Market Perspective for January 7, 2024

Market Perspective for January 7, 2024

admin

The first full week of 2024 offered some interesting news for investors. Although the main event for the week was the Bureau of Labor Statistics (BLS) nonfarm payroll report on Friday, the first consequential news of the year was released on Wednesday.

That morning, the Job Openings and Labor Turnover Survey (JOLTS) report was released and revealed that there were 8.79 million positions available in the United States. This was slightly below the 8.84 million figure forecast before the release and slightly below the 8.85 million figure from last month.

Also on Wednesday, the ISM Manufacturing PMI was released and came in at 47.4 percent, which was slightly higher than the 47.2 percent expected by analysts prior to Wednesday. This shows that the manufacturing sector is showing a slight contraction that has stabilized over the past couple of months.

Finally, on Wednesday afternoon, the FOMC meeting minutes were released. Although the Fed is still likely on track to cut interest rates, there is still some discussion as to how many cuts will occur and when they will happen. At a minimum, there is a broad consensus that interest rates are either at their peak or very close to them.

On Thursday, the ADP version of the nonfarm employment change report was released. Over the past month, the economy added 164,000 jobs compared to an expected 120,000. The December jobs figure was also significantly higher than the 101,000 added in November. This is likely to be seen as more evidence that a recession won’t happen during the first half of 2024. Unemployment claims were also released on Thursday morning and came in lower than expected as well as lower than the previous week. During the past seven days, 202,000 claims were filed compared to 217,000 the week prior.

On Friday, the BLS reported that 216,000 jobs were created in December compared to an expected 168,000. Furthermore, average hourly earnings for the month were up .4 percent compared to an expected .3 percent. Finally, the unemployment rate dipped to 3.7 percent from 3.8 percent in November.

To close out the week, the ISM Services PMI was released and came in at 50.6 percent. This was lower than the expected 52.5 percent, but it does still show that the service industry is expanding even if demand may be starting to wane just a bit.

The S&P 500 finished the first week of the 2024 trading year down 1.89 percent to finish at 4,697. On Tuesday, the market made its high for the week of 4,750 before spending most of the rest of the week losing ground.

The Dow would start the year by losing .71 percent to close the week at 37,466. It would also make a high of the week on Tuesday of 37,781 before sliding all the way to 37,331 on Friday afternoon.

Finally, the Nasdaq would also give back some of its December gains closing the week at 14,524. That was a loss of 3.83 percent during the first four trading days of the new year, and like the other major indexes, the Nasdaq would make its high of the week on Tuesday before retreating the next several days. The high for the week was 14,821 while the low was 14,514 set on Thursday afternoon.

Oil would briefly dip below $70 a barrel on Wednesday before rebounding and finishing at $74.26 for the week. The commodity spent most of December stuck in a trading range between $68 and $76 per barrel after reaching a 2023 high of $94.18 in October.

The upcoming week will feature several important news releases, including December’s inflation numbers on Wednesday. It’s expected that inflation ticked up slightly on an annual basis to 3.2 percent and to .2 percent on a monthly basis. Price data will be released on Friday with the expectation that the cost of all goods were up .1 percent in December. Central banks in Australia, China and Japan will also be releasing inflation data, which could have an influence on what the Fed might be thinking in terms of interest rate cuts. In addition, Switzerland will be releasing its inflation data early Monday New York time.

Market Perspective for December 31, 2023

Market Perspective for December 31, 2023

admin

As expected, the final trading week of the year was rather subdued. There were only a few relatively consequential news items on the calendar as most market participants were taking it easy between the Christmas and New Year’s holidays.

However, this doesn’t mean that nothing of note happened over the last four trading days. On Wednesday, the Richmond Manufacturing Index was released and came in at -11. This was much lower than the -4 analysts had expected to see prior to the release. It was also much lower than the -5 reported in November.

On Thursday, unemployment claims data revealed that 218,000 people filed for benefits in the past seven days. This was an increase of 12,000 claims since last week and was slightly higher than analysts had predicted. Thursday also saw the release of pending home sales over the past month, and since November, pending sales were unchanged. It was thought that sales would increase by .8 percent during the final month of the year.

Finally, on Friday morning, the Chicago PMI was released and came in at 46.9 percent. Analysts had expected a reading of 50.1 percent, which would have still been lower than November’s reading of 55.8 percent.

The Dow finished the year on a high note by closing the week at 37,689, which was an increase of .68 percent. On Tuesday, the market opened at its weekly low of 37,427 and would climb from there until reaching a high of 37,760 on Thursday afternoon. For the year, the Dow finished up 13.7 percent, which is above the historical average of around 8 percent annually. In December, the market made and broke several new all-time highs.

The Nasdaq would finish the week at 15,011, which was a loss of .1 percent compared to the previous week’s close. On Thursday, the Nasdaq made its high of the week at 15,147 and would make its low of the week on Friday of 14,959. Although the Nasdaq was relatively flat for the week, it saw impressive returns for investors during the previous year. For 2023, the index gained 4,544 points, and it is currently sitting roughly 500 points away from the all-time high of 15,537 set in November 2021.

As with the Nasdaq, the S&P 500 was also relatively flat for the week closing up .18 percent to finish at 4,769. In addition, the S&P would copy the Nasdaq in making a weekly high on Thursday and weekly low on Friday. On Thursday afternoon, the market would hit 4,792 before coming back to 4,756 on the final day of trading for 2023. For the calendar year, the S&P 500 would gain 930 points or 24 percent from its 2022 closing price. As with the Nasdaq, the S&P will also be looking to eclipse its all-time high in 2024.

In other markets, oil would make a monthly high above $76 a barrel before falling back to $71.78 on Friday. Gold would make a high of $2,085 an ounce on Thursday before easing back to $2,060 on Friday. The commodity is currently trading near a yearly high of $2,143 that was set earlier in December.

In international news, the Bank of Japan released Core CPI data for the previous month. In November, inflation eased to 2.7 percent on an annual basis compared to 3 percent in October. On Thursday, Spain revealed that its inflation rate has also gone down from 3.2 percent on an annualized basis in October to 3.1 percent in November.

This week should be a far more volatile one as the holiday season comes to a close and trading schedules get back to normal. On Wednesday, the JOLTS report comes out along with minutes from the most recent FOMC meeting. The minutes will likely reveal more insight into both the likelihood and pace of interest rate cuts in 2024.

On Friday, the BLS nonfarm payroll, unemployment rate and wage data for December will be released. The ADP version of the nonfarm payroll report as well as unemployment claims data will be released on Thursday. Finally, ISM Manufacturing and Services reports will be issued on Wednesday and Friday of next week.