Market This Week: 12/19/2022 - 12/23/2022
Next week brings information on the housing market, PCE pricing, and additional earnings.
U.S. equities markets ended the week lower due to the Federal Reserve's most recent interest rate increase and weak retail sales figures, which led to a significant selloff. The S&P 500 lost 2.1%, the Nasdaq shrank 2.7%, and the Dow dropped 1.7% for the week. U.S. Treasury yields decreased as recession concerns dominated the bond markets worldwide. The 10-year note's yield was 3.49%, while the two-year note's was 4.19%, maintaining the yield curve's extreme inversion. Oil prices fell on Friday, reversing gains from earlier in the week. Weakening industrial output in industrialized economies and rate increases from major central banks damaged the outlook for global energy consumption. The benchmark price for the United States, WTI crude, ended the week at $74 per barrel, down from around $78 on Wednesday.
Following the U.S. Senate's passage of a record $858 billion annual defense bill and a stopgap spending bill to extend current government spending levels by one week, giving negotiators more time to pass a full-year agreement, a bill to fund the government through September 30, 2023—the end of the current fiscal year—is anticipated to pass Congress next week. The NAHB Home Market Index is scheduled for release on Monday, while housing starts and building permits are scheduled for release on Tuesday. These events will put the U.S. housing market in the limelight. Later in the week, information on November's sales of new and existing homes will be made available. The Federal Reserve's favored inflation indicator, the Personal Consumption Expenditures Price Index (PCE) for November, will be released by the Bureau of Economic Analysis (BEA) on Friday. Next week will see the release of profits from several companies, including Carnival Corporation, Nike, General Mills, FedEx, Micron Technology, and CarMax.
Markets
Source: Investopedia
Key Takeaways
Next week, there will be updates on the housing market in the United States, including information on construction starts, building permits, and new and existing house sales for November.
On Monday, the National Association of Home Builders (NAHB) will release its most recent Housing Market Index, which measures builder sentiment from the previous month.
The Personal Consumption Expenditures Price Index (PCEPI), the Fed's favored inflation indicator, will be made public by the Bureau of Economic Analysis (BEA) on Friday for November.
Next week, several companies, including Carnival Corporation, Nike, General Mills, FedEx, Micron Technology, and CarMax, will announce their financial results.
Monday, December 19
Heico Corp. HEI 0.00%↑ and Carnival Corp. CCL 0.00%↑ report earnings
NAHB Housing Market Index
BOJ Interest Rate Decision
Tuesday, December 20
Nike NKE 0.00%↑, General Mills GIS 0.00%↑, FedEx Corp. FDX 0.00%↑, FactSet Research Systems FDS 0.00%↑, Neogen Corp. NEOG 0.00%↑, Worthington Industries WOR 0.00%↑, BlackBerry Ltd. BB 0.00%↑, and FuelCell Energy FCEL 0.00%↑ report earnings
Housing Starts (Nov)
Building Permits (Nov)
Wednesday, December 21
Micron Technology MU 0.00%↑, Cintas Corporation CTAS 0.00%↑, and The Toro Company TTC 0.00%↑ report earnings
Existing Home Sales (Nov)
CB Consumer Confidence (Dec)
U.S. Current Account Balance (Q3)
Thursday, December 22
Paychex Inc. PAYX 0.00%↑, CarMax KMX 0.00%↑, Mission Produce AVO 0.00%↑, and Apogee Enterprises APOG 0.00%↑ report earnings
U.S. GDP Growth Rate - Final Reading (Q3)
Real Consumer Spending - Final Reading (Q3)
Corporate Profits - Final Reading (Q3)
CB Leading Economic Index (Nov)
Kansas Fed Composite Index (Dec)
Friday, December 23
Personal Income & Spending (Nov)
Durable Goods Orders (Nov)
PCE Price Index (Nov)
New Home Sales (Nov)
Michigan Consumer Sentiment Index - Final (Dec)
The Housing Market Is Slowing
The National Association of Home Builders (NAHB) is scheduled to release its Housing Market Index for December on Monday, revealing whether homebuilder sentiment has declined as higher prices and borrowing costs weigh on the market. This will put the U.S. housing market in the spotlight the following week. The U.S. Census Bureau will release a report on home starts and building permits for November on Tuesday. It is anticipated that housing starts decreased marginally last month from 1.425 million units in October to 1.415 million units.
The National Association of Realtors (NAR) will publish information on existing home sales for November on Wednesday. According to estimates, existing home sales decreased to 4.2 million units in November from 4.43 million in October and a peak of nearly 6.5 million in January. With pandemic-related disruptions in early 2020 excluded, existing home sales dropped to their lowest level since 2011 in October as a result of rising mortgage rates, falling affordability, and a shortage of available homes. Next Friday's new home sales data is expected to drop as well. Sales most likely decreased from 632,000 in October to 608,000 in November.
November PCE
The release of the November Personal Consumption Expenditures (PCE) Price Index on Friday will provide additional details on inflation next week. After increasing by 0.3% in October, the PCE Price Index is predicted to have increased by 0.2% in November. Prices are anticipated to have increased 5.5% annually from a year ago, down from 6% in October. The core rate, which includes volatile prices for food and energy, probably increased 0.2% last month and 4.7% from a year earlier, decelerating from 5% in October.
The U.S. Federal Reserve prefers the PCE Price Index as an indicator of inflation since it more closely reflects customers' purchasing decisions than the Consumer Price Index (CPI). The PCE Price Index employs a basket of commodities that is updated more regularly than the CPI does to reflect shifts in consumer preferences.
The home builder sentiment dropped again for the 12 straight month but from what I’ve read it seems that it is the smallest drop on HMI index in past 6 months... maybe near the bottom of the cycle 🏠🧐
Akash!! This weekly update is EPIC. So glad to have stumbled upon your Substack.