Hello, this is Claire Ellerhorst, Senior Portfolio Manager at Fifth Third Bank with this week’s Economic Beat.
Major U.S. equity indices finished last week higher, with the S&P 500 Index exceeding its 200-day moving average for the first time since April and the Dow Jones Industrial Average exiting a bear market. The S&P 500 Index rose 1.2% in total return for the week, while the Nasdaq Composite added 2.1% and the Dow Jones Industrial Average rose just shy of half a percent.
Optimism around the chances for a soft landing grew as inflation begins to weaken and the labor market remains strong. Friday’s labor market report from the Bureau of Labor Statistics showed businesses added 263,000 workers to payrolls in November, better than anticipated. Wages rose at a faster pace than anticipated, perhaps complicating the Federal Reserve’s interest rate decisions. Core personal consumption expenditures, the Fed’s preferred measure of inflation, rose two tenths of one percent in October, below consensus for a three tenths of one percent increase and supporting the peak inflation narrative.
Federal Reserve Chair Jerome Powell signaled in a speech at the Brookings Institution that the central bank may slow the pace of rate hikes to half a percent at their meeting later this month, after raising the Fed Funds rate by 75 basis points at each of the last four consecutive meetings. Powell cautioned that there is still a long way to go in restoring price stability and monetary policy will likely stay restrictive for some time. The central bank’s next policy announcement comes on December 14.
In the week ahead, the economic calendar includes the trade balance, the producer price index and a final reading on third quarter unit labor costs and productivity. The data will likely confirm lackluster productivity last quarter and perhaps slightly lower growth in labor costs than previously reported.
As always, we’ll be watching and reporting back to you. Thank you.
