Stocks managed to rally on light volume ahead of the long holiday weekend.
Reliable information about inflation (opens in new tab) calmed traders’ nerves, which had been rattled by the Federal Reserve’s relentless hiking policy in December interest rates (opens in new tab). However, there are not many market participants at this time of year, making it difficult to develop conclusions about what measures of equity value are doing.
That’s especially true this year, given that the stock market will be closed (opens in new tab) Christmas Monday, which falls on the weekend of 2022.
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Mainly, economic data on durable goods and inflation led the session on Friday.
As for the former, the Ministry of Commerce reported durable goods (opens in new tab) orders fell by 2.1% in November, which is significantly less than economists’ forecast for a 0.6% drop. We also saw the release of the Fed’s preferred measure of inflation known as Price index of personal consumption expenditures (opens in new tab) (PCE).
The last report showed that inflation slowed in November (opens in new tab) to a price increase of 5.5% compared to the previous month. This was in line with economists’ forecasts and represented a slowdown compared to October’s monthly price growth of 6.1 percent. Any data suggesting the Fed is managing to tame the worst inflation in four decades is largely welcomed by the market, which is desperate for the central bank to slow its policy interest rate increases (opens in new tab).
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In less bullish news, the PCE report also showed this consumption (opens in new tab) it rose by just 0.1% in November, a slowdown from October’s 0.9% growth. The figure unsettled at least some market participants as it could signal a potential slowdown in consumer spending.
“The personal income and expenditure report in November was close to what markets expected, although spending was relatively weak in both nominal and real terms,” wrote Eugenio J. Aleman, chief economist at Raymond James (opens in new tab). “The report was consistent with the weak retail sales report earlier this month, where we saw a very weak footprint for goods spending and a relatively strong footprint for services spending.”
At the final bell, a blue chip Dow Jones Industrial Average added 0.5% to end at 33,203, while wider S&P 500 increased by 0.6% to 3,844. Technologically difficult Nasdaq Composite increased by 0.2% to 10,497.
The best bear market ETFs to buy
With just a few trading days until 2022, the stock market is almost certain to record its worst annual performance since 2008. All three major market benchmarks entered falling markets, falling stocks, falling prices (opens in new tab) territory this year, and it is not known when they will withdraw from it.
But as unpleasant as it may be, bear markets are natural and inevitable – and surviving a bear market (opens in new tab) it doesn’t have to be all that complicated. Whether we’re talking about the best stocks for a bear market (opens in new tab)the best defense Dividend shares Dov (opens in new tab) or even actions picked up by artificial intelligence (opens in new tab)investors have no shortage of damage mitigation strategies.
Most importantly, investors need to be diversified, and that’s where exchange-traded funds come in. Be sure to check it out the best ETFs to fight bear markets (opens in new tab) as you set your allocations for 2023.