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Gradient Investments Weekly Talking Points 12/17/2021
All data is for the week ended December 17, 2021
Stocks
Equities were down across the major global indices with the S&P 500 down 1.91%, the Russell 2000 retreating 1.68% and the NASDAQ declining 2.94%. Overseas the developed markets (MSCI EAFE) eased 0.46% while emerging markets (MSCI EM) dropped 1.75%. By sector in the US, health care and real estate were the best performers while consumer discretionary and energy were the laggards. By style, large cap growth stocks were the poorest performing while large cap value were the best performers.1
Fixed Income
The Federal Reserve agreed last week to increase the pace of its planned reduction in bond purchases or tapering. It plans to discontinue bond purchases by March in the face of ongoing high inflation2. After that, the Fed chair stated, it would be in a position to raise interest rates if conditions were right. Additionally, committee members increased their forecast of rate hikes during 20223. For the week, the benchmark 10-year treasury finished with a 1.41% yield, down 7 basis points.1
Overseas the Bank of England raised interest rates by 15 basis points to 0.25%, which was a surprise to many after weak economic growth in October. Additionally, they reported inflation of 5.1% on a year over year basis for November.4
Commodities
Gold (GLDM), an Endowment Series and Precious Metals strategy holding, rose 0.79% last week5 as the price per troy ounce exceeded the important $1800 level on concerns around ongoing inflation that far exceeds the 2% goal set by the Federal Reserve.
Economic Data
Producer prices in November rose 9.6% over the past 12 months, accelerating from the 8.8% rate in the prior month. This marked the largest advance since 2010.6
Company News5
Bristol-Myers Squibb Co. (BMY), a G50 and Core Select holding, rose 9.23% last week following a 10% dividend increase and a new $15 billion share repurchase program7. Additionally, shares benefitted from strength across most of the health care stocks as investors turned toward more defensive sectors and lower value stocks.1
Eli Lilly & Co. (LLY), a Core Select holding, announced 2022 revenue and earnings guidance that exceeded consensus estimates. Management was encouraging about its key growth products (more than two-thirds of revenue) and upcoming product launches.8 Additionally, the board authorized a 15% dividend hike.9 Yield on the new rate is .1.64%. Shares rose 9.54% for the week.
Medtronic plc (MDT), a G50 and Core Select holding, reported series of setbacks to the company’s pipeline for medical devices including one to treat diabetes.11 Shares dropped 10.50% for the week.
Did you know…
There is a reason you feel tired by just traveling in a vehicle and doing nothing else, called the “stressors of flight.” Many of these stressors are present in automobiles and trains as well as airplanes. As the vehicle moves, the sway and direction change causes you to make micro-adjustments to keep yourself upright. These micro-movements cause your muscles to be continuously working, leading to fatigue.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 12-20-21
2 Federal Reserve Open Market Committee press release 12-15-21
3 Federal Reserve Projections 12-15-21
4 Bank of England Interest Rates 12-16-21
5: All weekly changes in company stock prices: Yahoo Finance
6 Bureau of Labor Statistics 12-14-21
7 Bristol-Myers Squibb press release 12-13-21
8 Eli Lilly & Co. press release 12-15-21