Last Week on WallStreet - January 21, 2023

S&P 500: 0.66% DOW: 2.70% NASDAQ: 0.55% 10-YR: 3.49%

What Happened?

The short week on the street witnessed the return of selling pressure as investors forecast the paths for the economy and the Federal Reserve. After a rangebound session Tuesday, Wednesday's disappointing retail sales report for December brought the bears back into action on fears of a worsening economy. Markets couldn't shake the news while hawkish Fed speak and continued layoff announcements from Microsoft, Amazon, Google, and others further soured investors' outlook. Despite a shockingly strong session on Friday, the S&P 500 finished lower.

Beneath the surface, cyclical sectors exhibited strength in Friday's rally. Telecommunications (1.9%), Technology (0.9%), and Discretionary (0.4%) pushed the NASDAQ higher. Defensive sectors such as Utilities (-3.3%) and Staples (-2.4%) lagged this week with Industrial (-3.5%) names also falling, all causing the DOW to underperform.


Retail Sales Slump at the End of 2022 as US Economy Slows

  • Sales at U.S. retailers sank 1.1% in December — matching the biggest decline in a year— largely because of falling gasoline prices and fewer purchases of new cars
  • Receipts fell a smaller but still steep 0.7% if auto dealers and gas stations are excluded
  • Retail sales were forecast to drop 1% last month, according to economists
  • The slump in sales was broad-based with almost every major retail category reporting declines

The key takeaway - Retail sales are a great indicator of the spending patterns of consumers and assist in gauging their strength, the main driver of the US economy. While retail sales rose overall for the year, the declining figures seen recently show consumers are easing on the gas pedal. This, combined with data indicating households have drawn down savings built up during the pandemic, presents a consumer picture that could lead to a weakening economy.


US Existing-Home Sales Fall for the Eleventh Straight Month in December

  • US existing-home sales fell 1.5% in December to an annual rate of 4.02 million marking the 11th straight month of declines
  • Sales activity was the lowest since November 2020 and is down 34% compared to December 2021
  • For the calendar year 2022, sales of existing homes fell 17.8%
  • The number of homes on the market and the median selling price fell while average time on the market rose
  • Sales fell across most of the country with only the western region remaining unchanged

The key takeaway - All in all, 2022 turned in a dismal year for the housing market. Activity, prices, and demand fell out of the sector as the Federal Reserve's battle with inflation pushed up borrowing costs and made the prospect of home ownership significantly less realistic for many Americans. The December report was a continuation of that trend. Mortgage rates, however, have begun to moderate and could attract buyers back. Inventory will continue to present issues as the availability of homes for sale remains tight.


From the Waterloo Watercooler

Microsoft announced plans to cut 10,000 employees, and Amazon began a round of layoffs that will impact 18,000 people

China’s population declined in 2022 for the first time since the early 1960s, and India is poised to overtake it as the world’s most populous country soon

LIV Golf reaches broadcast rights deal with CW Network

More than 5 million new business applications were filed in 2022, according to the latest data from the US Census Bureau