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What’s in store for January?

What’s in store for January?

January 04, 2022
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The stock market was relatively quiet last week, with no major news events and many investors on holiday. Let’s look at a few potential market movers we’ll be watching this month:  

  • The December Jobs Report will be released on Friday. This is one of the most important monthly economic reports, and it always has the potential to drive the market up or down.
  • Corporate Earnings Season kicks off in mid-January and will continue to have influence on the stock market’s direction for the rest of the first quarter. I believe corporate earnings will continue to be strong and help propel the stock market to new highs.
  • The Federal Reserve meeting on January 25 – 26, where they will discuss and vote on economic policy, including interest rates. They meet 8 times a year, and I believe the next few meetings have potential to disappoint investors and push the market down. I say this because inflation continues to be hotter than expected and the Fed may have to play catch up to bring inflation to manageable levels (2% annually). This means they would have to reduce economic stimulus quicker, which could lead to a short-term stock market drop. In the long-term, 5-10 years, reducing stimulus and increasing interest rates is a positive thing because it shows that the economy is strong and doesn’t need help from the Fed. Historically, the stock market has continued to rise after the Fed began to systematically increase interest rates, often for several years after.

Photograph by: Glen Carrie

 

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