Week of December 20, 2021

Last Friday was a very rough day in the U.S. equity markets, ending what was a very rough week.  The Dow dropped nearly 1.5% on Friday and almost 1.7% for the week.  The S&P 500 slipped 1% on Friday and nearly 2% on the week.  The tech-heavy NASDAQ dipped 0.07% on Friday but roughly 3% for the week.  Despite this recent weakness, all three benchmarks are still up nicely for the year, with the Dow, S&P 500 and NASDAQ climbing 15.5%, 23% and 17.7%, respectively, in 2021 as of last Friday’s close.

Last week’s losses came as investors weighed the Federal Reserve’s hawkish pivot, speeding up its reduction of monthly bond purchased (the tapering that the Fed has been referring to) in addition to predicting three interest rate hikes next year.

The markets also tumbled after President Biden’s signature $2 trillion spending plan appeared doomed as Sen. Joe Manchin said on Sunday that he cannot support it – potentially handing President Biden and Democrats a major political loss.  Goldman Sachs downgraded their U.S. growth forecasts for 2022, citing difficulties in getting the spending bill passed.

New COVID-19 cases are growing sharply in many parts of the world, fueled by the rapid spread of Omicron.  Dr. Anthony Fauci said Sunday that he expects record cases of COVID-19 this winter, and urged people to get vaccinated and get boosters.