{"id":6353,"date":"2022-12-13T15:19:42","date_gmt":"2022-12-13T21:19:42","guid":{"rendered":"https:\/\/www.keystonefinancial.com\/?post_type=oi_article&p=6353"},"modified":"2022-12-13T15:19:44","modified_gmt":"2022-12-13T21:19:44","slug":"market-commentary-december-13-2022","status":"publish","type":"oi_article","link":"https:\/\/www.keystonefinancial.com\/articles\/market-commentary-december-13-2022","title":{"rendered":"Market Commentary | December 13, 2022"},"content":{"rendered":"\n
What comes next?<\/p>\n\n\n\n
The U.S. stock market tends to be a forward-looking vehicle. Investors make decisions today based on what they think may be ahead for the economy, and how economic change may affect the companies they\u2019re considering for investment. Currently, key questions include:<\/p>\n\n\n\n
Will inflation be lower in 2023?
Will Federal Reserve (Fed) policies change? When will they change?
Will economic growth remain strong next year? Or will it slow or contract?<\/p>\n\n\n\n
Opinions about the answers to these questions vary, and that\u2019s one reason markets have been volatile lately. For example, some think the U.S. economy is headed for:<\/p>\n\n\n\n
A soft landing. This is the Goldilocks ideal. In December, a large investment bank said there was a 35 percent chance the United States is headed for a soft landing, which the bank defined as inflation falling to 4 percent, the Fed funds rate rising to 5 percent, and economic growth settling at 1 percent.<\/p>\n\n\n\n
A period of stagflation. A November survey of 272 asset managers with $790 billion under management reported that 92 percent of respondents expected the United States to experience a period of stagflation over the next 12 months, reported Sagarika Jaisinghani of Bloomberg. Stagflation is characterized by above average inflation and slowing economic growth.<\/p>\n\n\n\n
A recession. There is a diversity of opinion about whether the U.S. will experience a recession in 2023. The Fed put the odds of recession at 50 percent. However, \u201ceconomists surveyed by Bloomberg [in November] saw a 65% chance of recession in the next year, based on the median estimate. A Bloomberg Economics model puts the probability at 100%,\u201d reported Matthew Boesler of Bloomberg.<\/p>\n\n\n\n
It\u2019s important to remember the economy is not the stock market. It is just one of the many factors that influence share prices. Each of the economic possibilities would affect share prices and market sectors differently.<\/p>\n\n\n\n
With so much uncertainty, it\u2019s hard to know what will happen. As baseball great Yogi Berra said, \u201cIt\u2019s tough to make predictions, especially about the future.\u201d That\u2019s why it\u2019s a good idea to hold a well-allocated and diversified portfolio that targets your financial goals.<\/p>\n\n\n\n
Last week, major U.S. stock indices finished lower, and the Treasury yield curve remained inverted.<\/p>\n\n\n\n