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Market Perspective for January 14, 2024

Market Perspective for January 14, 2024

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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

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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.