Blogs

Why did stock markets in the United States finish the week lower?

If this were Jeopardy, acceptable answers to that question might include:

A rosy view through the rearview mirror.

To say that economists did not have great expectations for the January employment report might be understating their position. It was widely believed that the spread of the COVID-19 Omicron variant would translate into a dismal jobs report.1 It didn’t.

Last week, the January stock market decline was interrupted by a Friday afternoon rally.  

When is a barometer not a barometer?

It’s widely recognized that people do not make perfect financial decisions. In fact, many investors rely on mental shortcuts when asked to make complex decisions. That may be why there are theories that correlate stock market performance to football, hemlines and sales of headache remedies. 

Is the economy doing well, or not?

If you skimmed the headlines last week, you may have seen that retail sales – the purchases we make from stores in-person or online – declined 1.9 percent in December. The statistic may have raised questions about the strength of the economy. After all, how could retail sales move lower during the holiday season?

Here’s a little story about a group called the Fed… 

Here’s a little story about a group called the Fed… 

In the 1950’s, then Fed Chair William McChesney Martin described the Federal Reserve as “the chaperone who has ordered the punch bowl removed just when the party was really warming up.” 

2021 was a fizzing mints-in-soda kind of year.

Investors were feeling bullish.

Stock and bond markets diverged. 

Last week, the Bank of England surprised markets with a rate hike, its first in three years, and the Bank of Mexico raised rates more than expected. Both cited persistent inflation as the reason for the increases, reported Carla Mozée of Markets Insider. 

Inflation met expectations.

When the Bureau of Labor Statistics released the Consumer Price Index (CPI) last week, it showed that inflation was at levels last seen in 1982. In November, prices were up 0.8 percent month-to-month and 6.8 percent year-to-year.