In the penultimate week of 2022, the stock market experienced typical end of year volatility. Generally, this resulted in stocks rounding out the week at a lower point.

Investors React to Inflation Data Amidst End of Year Volatility

Notably, the latest inflation data came out last week, sparking the end of year volatility. According to the Bureau of Economic Analysis, inflation rose by only 0.1% in November 2022.

Now, investors digest this information while simultaneously anticipating the Federal Reserve’s response. After more than a year of record inflation levels, investors hope this marks the latest sign that inflationary pressures reached their peak. If this is the case, the data might influence the Federal Reserve to scale back its interest rate hikes.

China Experiences Surge in COVID-19 Cases

Further fueling the end of year volatility, China revealed news of their latest surge in COVID-19 cases. Due to this news, investors potentially expect further government-imposed lockdowns. If this occurs, the lockdowns hold heavy potential to influence the global economy.

Diving into the numbers, Ten-Year Treasury Yields advanced the most since April 2022. Meanwhile, the dollar edged lower. On the other hand, gold prices climbed higher. Finally, crude oil prices increased for the second week in a row. As a result, crude oil prices approach $80.00 per barrel.

Eye on the Week Ahead After End of Year Volatility

Despite last week’s end of year volatility in the stock market, trading tends to die down during the final week of the year. Typically, investors take a break while preparing for the new year.

Additionally, very little economic reporting comes out between Christmas and New Year’s Day. In the meantime, investors look towards the Federal Reserve for updated projections on their increases to the federal funds rate.

To reevaluate your financial goals in 2023, contact the financial advisors at IHT Wealth Management.

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Information accredited to Broadridge.

Last week, the third-quarter GDP data came out. In the final estimate for third-quarter gross domestic product, the latest data told the story of an accelerating economy.

Third-Quarter GDP Exceeds Expectations

The final estimate for the third-quarter gross domestic product showed the economy accelerated at an annual rate of 3.2%. Thus, the third-quarter GDP figures exceeded expectations.

Earlier in 2022, GDP declined 1.6% in the first quarter. Similarly, it fell 0.6% in the second quarter of 2022. That said, this most recent report reflects a break in the pattern.

Exploring the Increase in Third-Quarter GDP Data

When exploring the increase in third-quarter GDP data, the story begins with advances in exports. Likewise, federal, state, and local government spending also rose alongside consumer spending. Last but not least, nonresidential fixed investment climbed.

However, these increases faced offsetting pressure by decreases in residential fixed investment and private inventory investment. Imports, which are a negative in the calculation of GDP, decreased. The personal consumption expenditures price index, a measure of inflation, increased 4.3% in the third quarter, lower than the 7.1% advance in the second quarter.

GDP Rises Alongside Stock Market Volatility

Overall, the stock market experienced a great deal of volatility in the penultimate week of 2022. However, investors keep their eyes on the latest inflation figures, which indicate that the Federal Reserve’s increases to the federal funds rate are reducing inflationary pressures.

Also worth noting, China experienced a surge in COVID-19 cases. This does indicate the possibility of another lockdown. Such an event would influence the global economy, potentially impacting the first-quarter GDP figures in 2023. However, after declines in the first two quarters of 2022, the third-quarter GDP report shows that the economy is once again beginning to accelerate heading into the new year.

To discuss your portfolio management strategy for 2023, contact the financial advisors at IHT Wealth Management.

Want to read about the rest of the week ending on December 17th? Explore our additional resources below.

Information accredited to Broadridge.