{"id":5270,"date":"2021-12-07T14:15:01","date_gmt":"2021-12-07T20:15:01","guid":{"rendered":"https:\/\/www.keystonefinancial.com\/?post_type=oi_article&p=5270"},"modified":"2021-12-07T14:15:03","modified_gmt":"2021-12-07T20:15:03","slug":"weekly-commentary-december-7-2021","status":"publish","type":"oi_article","link":"https:\/\/www.keystonefinancial.com\/articles\/weekly-commentary-december-7-2021","title":{"rendered":"Weekly Commentary | December 7, 2021"},"content":{"rendered":"\n
Investors look to the future.<\/p>\n\n\n\n
Last week, employment and manufacturing data confirmed that the United States economy continued to strengthen in November, but positive economic news was overshadowed by investors\u2019 concerns about the spread of coronavirus and Federal Reserve policy.<\/p>\n\n\n\n
Let\u2019s start with the economic news.<\/p>\n\n\n\n
More Americans were working.<\/strong> The Bureau of Labor Statistics (BLS) reported that unemployment dropped to 4.2 percent in November \u2013 a level the country wasn\u2019t expected to achieve before 2024, according to Eli Rosenberg of The Washington Post. The labor force participation rate improved, too, meaning that more people are returning to work.<\/p>\n\n\n\n Fewer new jobs were created than analysts expected, but that wasn\u2019t surprising given the BLS\u2019 track record during the pandemic. From June through September, it underestimated employment gains by 626,000, according to Andrew Van Dam of The Washington Post. In the latest report, the BLS revised October\u2019s numbers to be higher by 15,000.<\/p>\n\n\n\n Manufacturing strengthened. <\/strong>The manufacturing industry made gains in November, too. The Institute for Supply Management Purchasing Managers\u2019 Index (PMI) came in at 61.1 for November. The reading for new orders, which measure future demand, was 61.5. \u201cA [PMI] level of 50 indicates that the manufacturing economy is growing. Above 60 is a very strong level,\u201d reported Allen Root of Barron\u2019s.<\/p>\n\n\n\n Positive economic data didn\u2019t inspire investors last week, though. That may be because economic data reflects what has happened in the past. Investors are more concerned about what may happen in the future and how markets may be affected. As a result, investors focused on:<\/p>\n\n\n\n The Omicron variant spread.<\/strong> Last week, a new variant of the coronavirus spread in the U.S. states. Initial indications suggest Omicron may be milder than previous variants, reported Deena Beasley of Reuters. However, that did not quell investors\u2019 concerns. Josh Nathan-Kazis of Barron\u2019s reported:<\/p>\n\n\n\n \u201cFearing new lockdowns that had been ruled out as recently as a week ago, investors are at times panic-trading based on anecdotes and passing comments by CEOs. The S&P 500 index moved more than 1% nearly every day this week, gyrating up and down on new guesses about what Omicron will mean for the world.\u201d<\/p>\n\n\n\n Federal Reserve policy changes.<\/strong> Investors pondered Fed Chair Jerome Powell\u2019s testimony before the Senate Banking Committee. Powell \u201c\u2026reiterated that he and fellow policymakers will consider at their upcoming meeting a faster wind-down to the Fed’s bond-buying program, a move widely seen as opening the door to earlier interest rates hikes,\u201d reported Jonnelle Marte and Lindsay Dunsmuir of Reuters. Historically, rising interest rates have slowed economic growth.<\/p>\n\n\n\n Major U.S. stock indices finished the week lower, according to Ben Levisohn of Barron\u2019s. U.S. Treasury yields moved lower.<\/p>\n\n\n\n <\/p>\n\n\n\n