Market Perspective for January 21, 2024

Market Perspective for January 21, 2024

The third week in January was another truncated one as markets were closed Monday for the Martin Luther King Day holiday, there was still a significant amount of interesting news. The first major piece of news to be released in the United States was on Wednesday when retail figures were made available.

Over the past month, retail sales were up .6 percent while core retail sales were up .4 percent over that same period. Analysts had expected increases of .2 percent and .4 percent respectively. It’s possible that the higher figures were reflective of the holiday season during when consumers tend to be enthusiastically spending. It may also be a sign that the economy is still too hot to handle a rate cut soon.

On Thursday, unemployment claim figures for the past seven days were made available, and it was revealed that 187,000 people had filed for benefits during that period. This was compared to 203,000 a week ago and an expected 206,000 for the current period.

On Friday, preliminary consumer sentiment and inflation expectation data were released by the University of Michigan. The reports found that consumer sentiment was 78.8 percent, which was significantly higher than the projected 69.8 percent and much higher than last month’s reading of 69.7 percent. Inflation was expected to be at 2.9 percent a year from now compared to an expectation of 3.1 percent during last month’s reading.

The S&P 500 finished the week up .89 percent to close at 4.839. On Wednesday, the market reached its low of the week at 4,717 while it closed at the high of the week on Friday. The index is currently at an all-time high and some analysts believe it has the potential to eclipse 5,000 at some point this year.

The Dow was relatively flat this week finishing up .13 percent over the past four trading days. On Wednesday, the market hit a low of 37,141 before rebounding and closing at the high of the week at 37,863. In fact, the Dow spent most of the week in the red before surging 345 points on Friday to eke out a modest gain.

Finally, the Nasdaq was up 1.98 percent this week to close at 15,310 and is now just 215 points away from its all-time high. On Wednesday, the market hit its low of 14,722 and would continue to rally through the end of the day on Friday.

Oil would continue to remain range bound making a low of $70.72 on Wednesday and a high of $74.70 on Friday. During the week, an American oil tanker was attacked in the Red Sea near Yemen, which likely spooked markets during the middle of the week. Any prolonged conflict involving American oil interests may help the market break out of its recent trading range.

Gold made a high near $2,060 an ounce on Monday before falling back to $2,005 an ounce on Wednesday. The market would rebound to close the week at $2,030 an ounce.

In international news, it was revealed on Tuesday that inflation in Canada increased to 3.6 percent on an annualized basis from 3.3 percent a month ago. China revealed that retail sales were up 7.4 percent on an annual basis while gross domestic product was up 5.2 percent on an annualized basis over the past quarter. In Great Britain, inflation was up to 4 percent from 3.9 percent a month ago while retail sales fell 3.2 percent compared to last month. Finally, in Australia, the unemployment rate remained at 3.9 percent from November to December.

A number of important reports will be released this week. On Wednesday, the Flash Services PMI and Flash Manufacturing PMI figures will be made public. On Thursday, advance GDP data for the last quarter will be made available while the Core PCE Price Index will be released on Friday.

A slew of monetary policy decisions will be forthcoming from central banks around the globe including Japan and most of the major economies in the European Union (EU). The Bank of Canada (BOC) will also release its latest rate decision, and when taken as a whole, what other banks do might provide some insight into what the Fed has planned in March.

Market Perspective for January 14, 2024

Market Perspective for January 14, 2024

The first full trading week of 2024 featured the release of December’s inflation figures, which could have an impact on future interest rate decisions. On Thursday, it was revealed that inflation during the final month of the year was 3.4 percent, surprising most observers who believed that inflation was going to come in at 3.2 percent. While that figure would have still been higher than the 3.1 percent recorded in November, it probably would have been enough to assume that the worst was over in terms of the Fed’s inflation fight.

It is worth noting that the news wasn’t significant enough for anyone from the Fed to say that rate cuts were off the table. However, it may give pause to some voting members who may believe that the battle against inflation isn’t over until the Fed’s target of 2 percent is reached.

Prior to Thursday’s release, it was expected that the Fed could enact a rate cut in March. However, after the release Fed Member Mester said that she doesn’t believe the time is right for a rate cut and that inflation probably won’t come back to 2 percent at any point in 2024.

In other news this week, unemployment claims data was also released on Thursday morning, and it was revealed that 202,000 people sought benefits over the last seven days. This was just below the 203,000 claims reported last week and well below the analyst estimate of 209,000 claims.

On Friday, it was revealed that Core PPI was flat for the month, which means that prices for goods excluding food and energy prices remained unchanged. Overall PPI was down .1 percent for the month, which was in line with the previous month and lower than what analysts expected prior to the release.

The S&P 500 was up 1.58 percent this week to close at 4,783. On Friday, the market touched a record high of 4,802 before easing back later in the day. The market opened trading at the low of the week of 4,706 before steadily climbing.

The Dow was also up this week finishing .82 percent higher to close at 37,592. As with the S&P, the Dow would also make its weekly open at the open on Monday before climbing. The low for the week was 37,470 while the high for the past five trading days was 37,825.

Finally, the Nasdaq was up 2.67 percent to finish at 14,972 for the week. The market would make a high on Friday of 15,039 and a low of 14,586 on Monday. While it didn’t make an all-time high like the S&P did this week, it is only 2 percent off the mark and could break the existing record of 15,497 with a strong finish to the month.

Oil prices continued to remain range bound for the month as traders can’t seem to push the market above $75 a barrel or below $70. The market has been stuck in a rather tight range for the past two months.

Gold spent most of Monday and Tuesday confined to a range between $2,020 and $2,040 per ounce. However, the market broke out on Wednesday to reach a weekly low of $2,010 before rebounding to hit a weekly high of close to $2,070 on Friday.

In international news, the Swiss central bank revealed that inflation was flat over the previous month on an annualized basis. Inflation in Japan remained at 2.1 percent while price pressures eased slightly in Australia as the CPI reading for December came in at 4.3 percent compared to 4.4 percent a month ago. In China, prices fell about .3 percent compared to a fall of .4 percent last month. In Great Britain, the gross domestic product (GDP) was up .3 percent monthly.

This upcoming week will be another that is likely to start slowly thanks to the Martin Luther King Day holiday on Monday. However, the action is likely to pick up on Wednesday when retail sales figures are released. It’s expected that sales will be up .4 percent on a monthly basis. Unemployment, home sales and other key reports will also be released throughout the week while several members of the Fed are expected to give speeches that might create market volatility.

Market Perspective for January 7, 2024

Market Perspective for January 7, 2024

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.