline in retail sales, amplified fears of a recession and sent stocks lower for the remainder of the week.

Inflation and the Fed

The release of November’s CPI showed inflation cooling for the second consecutive month, as prices rose just 0.1% month-over-month and 7.1% from a year ago. Both were better than expected.4

The FOMC ended its last meeting of 2022 by raising interest rates another 0.5% and signaling that it would likely continue to hike rates into the new year. At a subsequent press conference, Fed Chair Powell commented that the next rate increase could be a quarter-percentage point. Most FOMC members appear to support raising the terminal rate (the point at which hikes end) to above 5%, up from its September projection of 4.6%.5  

This Week: Key Economic Data

Tuesday: Housing Starts.

Wednesday: Consumer Confidence. Existing Home Sales.

Thursday: Jobless Claims. Gross Domestic Product (GDP). Index of Leading Economic Indicators.

Friday: New Home Sales. Durable Goods Orders. Consumer Sentiment.

Source: Econoday, December 16, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: FedEx Corporation (FDX), Nike, Inc. (NKE), General Mills, Inc. (GIS).

Wednesday: Micron Technology, Inc. (MU).

Source: Zacks, December 16, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


Keep Well-Organized Records Until Period of Limitations Expire

Well-organized recordkeeping makes it easier to prepare your tax return and provide evidence of tax deductions. According to the IRS, You must keep records, such as receipts, canceled checks, and other documents that support an item of income, a deduction, or a credit appearing on a return as long as they may become material in the administration of any provision of the Internal Revenue Code. Depending on the assessment, these periods of limitation can range from 3 years to no limit.

There are also periods of limitations for refund claims, which range from 2 years to 7 years. The IRS recommends keeping records of property records, healthcare insurance, and business income and expenses, among other categories.6

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.


How to Start Journaling

Journaling has many potential benefits, from increased focus to more detailed goal-setting. Want to pick up the habit of journaling but need help figuring out where to start? Here are some tangible tips to get you started:

  • Start small. Sometimes, the idea of starting a whole new journal can be overwhelming. Start by writing just one prompt or setting a timer for 2 minutes.

  • Pick the simplest tools, and pick tools you love. You’re more likely to enjoy journaling if you enjoy the journal and pen themselves!

  • Depending on your journaling style, you can either start with a prompt or start with free writing. Free writing is the act of writing whatever comes to mind.

  • Let it all out and write without censoring yourself. One tip: try writing as fast as possible, so you don’t have time to edit! 7


Gingerbread Loaf

Servings: 8

Time: 60 mins

Ultra moist, perfectly spiced holiday gingerbread loaf with rich cream cheese frosting!

Ingredients:

  • 1 ½ cups flour
  • 2 teaspoons ground cinnamon
  • 1 teaspoon ground cloves
  • 2 ¼ teaspoons ground ginger
  • 1 teaspoon salt
  • 1 teaspoon baking soda
  • ½ cup butter, softened
  • 1 cup sugar
  • 1 cup unsweetened applesauce
  • frosting
  • 3 tablespoons butter
  • 3 cups powdered sugar
  • 2 ounces cream cheese
  • 1/2 teaspoon vanilla
  • 4-6 tablespoons milk

Directions:

  1. Preheat oven to 350 degrees. Line a 9×5 inch bread pan with nonstick foil and spray with nonstick spray. 
  2. In a medium bowl whisk together flour, cinnamon, cloves, ginger, salt, and baking soda. In a large bowl cream together butter, sugar, and applesauce. 
  3. Add dry ingredients to wet ingredients and mix until blended. Pour mixture into prepared baking pan. Bake for 45-55 minutes until a toothpick inserted into the center comes out clean. Allow to cool on a cooling rack. 
  4. For the frosting, in a medium bowl cream together butter, cream cheese, powdered sugar, vanilla, and milk until smooth and spreadable. Spread over cooled gingerbread loaf. Allow to set up for 1 hour (or if you can’t wait you can serve it immediately, but I like it best when the frosting has a chance to set up a bit!). Store in airtight container.





Footnotes and Sources


1. The Wall Street Journal, December 16, 2022

2. The Wall Street Journal, December 16, 2022

3. The Wall Street Journal, December 16, 2022

4. CNBC, December 13, 2022

5. The Wall Street Journal, December 14, 2022

6. IRS.gov, August 8, 2022

7. Healthline, February 22, 2022


Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2022 FMG Suite.

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