Weekly Economic Update: November 8th, 2021

Presented by Nicholas Wealth Management

November 8th, 2021

Weekly Market Update

In this week’s recap: Tapering news, profits, and other encouraging data lifts stocks.

The Week on Wall Street

A Federal Reserve announcement on tapering, a fresh batch of corporate profits, and encouraging economic data lifted stocks to another weekly gain.

The Dow Jones Industrial Average rose 1.42%, while the Standard & Poor’s 500 advanced 2.00%. The Nasdaq Composite index led, tacking on 3.05%. The MSCI EAFE index, which tracks developed overseas stock markets, added 1.58%.^1,2,3

Stocks Power Higher

Stocks marched higher throughout the week, lifted by a succession of positive corporate earnings surprises, optimistic forward guidance by some companies, and healthy economic data. Continued strong third-quarter profits reinforced the narrative that businesses were able to meet strong consumer demand and maintain robust profit margins, despite the headwinds of inflation and supply-chain knots.

Investors were unfazed by the Fed’s mid-week announcement that it would begin its bond purchase tapering plans, in part, because it had long been telegraphed and Fed Chair Powell’s optimistic analysis of the current state of the economy. Also cheered was the announcement of a new COVID-19 antiviral pill and a powerful rebound in job creation, driving stocks to new heights to close out the week.

The Fed Speaks

In an eagerly awaited November meeting of the FOMC (Federal Open Market Committee), the Fed pulled the trigger on its plan to taper monthly bond purchases. Fed tapering will begin this month with reductions of $15 billion per month ($10 billion in Treasurys and $5 billion in mortgage-backed securities) that will end this pandemic-era policy response by July 2022.⁴

The Fed reiterated its belief that inflation remained transitory, though conceding it had underestimated its acceleration and persistence; it did not expect interest rates to be raised until after the completion of the tapering program. Powell expects inflation to stay elevated until mid-2022 when he anticipates supply-chain bottlenecks to clear.^5,6

Tip of the Week

Media

[yotuwp type="videos" id="u9jcMbCdbeA" ]

On October 25, rental car company Hertz announced they would buy 100,000 vehicles from Tesla. Last week, Elon Musk tweeted Hertz has yet to sign a contract. David Nicholas joined Stuart Varney on Fox Business to discuss why this may be an early Christmas gift for investors looking to get in on TSLA.

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!

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CITATIONS:

1. The Wall Street Journal, November 5, 2021

2. The Wall Street Journal, November 5, 2021

3. The Wall Street Journal, November 5, 2021

4. CNBC, November 3, 2021

5. CNBC, November 3, 2021

6. CNBC, November 3, 2021