The year ended on a mostly upbeat note, with both the S&P 500 and the Dow Jones higher in the month’s last week. The Nasdaq was a little contrary, trading down -0.1% (Edward Jones, December 31, 2021), the harbinger of a tech stock selloff that was to persist into January.

Treasury yields were flat while oil moved up, capping a 12-month run that saw the price of a barrel of crude rise more than 55% and energy finish as the year’s top performing sector (Wall Street Journal, January 2, 2022). Even what is possibly the world’s most despised energy source had a moment, with prices for Wyoming’s Wind River coal doubling in November (Bloomberg, November 29, 2021).

Still, it was the U.S. Federal Reserve and spread of the Omicron variant of the coronavirus that dominated the headlines, along with a hotter than expected read on inflation. To that end, the Labor Department reported that consumer prices rose at a 6.8% annual rate in November, the fastest pace in nearly 40 years (New York Times, December 10, 2021). Meeting mid-month, the Fed announced plans to accelerate the tapering process and raise rates. Markets were up on the news but sold off sharply to end the year’s last week. For the month, however, all three major U.S. indexes ended up, closing the books on a third straight year of double-digit gains.



Omicron continued to cast a pall of uncertainty over the economy, but its sudden emergence meant its impact was not yet fully reflected in December’s economic data, which was mostly positive. Durable goods orders (for November but reported in December) rose by the most in six months, up 2.5% from October on the back of strength in demand for aircraft (Bloomberg, December 23, 2021). Existing home sales climbed to the highest level in ten months. Surprisingly, perhaps, the Conference Board’s consumer confidence index ticked up 115.8 in December from 111.9 the month before (Yahoo Finance, December 22, 2021). New unemployment claims sounded a slightly discordant note, rising to 205,000 for the week ended December 18 (Reuters, December 23, 2021) from 184,000 for the week ended December 4 (CNBC, December 9, 2021), but still near post-pandemic lows. For the month, the economy added a disappointing 199,000 new jobs, while the unemployment rate fell to 3.9% (Bloomberg, January 7, 2022).

The New Year started on the front foot but with a familiar set of concerns. Tech stocks continued on their downward path as interest rates rose and economists dialed back their 1Q and full-year GDP growth forecasts. But there were hopeful signs as well: countries initially impacted by the virus began to see cases decline. There was evidence, too, that the supply chain issues that have helped drive consumer prices up were starting to ease.

The Federal Reserve continued to loom over all of this, with investors anticipating a bump in the Fed Funds rate as early as March, and two more during the course of the year. Any shift in those plans either up or down – based, presumably on changes on the ground (i.e. a sudden acceleration/ deacceleration in the rate of inflation) – is likely to result in further volatility, something we expect to see a lot of in 2022. If the past few years have taught us anything, it’s to expect the unexpected.


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The S&P 500® Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance.

The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.

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The Consumer Confidence Index (CCI) is a survey, administered by The Conference Board, that measures how optimistic or pessimistic consumers are regarding their expected financial situation. This monthly report details consumer attitudes, buying intentions, vacation plans and consumer expectations for inflation, stock prices and interest rates.

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