Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  • U.S. equity indices surged higher last week following better than expected inflation data.
    • S&P 500 +5.89% Dow +4.15%, Russell 2000 +4.60%, Nasdaq +8.10%1
      • The All-Country World Index gained +6.56%.1 
    • S&P 500 sub-sectors ended the week higher across the board.
      • Tech led with a 10% gain followed by Materials & Real Estate at 7%+.1 
      • Energy, Healthcare, & Utilities were up the least at around 1.5% gains. 1 
    • The CBOE Volatility Index (VIX) dropped by 8% to its lowest level since August of 22.48. 1 
  • US Treasury bond yields sank lower last week as Treasuries rallied the most in a decade.
    • US 2yr -0.32% at 4.34%, 10yr -0.35% to 3.82%, 30yr -0.24% to 4.03%.1 
    • The yield curve inverted further on the rally, signaling possible economic weakness ahead. 
  • Commodities as an aggregate asset class were higher last week.
    • WTI Crude declined -4.08%.1 
    • Gold rose 5.21%.1  
    • The US Dollar index plunged -4.03%.1 
  • In our opinion, U.S. economic data was mixed last week.
    • The US CPI inflation gauge rose 0.4% since last month & 7.7% since last year. 1
      • This reading sent assets prices higher on the prospects of a Federal Reserve pivot. 
    • Consumer sentiment fell in November along with small business optimism. 1 
  • An index of equities outside the US (FTSE All-World ex-US) gained 6.73%.1 


  • US Equities roared higher last week as a better than inflation reading led market participants to quickly start pricing in a possible Federal Reserve pivot away from their aggressive monetary tightening policy.
    • The beat-up Nasdaq led to the upside with a gain of over 8%.1 
    • The S&P 500 & small-cap tracking Russell 2000 gained around 5%.1 
  • While CPI did come in at its lowest monthly level since 2021, we are still far from levels consistent with the Fed’s goal of 2% core inflation. 1
    • While the pace has undeniably slowed down, the less positive news is that almost 70% of core CPI components still run at or above 4% annualized rates. 1 
    • Ex-energy core CPI is still running 6.7% year-over-year, the fastest pace in 40 years. 1 
    • We reiterate caution in jumping in with both feet on the back of a single inflation data point. 
  • While this type of massive, quick up move in stocks is refreshing to investors, we urge caution and remind readers that this type of action is far from healthy market behavior.
    • From a structural standpoint, there is currently very little protection underlying the market. 
    • Said another way, the size of last Thursday’s up move could be seen even larger on the downside and for multiple days if it gets going in that direction. 
  • Much of the positioning last week was on the expectation that the Fed will now slow down their monetary tightening as a result of inflation not continuing to go up. (i.e. Their policy is working.)
    • While this could be, Goldman Sachs reports that its intra-day estimates of US financial conditions eased by over 0.50% on Thursday for the 3rd largest single day decline on record. 1
      • Fed officials commented over the weekend to this exact point that this is “a loosening of financial conditions that we were trying not to do” and that 7.7% CPI inflation “is enormous.” 1 
  • Taking a step back from the Fed, S&P 500 equity risk premium hit its lowest level since 2021 last week and is in the top 30th percentile of expensive territory using a 15-year time horizon. 1 
  • S&P 500 sectors finished the week higher across the board.
    • Tech led by a wide margin last week with a gain over 10%.1 
    • Despite this move higher, mega-cap tech co’s have lost more than $3 trillion in market value this year as slowing revenue growth & rising interest rates battered valuations.
      • This has cut their weighting in the S&P 500 index to about 19% from a record of more than 24% in Sept of 2020. 
  • US Treasury yields sank lower last week as bond values had their best week in a decade.
    • A byproduct of this is that the short-end held up for the most part better than longer maturities, therefore causing deeper inversions. (Short maturities yielding more than longer ones) 
  • Non-US equities also skyrocketed higher last week as the US Dollar sank over 4%.1
    • This was another knee-jerk reaction to anticipation of the Federal Reserve slowing down on its pace of rate hikes and having a lower final rate following the CPI inflation data last week. 

Ryan A. Mumy, CFP®,

AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 11/11/2022  

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