The first full trading week in January was quite volatile as the market anticipates a number of policy changes that will likely have an impact on stocks, bonds and currencies when Donald Trump takes office.
The first major news release came out on Tuesday when the Price Producers Index for December was made public. It was reported that Core PPI was flat while overall PPI was up .2 percent. Analysts had expected Core PPI to increase by .2 percent while overall PPI was expected to increase by .4 percent.
On Wednesday, inflation data was released and provided some calm to jittery markets. It was revealed that Core CPI increased by .2 percent for December while overall CPI was up .3 percent. It was believed that Core CPI increased by .3 percent prior to the release while overall CPI was in line with analyst expectations. On an annualized basis, inflation rose from 2.7 percent to 2.9 percent.
Thursday saw the release of retail sales data in addition to unemployment claims data for the previous seven days. Core retail sales as well as overall retail sales were up by .4 percent over the last month, which was lower than the projected .5 percent and .6 percent increases, For the past week, there were 217,000 claims for unemployment benefits, which was higher than the projected 210,000 claims prior to the report’s release.
On Friday, Treasury Secretary Janet Yellen announced that extraordinary measures would begin on Tuesday. Those measures are designed to ensure that the government doesn’t default on its financial obligations after the nation hits its debt limit. A default could happen at some point in the summer if the debt ceiling isn’t increased or abandoned altogether.
The S&P 500 finished the week up 3.61 percent to close at 5,996. It made its low of the week on Monday morning when it dipped to 5,981 just before noon that day. The market then reversed and would finish at its weekly high. Despite the strong gains over the past five trading days, the index is still down about 1 percent for the month.
Like the S&P, the Dow also finished the week up more than 3 percent closing at 43,487 at the end of trading on Friday. The two indexes were also similar in that they made their lows of the week on Monday. On Monday, the Dow dipped to 41,957 before reversing and closing just off its high of the week of 43,632.
Finally, the Nasdaq finished at 19,630, which was a gain of 3.87 percent for the week. It made its low of the week on Monday morning when it dipped to 18,882 and would make its high of the week of 19,687 on Friday afternoon. As with the other indexes, the Nasdaq is down for the year having lost nearly 2 percent in January.
In international news, Great Britain announced on Tuesday morning that inflation was 2.5 percent on an annualized basis, which was slightly lower than the 2.6 percent reported in December. On Wednesday, the nation announced that retail sales were up .1 percent for the month. Australia announced on Wednesday evening that the nation’s unemployment rate inched up to 4 percent despite its economy adding over 50,000 jobs in the final month of 2024. It was announced early Friday morning that Japan will likely increase the nation’s key interest rate next week.
The upcoming week is going to feature a significant number of events, besides the inauguration of President-Elect Trump on Monday. On Friday, Flash Services and Flash Manufacturing PMI reports will be made public, and several European countries will release their own such reports on Thursday evening and early Friday morning.