Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  • U.S. equities moved higher last week as economic data gave investors hope for a Fed hike slowdown.
    • S&P 500 +1.48% Dow +1.46%, Russell 2000 +1.85%, Nasdaq +0.98%1
      • The All-Country World Index rose +1.83%.1
    • S&P 500 sub-sectors ended the week mostly higher.
      • Financials & Materials led to the upside with gains north of 3%.1
      • Healthcare was the only negative sector, finishing -0.13%.1
    • The CBOE Volatility Index (VIX) finished slightly lower at 21.08. 1
  • US Treasury bond yields moved lower to begin the new year.
    • US 2yr -0.17% at 4.24%, 10yr -0.33% to 3.55%, 30yr -0.30% to 3.67%.1
    • The 3-month US Treasury ended the week yielding a full percent more than the 10 year UST. 1
  • Commodities as an aggregate asset class moved lower last week.
    • WTI Crude sank -8.24%.1
    • Gold rose +2.28%.1
    • The US Dollar index finished up 0.48%.1
  • In our opinion, U.S. economic data was mixed last week.
    • In the latest payroll data: Unemployment was low, jobs went up, yet wage inflation came down. 1
    • ISM prices index plunged to the bottom 5% of all periods as manufacturing data shrank. 1
    • Services activity plummeted into contraction territory for the 1st time in 2.5+ years. 1
  • An index of equities outside the US (FTSE All-World ex-US) shot higher by 4.01%.1


  • US Equities began 2023 with a modest gain as economic data gave investors hope the Fed would slowdown their aggressive monetary tightening policy and are close to wrapping up their inflation-fighting campaign.
    • The small-cap tracking Russell 2000 led to the upside with a gain of 1.85%.1
    • The S&P rose 1.5% while the Nasdaq gained 1%.1
  • S&P 500 sub-sectors were mostly positive on the week.
    • Financial were one of the strongest sectors last week as the yield curve steepened. 1
      • Financials will kick off 4th quarter earnings reporting season next week.
    • Healthcare was the lone negative sector last week as traders favored cyclicals to defensives.
    • Despite Oil moving lower by over 8%, the Energy sector posted a gain of +0.10%.1
      • We continue to monitor the ongoing divergence between oil & energy equities.
  • US Treasury markets saw yields sink last week following the release of economic data.
    • The non-farm payrolls report showed wage growth slowing and a gauge of the services-sector economy unexpected shrank. 1
      • This data stoked investor speculation that the Federal Reserve is coming near to stopping its most aggressive rate-hiking cycle in decades and may start easing by year end.
    • The rally in bonds lessened the inversion of key US Treasury yields…the gaps between shorter & longer-term rates that are watched closely as potential recession signals.
    • We continue to point out that there remains a large disconnect between the financial markets and Fed officials.
      • The Fed continues to emphasize that they are likely to keep raising rates — and hold them there — until inflation draws back toward the central bank’s 2% target.
      • This gap will be tested this week as December’s inflation data is released.
  • The volatility index (VIX) moved slightly lower last week. 1
    • As market participants have recently flooded into shorted dated options than the VIX index represents, we believe the measure of volatility has been slightly skewed for several months.
      • As such, we’ve been monitoring the 9-day VIX in conjunction with the normal VIX.
    • While the VIX has been “stuck” at higher levels, the volatility of the VIX has remained muted and trended lower. 1
      • This is an interesting structural change that could adjust how investment decisions are made in the short-term.
  • Non-US equities finished the week firmly higher despite the lack of weakness in the US Dollar. 1
    • A major input of this is the continued China re-opening and their attempt to return to normal.
  • Earnings season is about to kick-off with 77% of S&P 500 companies expected to report 4th quarter and full 2022 results by February 10th. 1
    • Consensus expectations call for the aggregate S&P 500 index to post a 0% earnings per share gain in the 4th quarter ’22 vs 4th quarter ’21. 1
      • This follows earnings decelerating from +12% in Q1 to +3% in Q3. 1

Ryan A. Mumy, CFP®,

AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 1/6/2023 

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