Market Drama

Welcome to this week’s Market Drama.

The stock market had another up week. It was up 1%, which brings us back to almost flat for the last six months and down 15% year-to-date. 

• During the Brookings Institute Conference, Fed Chairman Powell said, “the time for moderating the pace of rate increases may come as soon as of December meeting.” 
• This means they’re not going to keep raising interest rates at 75 basis points. It’s going to be more like 50 basis points or 25 basis points. However, Powell also emphasized that they will keep hiking rates until inflation is at 2% to 3%. 
• On Friday, the stock market dip from the highs of the week because the payroll numbers came to $263,000 gains for November (bigger than the $200,000 that the market was expecting).
• Average hourly earnings, which is a metric for wage increases, came out at a higher-than-expected 0.6% growth month-over-month, which annualizes 5.1%. As long as wages are sticky, the Fed can’t lower interest rates. 
• The labor force participation rate (the share of Americans that are either working or actively looking for a job) fell for the third month in a row. It’s now at 62.1%. The reason that this number keeps falling is that the share of the population aged over 64 has been increasing significantly since 2010.

What to look forward this week? 

The labor department on Friday releases the Producer Price Index and that’s supposed to be up 7.2% year-over-year. It’s another data point around inflation.

– Andres