Author: 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. 

The week before the Christmas holiday was eventful. On Wednesday, the first important piece of data for the week was released when the Consumer Board released its Consumer Confidence Index. The index came in at 110.7, which was higher than the 104.6 expected by analysts prior to the report’s release. It was also significantly higher than November’s reading of 101.

This would not be the only barometer of consumer confidence that would be released this week. On Friday, the University of Michigan came out with its own index revealing that consumer sentiment had increased from 69.4 last month to 69.7 in December. These figures come on the heels of a drop in the annual inflation rate and comments from Fed Chair Jerome Powell that interest rate cuts may be coming in 2024.

A couple more key reports were released on Thursday as quarterly gross domestic product (GDP) numbers were revealed. During the previous quarter, the economy grew at a rate of 4.9 percent, which was slightly lower than the 5.2 percent predicted by analysts prior to the report’s release. It was also lower than the 5.2 percent reading from the second quarter of 2023. However, that still represents healthy economic growth, leading many to believe inflation can be reined in without a recession.

Also on Thursday, unemployment figures for the last seven days came out, and during that period, 205,000 claims were received, which was up slightly from 203,000 a week ago. It was thought prior to the release that 214,000 people had applied for unemployment benefits since last Thursday.

On Friday, the monthly Core PCE Price Index came out at 8:30 a.m. It showed that prices had gone up .1 percent since November, which was less than the .2 percent that was expected prior to the release. In addition, both durable and core durable orders were up this past month by 5.4 percent and .5 percent respectively.

The Dow was relatively flat for the week finishing up 35.91 points to close at 37,385. On Wednesday, the market made its high of the week at 37,636 while the low was reached on Thursday at 37,186. For the month, the Dow was nearly 2,000 points or 5.65 percent while it finished the year up 4,182 points or 12.6 percent.

Like the Dow, the S&P 500 remained relatively flat for the week finishing up .47 percent to close at 4,754. It would also make its high of the week on Wednesday at 4,776 and its low of the week on Thursday at 4,706. For the month, the S&P is up 4.37 percent and for the year it is up 23.66 percent.

Finally, the Nasdaq was up 1 percent for the week to close at 14,992. Unlike the other two major indices, it would make both its high and low of the week on Wednesday. On that day, the market would reach 15,068 before plummeting all the way to 14,811. Investors who put their money into this index were the big winners for the year as it is up more than 42 percent over the past twelve months.

Internationally, the Bank of Japan kept interest rates steady at -.1 percent while China kept its prime rates on short-term loans at 3.45 percent and long-term loans at 4.2 percent. In Canada, the median inflation rate was 3.4 percent on an annualized basis and .1 percent on a monthly basis. The inflation rate in Great Britain eased to 3.9 percent on an annualized basis while the final inflation rate for the European Union was 2.4 percent.

The past week brought inflation data for November and the Fed’s interest rate decision. More importantly, the Fed seems to be pivoting to the idea that rate cuts are on the horizon in 2024.

On Tuesday, the first important news release took place as the CPI report for November was made available to the public. On a yearly basis, inflation dropped .1 percent to 3.1 percent, which was exactly what analysts predicted. However, on a monthly basis, inflation went up .1 percent whereas analysts had expected it to remain flat. Core CPI was up .3 percent for the month, which is what experts had predicted.

Although the Fed’s rate decision Wednesday afternoon was the main event for the week, it was not the first report released that day. Wednesday morning saw the release of the Producer Price Index (PPI), which found that prices remained flat for the previous month. Furthermore, it found that core PPI was also flat, despite the belief that it would go up .2 percent.

As expected, the Fed did not raise rates. In remarks made after the decision was released, Fed Chair Jerome Powell said that recent data showed a path to sustainable reductions in inflation over the next several months. He also mentioned that there was a possibility of rate cuts starting in March 2024.

Of course, there was some pushback on that idea by other Fed members, but it did mark a significant change in tone by the central bank. Over the past several months, the Fed has stood by the assertion that decisions would be driven by data and that rate increases were still possible. Ultimately, this relatively dovish stance is an indication that the worst may be over and that risks are shifting from being too accommodating to being too restrictive.

Ironically, this could create another temporary round of inflation as markets respond positively to the news. In anticipation of rate cuts, investors, businesses and consumers may start to pour money back into the market.

On Thursday, it was revealed that retail sales were up .3 percent as opposed to down .1 percent as analysts had expected. It was also announced Thursday morning that unemployment claims were down to 202,000 from 219,000 a week ago. This could mean that there is still upward price pressures being placed on the market. Of course, the uptick in job creation could also be a result of the holiday season and the temporary labor most companies add this time of year.

On Friday, the Empire State Manufacturing Index came in at -14.5, which was well under the positive two expected by analysts. The Flash Manufacturing PMI was also lower this month coming it at 48.2 compared to 49.4 in October.

The Dow was up 2.58 percent to close at 37,319, which is both a yearly and all-time high for this market. It would make a low of the week on Monday when it opened at 36,274 and would simply continue to rise during the next four trading days. For the year, the Dow is up 12.41 percent or 4,110 points.

The S&P 500 was also up this week by 2.5 percent to finish at 4,723. As with the Dow, the S&P 500 made its low of the week on Monday and would spend most of the week climbing to new highs. It would make its high of the week on Thursday when it hit 4,732. For the year, the S&P is up 21 percent or 828 points.

Finally, the Nasdaq was up 3.2 percent to finish at 14,831. As with the Dow, it would make a low on Monday of 14,347 before reversing and spending the rest of the week making new highs. The Nasdaq made its high of the week on Thursday at 14,840. For the year, the Nasdaq is up a whopping 37 percent.

The upcoming week is certain to be busy at it is the final full week before the Christmas and New Year’s holidays. The final gross domestic product (GDP) figures for the previous quarter are due on Thursday along with unemployment claims for the previous week. In addition, the Consumer Board and the University of Michigan are set to release consumer confidence reports on Wednesday and Friday, respectively. Finally, monetary policy statements and inflation figures are set to be released by central banks in Australia and Japan on Monday, Canada on Tuesday and Great Britain on Wednesday.