This week, it’s business as usual with a full economic calendar and the monthly jobs report.

The stock market is heading into 2022 buoyed by a record 2021. But, it will continue to face challenges in 2022. A strong economy and solid earnings growth are more important than the Federal Reserve’s super-easy policies.

It S&P 500In a remarkable year, the benchmark rose 27% to 4,766 and reached 70 closing highs. It beat out the 19% growth in the benchmark. Dow Jones Industrial Averagethe 21% increase in Nasdaq Composite.

On Monday, the clock will start ticking for the third quarter which could see the Fed’s first rate increase since 2018. The bond market could see worries over the new omicron Covid-19 variant give way to a more focused investment community that is eager for a reset in expectations. for where interest rates are heading over the course of 2022.

In a calendar which also contains the ISM manufacturing survey and auto sales data for Tuesday, the top data is the employment report. Thursday is the day for international trade data.

Dow Jones reports that economists anticipate 405,000 job creation in the last month of 2021. This is up from 210,000 jobs in November. From 4.2%, the unemployment rate will drop to 4.1%.

“It is the start of a brand new year. It would be a good idea to kick off the year in an aggressive manner considering that history has shown us how to correct this sort of rolling correction,” explained Sameer Samaa, senior global strategist for Wells Fargo Investment Institute. “We appreciate the fact the S&P has been making new highs, but when you look at the average stock or small cap stocks, they’ve had a very different experience.”

The 2021 market was bifurcated with an initial surge in some high flying growth stocks, but then many of those names fell hard, and some of the big-cap names in the S&P 500 turned in super-charged performances.

MicrosoftIt was 51% higher than the previous year. AppleThe gain was 34% American Express increased 35%, while Home Depot rose 56%. Ford was up by 136%

It ARK Innovation ETFHigh-flying collection of high growth stocks, 2020 was 24% lower than the previous year.

Fed in the future

The minutes of the December Fed meeting will be released by the Fed on Wednesday. Following that meeting, the central bank announced it would speed up the tapering of its once $120 billion a month bond buying program — now ending it by March instead of June. It is believed that the Fed will move to increase its rate at the March meeting. Three rate hikes are expected by the Fed for 2022, according to the Fed.

“I expect that people will start shifting to the new monetary landscape next week. “It’s such a huge deal,” stated Peter Boockvar chief investment officer of Bleakley Advisory Group. “The last two years of liquidity flow has been unlike anything we have ever seen.”

The stock market will be less volatile in 2022 as the Fed stops buying bonds and raises interest rates. Stock strategists have a median target of 5,050 for the S&P 500, according to CNBC’s Strategist Survey.

Boockvar stated that tightening policies will have a global impact as central banks reduce asset purchases and increase interest rates.

Boockvar stated that “that liquidity flow is slowing, and we know what a help they’ve been,” You can’t seperate a Fed tightening cycle and the stock market. It’s impossible to separate the stock market from a Fed tightening cycle. All of them are connected. You cannot avoid tightening financial conditions.

Samana, Wells’s representative said that he will be focusing on the quality of big-cap U.S. stocks in the New Year. According to him, you have to listen to the market and take advantage of what it gives you. “There aren’t many reasons to leave U.S. large-cap stocks,” he stated. We like technology, and we love communications services. We love financials as well as industrials. We have two growth sectors, and two cyclical ones. “We have been boiling this down to defensives only.”

Samana stated that Wells strategists had downgraded energy and materials sectors. They also upgraded technology. We want to be in a more balanced situation going into 2022. However, we don’t know the opportunities that may present themselves.

The top performing sector in 2021 was energy, which saw a 48% rise, the largest ever. This was closely followed by realty, which saw a 42% increase. Financials and technology were also up by 33%.

Matt Maley from Miller Tabak pointed this out Consumer Staples Select Sector SPDR FundIn December, it outperformed semiconductors and tech. It was almost 10% higher than the December benchmark. Technology Select Sector SPDR FundThe month saw a gain of 3%

The stock market’s actions over the past few weeks have been very different from what many believe.  We have not seen a melt-up … and the tech stocks have not done as well as most people think,” Maley wrote in a note. “More important, the group that rallies well is the most protective in the marketplace.  According to our analysis, investors are concerned about the impact that Fed’s more aggressive tightening cycles could have on stock market in the next year.

Tuesday, OPEC+ is meeting. expected to continue its policy of slowly returning oil to the market.

Week ahead calendar

Monday

9:45 am Manufacturing PMI

10:00 AM Construction Spending

Tuesday

Earnings: MillerKnoll

Sales of vehicles

11:00 a.m. ISM production

10:00 AM JOLTS

Wednesday

8:15 a.m. ADP employment

9:00 a.m. PMI Services

Minutes of the FOMC at 2:00 PM

Thursday

Earnings: Bed Bath and Beyond, Constellation Brands, Conagra, Walgreen Boots Alliance, PriceSmart, WD-40, Lamb Weston

8:30 a.m. 8.30 a.m.

8.30 a.m. Trade international

10:00 AM ISM Services

10:00 a.m. Orders from factories

1:15 P.M. St. Louis Fed President James Bullard

Friday

8:15 a.m.

Mary Daly, President of the San Francisco Fed at 10:00 AM

12:00 p.m. Atlanta Fed President Raphael Bostic

12:30 p.m. Richmond Fed President Tom Barkin

3.00 PM Consumer credit

Saturday

12:00 p.m. Atlanta Fed’s Bostic