Market This Week: 1/2/2023 - 1/6/2023

A brief first week of 2023 will feature a flurry of job statistics and the minutes from the Federal Reserve's final policy meeting of 2022.

Markets

• Dow Jones: 33,147.25 (-0.22%) 📉

• S&P 500: 3,839.50 (-0.25%) 📉

• Nasdaq: 10,466.48 (-0.11%) 📉

  *Stock numbers as of market close on December 30th

Due to New Year's Day, the stock and bond markets in the United States will be closed on Monday, January 2. After a calm end to December, economic data will ramp up when traders switch to a four-day trading week. Friday morning at 8:30 a.m. ET, the Labor Department will release its employment report for December, and according to Bloomberg consensus forecasts, economists anticipate a payroll increase of 200,000 jobs in December. In addition to the headline jobs data, this week's labor market updates for investors include the most recent Job Openings and Labor Turnover Survey (or JOLTS report), ADP's private payroll data, and the Challenger Job Cuts report. The Fed will give a readout of its December policy meeting, which investors will pore through for hints on the central bank's next move, along with the rush of labor market reports. The Federal Reserve increased interest rates by 50 basis points last month, bringing the total number of rises to 4.25% for 2022.

On December 14, 2022, Jerome Powell, the chairman of the Federal Reserve Board, delivers a press conference at the Federal Reserve Building in Washington, D.C.

On Friday, global and American markets ended their worst year since 2008. Financial markets were hammered, and the major averages' three-year winning record was broken by aggressive central bank initiatives to tame historic inflation and the war in Ukraine.

The S&P 500 fell 19.4% in 2022, its biggest annual decrease since the Great Recession's 38% collapse in 2008. The Dow fared better than other index members, dropping only 9% in comparison.

As rising interest rates devastated technology firms, the Nasdaq Composite lost a third of its value, fell 33%, and completed its first four-quarter fall since the dot-com bubble in 2000.

Even when investors turn the page to 2022, much of Wall Street anticipates that there will still be some suffering.

According to consensus strategist predictions, 2023 will have a tumultuous first half and an easier second half. However, given that the Federal Reserve is predicted to maintain rates high for a sustained period of time, stocks are forecast to be little altered or, at best, register small gains.

Even as Fed officials continued their most aggressive monetary-tightening campaign in decades, the job market has calmed in recent months, despite the robust need for workers.

While other areas of the economy, like housing and manufacturing, have shown symptoms of slowing down, the U.S. labor market has avoided any significant damage despite authorities raising interest rates by 425 basis points in 2022.

Wall Street expects nonfarm payroll growth of 200,000 last month, although this would represent a drop from the 263,000 jobs created in the economy in November when forecasts were approximately similar. In addition, the unemployment rate is at a record low of 3.7%, and the labor force participation rate hasn't changed much.

The reasoning behind the "slower but higher" regime adopted by the central bank will probably be revealed in the minutes from the FOMC's meeting in December. To gauge the impact of their rate increases, Fed Chair Powell and his colleagues want to transition to smaller increases. However, they may ultimately raise the terminal rate higher.

A fresh interest rate peak of 5%–5.25% was predicted for December, up from 4.5%–4.75% in September. In contrast, the Fed's 0.50% increase signaled a change away from a regular series of 0.75% increases.

The FOMC is scheduled to meet from January 31–February 1 and, at the conclusion of its meeting, is anticipated to announce the first rate rise of 2023 and the eighth of the current hiking cycle.

Investors will receive the most recent pictures of manufacturing and industrial activity this week from readings on durable goods orders and PMI data, which are both on the economic calendar.

During the off-season, the earnings calendar is still sparse, with just a few notable companies, including Conagra (CAG), Constellation Brands (STZ), and Walgreens Boots Alliance (WBA), scheduled to report.

Events Calendar

Monday, January 2

• U.S. Markets Closed for Holiday

Tuesday, January 3

• S&P Global Manufacturing PMI, December Final (46.2 expected, 46.2 during the prior month)

• Construction Spending, month-over-month, November (-0.4% expected, -0.3% during prior month)

Wednesday, January 4

• MBA Mortgage Applications, the week ended Dec. 30 (0.9% during the prior week); ISM Employment, December (48.4 during the prior month)

• ISM Manufacturing, December (48.5 expected, 49.0 during the prior month)

• ISM New Orders, December (47.2 during the prior month)

• ISM Prices Paid, December (42.9 expected, 43.0 during the prior month)

• JOLTS Job Openings, November (10.100 million expected, 10.334 during the prior month)

• FOMC Meeting Minutes, Dec. 14

• Wards Total Vehicle Sales, December (13.70 million, 14.14 during the prior month)

• UniFirst Corporation UNF 0.00%↑

Thursday, January 5

• Challenger Job Cuts, year-over-year, December (416.5% during the prior month)

• ADP Employment Change, December (140,000 expected, 127,000 during the prior month)

• Trade Balance, November (-$74.5 billion expected, -$78.2 billion during the prior month)

• Initial Jobless Claims, the week ended Dec. 31 (230,000 expected, 225,000 during the prior week)

• Continuing Claims, the week ended Dec. 24 (1.710 million during the prior week)

• S&P Global U.S. Services PMI, December Final (44.4 expected, 44.4 during the prior month)

• S&P Global U.S. Composite PMI, December Final (44.6 during the prior month)

• AngioDynamics ANGO 0.00%↑ , Conagra CAG 0.00%↑ , Constellation Brands STZ 0.00%↑ , Helen of Troy HELE 0.00%↑ , Walgreens Boots Alliance WBA 0.00%↑

Friday, January 6

• Two-Month Payroll Net Revision, December (-23,000 prior)

• Change in Nonfarm Payrolls, December (200,000 expected, 263,000 during the prior month)

• Change in Private Payrolls, December (167,000 expected, 221,000 during the prior month)

• Change in Manufacturing Payrolls, December (6,000 expected, 14,000 during the prior month)

• Unemployment Rate, December (3.7% expected, 3.7% during prior month)

• Average Hourly Earnings, month-over-month, December (0.4% expected, 0.6% during prior month)

• Average Hourly Earnings, year-over-year, December (5.0% expected, 5.1% prior month)

• Average Weekly Hours All Employees, December (34.4 expected, 34.4 during the prior month)

• Labor Force Participation Rate, December (62.2% expected, 62.1% during the prior month)

• Underemployment Rate, December (6.7% during the prior month)

• ISM Services Index, December (55.0 expected, 56.5 during the prior month)

• ISM Services Employment, December (51.5 during the prior month)

• ISM Services Prices Paid, December (70.0 during the prior month)

• ISM Services New Orders, December (56.0 during the prior month)

• Factory Orders, November (-0.8% expected, 1.0% during the prior month)

• Factory Orders Excluding Transportation, November (0.8% during the prior month)

• Durable Goods Orders, November Final (-2.1% during the prior month)

• Durables Excluding Transportation, November Final (0.2% during the prior month)

• Non-defense Capital Goods Orders Excluding Aircraft, November Final (0.2% during the prior month)

• Non-defense Capital Goods Shipments Excluding Aircraft, November Final (-0.1% during the prior month)

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