Market Data as of Week Ending: 12/10/2021 unless noted otherwise
U.S. stock prices moved higher last week as concerns regarding the new Omicron variant eased after reports of potentially promising vaccine data. The S&P 500 recorded its strongest weekly result in 10 months while the VIX, a gauge of investors’ market volatility expectations, fell 39%. Size and style factors were mixed last week as large growth rebounded, outperforming large value by a wide margin. All the major economic sectors posted gains, with stocks in the information technology and energy sectors leading the way. Consumer discretionary, utilities and financials lagged, but still posted strong gains. Developed foreign stocks in Europe and Asia lagged U.S. stocks and Emerging Market stocks underperformed both U.S. and developed foreign stocks.
U.S. Treasury yields reversed trend, increasing last week as concerns surrounding the virus abated and economic data came in strong. The 10-year rose to 1.49% on Friday, up from 1.34% at the end of the previous week. Investment grade corporates increased slightly while high yield corporate bonds continued their decline, ending the week with yields around 2.4% and 5.0%, respectively.
Economic data released during the week was mostly mixed. Job openings rose to 11 million in October, marking the second highest level on record, but did come in below estimates as people are still switching or leaving their jobs. The cost of living rose again in November as the consumer price index rose 0.8%, higher than the forecasted 0.7% increase. The U.S. inflation rate swelled to a 39-year high of 6.8%, up from 6.2% last month, as higher prices are outstripping the biggest increase in worker wages in decades. University of Michigan’s consumer sentiment gauge rebounded in December, up to 70.4, but inflation fears loom large. Household inflation expectations for the next 5 years remained steady at 3%, still above the pre-pandemic level of 2.3%. Gross domestic product in the UK rose by 0.1% in October, slowing from 0.6% in September, as the construction industry shrank due to rising costs and supply disruptions.