Big Movers In December 2022
Universal Health Services (UHS): The hospital operator continued to climb after a strong quarterly report in October.
Tesla (TSLA): The electric-car maker had its worst month ever as demand weakened and CEO Elon Musk faced distractions from his purchase of Twitter.
Organon (OGN): The drug maker climbed as risk-averse investors favored health-care stocks.
Norwegian Cruise Line (NCLH): The cruise line fell as analysts worried about cost pressures and high debt levels. The stock had rallied more than 50% between mid-October and mid-November.
Align Technology (ALGN): The maker of orthodontic products held its ground after losing three-quarters of its value since mid-2021.
NRG Energy (NRG): The utility company paid a 33% premium to acquire Vivint Smart Home (VVNT). It surprised investors who expected NRG to spend its cash on share buybacks.
Key Economic Events Last Month
Data shows more strength in job market
Non-farm payrolls and wages rose more than expected in December and unemployment fell more than forecast. While the news was positive for the economy, it fueled worries about interest-rate hikes. (2/12)
Housing at a crossroads?
Consumer prices rose just 0.1% in November, less than the 0.3% estimate. Core inflation, which excludes food and energy, was also cooler than feared. (13/12)
Fed hikes rates, gives a hawkish outlook
The Federal Reserve raised interest rates by 50 basis points and provided hawkish guidance for future policy. Their quarterly projections anticipated slower economic growth, higher unemployment and a higher maximum interest rate. (14/12)
Retail sales crater as auto sector slows
Retail sales plunged 0.6% in November, twice the forecast decline. Big-ticket items like furniture and automobiles contracted, a potential sign of weaker economic growth. (15/12)
Key Futures Contracts
| Product Name | Current Month | Expiration | Next Month | 1-Mon% |
|---|---|---|---|---|
| S&P 500 E-Mini (@ES) | ESH23(March) | 17 Mar 2023 | ESM23(June) | -6.1% |
| S&P 500 E-Mini Micro (@MES) | MESH23 (March) | 17 Mar 2023 | MESM23 (June) | -6.1% |
| Nasdaq-100 E-Mini (@NQ) | NQH23 (March) | 17 Mar 2023 | NQM23 (June) | -9.3% |
| Nasdaq-100 E-Mini Micro (@MNQ) | MNQH23 (March) | 17 Mar 2023 | MNQM23 (June) | -9.3% |
| Dow Jones E-Mini (@YM) | YMH23 (March) | 17 Mar 2023 | YMM23 (June) | -4.5% |
| Dow Jones E-Mini (@MYM) | MYMH23 (March) | 17 Mar 2023 | MYMM23 (June) | -4.5% |
* Micro contracts are one-tenth the size of standard e-minis.
Events to Watch This Month
| Date | Event | WhattoWatch |
|---|---|---|
| Wed, 4-Jan | Federal Reserve minutes | Details on future central bank plans after policymakers surprised investors with hawkish outlooks in December. |
| Fri, 6-Jan | Non-farm payrolls | Will job growth, unemployment and wages give the Fed reason to pause interest-rate hikes? |
| Thu, 12-Jan | Inflation report | December’s Consumer Price Index (CPI) is due one hour before U.S. markets open. |
| Wed, 18-Jan | Retail sales | Will consumers slow spending, potentially giving the Fed reason to pause interest-rate hikes? |
| Thu, 26-Jan | Gross domestic product | Did the economy slow in the fourth quarter? |
Sector Watch
Consumer discretionaries fell the most as Tesla and Amazon.com declined. Travel-related stocks also led the sector lower.
Technology stocks slid amid worries about growth and the economy.
Noteworthy Calls & Predictions
Redfin sees home sales falling to the lowest level since 2011 because of higher mortgage rates. House prices are also expected to have their first year-over-year decline in a decade.
HousingAirlines will have positive earnings 2023 for the first time in four years, according to the International Air Transportation Association. The industry expects a $4.7 billion net profit, compared with $26.4 billion in 2019.
AirlinesPaul McCulley, former chief economist of PIMCO, expects a Fed pivot as inflation slows. Policymakers will stop hiking interest rates and potentially ease policy in 2023, even without a recession, he predicted.
Fed policyGoldman Sachs will cut hundreds of jobs in 2023, Bloomberg News reported. Other outlets including Forbes ran stories in December forecasting potentially significant layoffs across the economy early in the New Year.
US jobsSome 56% of millionaire investors expect stocks to fall double digits in 2023, according to a CNBC survey. It was the most pessimistic since 2008. However 81% of millennial millionaires think the market will advance.
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