The stock market is off to a good start to the year, as stocks recorded their second consecutive week of gains on inflation data and corporate earnings season.

A Friday rally after an encouraging jobs report helped propel markets into positive territory in the first week of the new year. Communication Services led the gains on a sector basis, with rallies in Charter Communications, Netflix, and Facebook parent Meta Platforms.

EQM Indexes 4Q 2022 Market Review Most investors are happy to get 2022 behind them, as the S&P 500 Index experienced its worst year since 2008’s financial crisis, down 18.1% on a total return basis. High growth tech-stocks fared even worse, with the NASDAQ Composite experiencing a 32.5% decline and Small Cap Russell 2000 stocks [...]

Investors remain focused on inflation and interest rates this holiday season as the two highly anticipated announcements of the week: CPI and the Fed decision sent markets in opposite directions, higher early in the week and selling off by the end.

When the Fed is concerned about inflation, good economic news is bad news for investors. Stocks gave up most of their previous two weeks of gains, as strong economic data dampened hopes that the Federal Reserve may be able to stop raising rates to curb inflation.

The market rallied last week, buoyed by the possibility that the pace of Fed rate increases may be slowing. Fed Chair Jerome Powell signaled smaller rate hikes going forward, but for a longer duration.

Markets rallied in a shortened Thanksgiving trading week, with the S&P 500 Index finishing above the 4000 level for the first time in two months. Positive earnings reports in retail and tech and signs that the Fed is going to slow the pace of rate increases, helped market sentiment.

Stocks gave up some ground this week after last week's inflation-data-infused rally. Growth stocks lagged value shares. Energy shares sold off on peak inventory levels for oil and gas in Europe.

What a difference a good CPI print can make! Markets celebrated Thursday morning's release of the Consumer Price Index data for October. Headline CPI rose 0.4% in October, which was less than consensus expectations for a 0.6% increase, which plots CPI at 7.7% year-over-year.

Markets initially rallied on Wednesday after the Fed statement indicated it might slow down its pace of rate increases, only to reverse after some hawkish comments in the press conference. As expected, the committee raised rates by 75 bps.