Stocks pulled back on Wednesday despite a much better than expected ADP report. The ADP report says more than 800,000 new jobs were created in December which is more than double the consensus estimate. The news is great for the economy as it means much-needed positions are getting filled and log-jams in the supply chain will begin to ease but it also means hiring. Wages are on the rise as well and expected to accelerate in this month?s NFP report. The buzz on Wall Street is that wage inflation will run in the mid-teens this year.

The reason for the pullback was the FOMC minutes which revealed a much-more hawkish Fed than the market was looking for. The FOMC minutes indicate the committee could hike rates for the first time by March and begin trimming the balance sheet soon after. The yield on the ten-year treasury advanced to an 8-month high on the news while the NASDAQ Composite shed more than 2.75% at the low of the day.

Equities wobbled again on Tuesday but the S&P 500 managed to set a new high in the process. The action was driven by the threat of rising interest rates which are driving a wedge in the market. High-growth company?s that rely on debt to fuel their growth are falling out of favor and are being replaced by blue-chips, dividend payers, and those with the resources to fund their own expansions. The blue-chip Dow Jones Industrial Average, for example, gained more than 0.70% at the high of the session while the tech-heavy NASDAQ Composite fell more than 1.5%.

The focus of the week is still the NFP, however, which is scheduled for release on Friday. The consensus is for job growth near 420,000 with a slight downtick in unemployment. The ADP report, released today, is expected to show a similar 375,000 new jobs added for the month and may impact the outlook for the NFP.

Equities wobbled on the first trading day of 2022 but managed to hold near the closing highs of 2021. Whatever the reason, it looks like the January effect is in effect this year and will push stocks higher in the first month of the year. The question, however, is what comes next? If the market closes higher in January it is likely to close higher for the year but that doesn?t mean it goes straight up. With Omicron on the rise, inflation running unchecked, and the global supply chain still in trouble there is a real chance for a major stock market correction in the first half of the year.

This week traders will be focused on the monthly NFP report. The consensus is for job gains in the range of 400,000 with a downtick in unemployment and acceleration of wage gains. Regardless of the numbers, the data shows employment conditions are tight and nearing full employment if not already there.

Equities pulled back a little at the end of the last week of 2021 but left the S&P 500 trading at a new all-time for the year. The move caps off another year of outsized gains for the index, gains that were driven in large part by stimulus spending and inflation. With stimulus spending a thing of the past and inflation still a concern there is a risk earnings growth will come to a standstill in 2022.

The biggest news this week will come from the economic front and includes the FOMC minutes as well as the monthly NFP reading. The minutes will be important for clues to the FOMC?s plans on rate hikes while the NFP data will tell us how many new jobs were created in December. Also on tap this week are readings on ISM, PMI, construction spending, and factory orders so there will be plenty for the market to chew on.

The equities market held firm for the 4th day with the S&P 500 maintaining the fresh all-time highs set earlier in the week. The action is on light volume and may go nowhere but bears the hallmarks of a larger move to come. If the market breaks out to the upside on the first trading day of the New Year the S&P 500 could add rise another 275 points before hitting the next major resistance point.

The New Year will bring more than just a bullish market with the monthly NFP data on tap. The report will likely show another gain in overall employment, the question is how much? The Leading Indicators suggested an acceleration of activity in December so the number could be an improvement over the previous month.

Equities held steady near fresh highs for a second day in thin holiday trading. The S&P 500 hovered around break-even while trading in a tight range near Monday?s high. The move was without strength but consistent with a strengthening market and could lead to the additional upside when the holiday is over. Inflation has been a problem but economic expansion is underway.

Thursday?s trading may be more of the same unless some new news comes across the wires. There will be very few earnings reports or economic releases to move the market. The next big market-moving events will come next week when normal trading conditions resume to include the onset of the Q4 earnings reporting season and the monthly release of NFP data.

Equities held their ground on Tuesday following Monday?s climb to new highs. The move is as much about digesting the new gains, however, as it is about the threat of COVID-19 and the impact of the Omicron variant. While the spread of COVID-19 remains a threat the Omicron variant is far less a problem than first thought. The latest news, in fact, suggests Omicron may help fight against the more virulent Delta variant.

The real question traders want to be answered is what will happen to the market in January? Will we see the typical January effect or will there be a sell-off to take the market back down to firmer support? Like they say as it goes in January, so goes the rest of the year.

Santa Claus brought the market exactly what it wanted for Christmas, a new all-time high. The S&P 500 advanced more than 1.0% on Monday to close near the high of the session and set a definitive new all-time high. This high breaks the market out of its recent consolidation and could add another 100 points or more to the index before the next level of major resistance is reached.

This week?s action could be a bit volatile due to low volume and engagement. The biggest news of the week will come on Thursday when they release the Chicago PMI. The PMI is expected to advance from the previous month, the question is by how much? Regardless, the data will not likely move the market unless it is wildly out of synch with the consensus estimates. The market will be closed on Friday in observance of the New Year Holiday.

Santa Claus experienced a bit of turbulence in the week leading up to the Christmas holiday but he was able to guide the market up to a new all-time high. The broad market S&P 500 was able to creep up and set a new high on Friday despite weakness in both the blue-chip Dow Jones Industrials and tech-heavy NASDAQ Composite.?

The biggest news investors missed last week was the monthly reading of income and spending data. The data shows spending and incomes are on the rise but also a much-hotter than expected increase in inflation. Core inflation accelerated more than expected in November leaving the PCE Price index at the highest level in decades. With the FOMC already moving the timeline for rate hikes forward this news will surely force the committee to do so again.

Despite some volatility, the Santa Claus Rally appears to be on track to lift the market into year-end. The S&P 500 extended its holiday-week rebound on Wednesday putting the index within an arm?s reach of the current all-time high. The question that needs to be asked, though, is what will the New Year bring?

The only certainty for the New Year is inflation. Inflation is running rampant through the economy and threatens to dampen consumption on many levels. The caveat for investors is that, until the market gives the signal for reversal, the trend in the market is up. If the S&P 500 can break out to a new high, we see it continuing upward at least until the Q4 earnings cycle gets underway.