What I’m Watching This Week – 11 February 2019

The Markets (as of market close February 8, 2019)

Most of the benchmark indexes listed here posted gains for the seventh consecutive week. Only the Global Dow lagged behind. Utilities and information technology shares performed well last week, while oil and energy shares did not fare quite so favorably. International trade once again was in the news as negotiations between the United States and China continue with no apparent resolution in sight. Investors will be keeping their eyes on the rhetoric from both of the global economic giants as the deadline for the tariff truce draws nearer. Of the indexes listed here, the Nasdaq led the way, followed by the Russell 2000, which continued to perform best since the beginning of the year.

Oil prices fell last week, closing at $52.71 per barrel by late Friday, down from the prior week’s closing price of $55.37 per barrel. The price of gold (COMEX) dipped for the first time in several weeks, dropping to $1,317.90 by last Friday evening, off from the prior week’s price of $1,322.00. The national average retail regular gasoline price was $2.254 per gallon on February 4, 2019, $0.002 lower than the prior week’s price and $0.383 less than a year ago.

Market/Index 2018 Close Prior Week As of 2/8 Weekly Change YTD Change
DJIA 23327.46 25063.89 25106.33 0.17% 7.63%
Nasdaq 6635.28 7263.87 7298.20 0.47% 9.99%
S&P 500 2506.85 2706.53 2707.88 0.05% 8.02%
Russell 2000 1348.56 1502.05 1506.39 0.29% 11.70%
Global Dow 2736.74 2947.87 2920.60 -0.93% 6.72%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.68% 2.63% -5 bps -5 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

  • Some government agencies are playing catch-up as they post information not available during the shutdown. Such is the case with the release of the international trade deficit, which is for November. According to the Bureau of Economic Analysis, the goods and services deficit was $49.3 billion, down $6.4 billion from October. November exports were $209.9 billion, $1.3 billion less than October exports. November imports were $259.2 billion, $7.7 billion less than October imports. The November decrease in the goods and services deficit reflected a decrease in the goods deficit of $6.7 billion to $71.6 billion and a decrease in the services surplus of $0.3 billion to $22.3 billion. Year-to-date, the goods, and services deficit increased $51.9 billion, or 10.4%, from the same period in 2017. Exports increased $157.1 billion, or 7.3%. Imports increased $208.9 billion, or 7.9%.
  • Economic activity in the services sector slowed in January. According to the Non-Manufacturing ISM® Report On Business®, the non-manufacturing index fell 1.3% from its December reading. Business activity and new orders also regressed, while employment and prices increased. Survey respondents expressed concern about the impacts of the government shutdown but remained generally optimistic about overall business conditions.
  • For the week ended February 2, there were 234,000 new claims for unemployment insurance, a decrease of 19,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended January 26. The advance number of those receiving unemployment insurance benefits during the week ended January 26 was 1,736,000, a decrease of 42,000 from the prior week’s level, which was revised down by 4,000.

Eye on the Week Ahead

More economic information should be forthcoming as government agencies try to catch up following the shutdown. Inflation indicators are front and center this week with reports on the Consumer Price Index and the retail sales report. Also, the Treasury budget report should be out this week, which should be for last December.

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What I’m Watching This Week – 4 February 2019

The Markets (as of market close February 1, 2019)

The benchmark indexes listed here rose for the week, particularly last Wednesday and Thursday. Strong corporate earnings reports, especially in the communication services sector, helped push stock prices higher. However, the biggest boost to the market may have come following the Federal Reserve’s meeting last Wednesday. The Fed decided to keep interest rates at their current spread and removed any reference to future rate increases. For the year, the small caps of the Russell 2000 lead the way, followed by the Nasdaq, the S&P 500, the Global Dow, and the Dow.

Oil prices rose slightly last week, closing at $55.37 per barrel by late Friday, up from the prior week’s closing price of $53.55 per barrel. The price of gold (COMEX) continued to surge, climbing to $1,322.00 by last Friday evening, up from the prior week’s price of $1,308.20. The national average retail regular gasoline price was $2.256 per gallon on January 28, 2019, $0.005 higher than the prior week’s price but $0.351 less than a year ago.

Market/Index 2018 Close Prior Week As of 2/1 Weekly Change YTD Change
DJIA 23327.46 24737.20 25063.89 1.32% 7.44%
Nasdaq 6635.28 7164.86 7263.87 1.38% 9.47%
S&P 500 2506.85 2664.76 2706.53 1.57% 7.97%
Russell 2000 1348.56 1482.85 1502.05 1.29% 11.38%
Global Dow 2736.74 2919.57 2947.87 0.97% 7.71%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.76% 2.68% -8 bps 0 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

Note:  Due to the partial government shutdown, some reports have not been updated. If and when this information becomes available, it will be included in the corresponding market report.

  • Two important economic reports scheduled for release last week were not available as some government agencies try to catch up following the shutdown. The initial report on the fourth-quarter gross domestic product has been delayed, as has the report on personal income and outlays.
  • Following its meeting last week, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at 2.25%-2.50%. The FOMC noted that slowing global growth requires patience as it determines whether or when to change rates in the future. Of importance is the fact that the Committee did not indicate a predetermined number of rate increases as it had done previously.
  • Due to the government shutdown, the report on new home sales, released on January 31, is for the month of November. Sales of new homes climbed sharply in November, up 16.9% over October’s figures. New home sales are still off 7.7% from November 2017. The median sales price of new houses sold in November was $302,400. The average sales price was $362,400. The estimate of new houses for sale at the end of November was 330,000, which represents an inventory of 6.0 months.
  • Manufacturing picked up the pace in January, according to the Manufacturing ISM® Report On Business®. New orders, production, and inventories each moved higher in January over their December figures. Employment, deliveries, and prices all fell, however.
  • The IHS, Markit US Manufacturing PMI™ also saw manufacturing improve in January. Domestic demand drove new business growth, as new export orders rose only marginally and at the weakest rate since last October. Business confidence about the year ahead also picked up markedly to reach a three-month high.
  • For the week ended January 26, there were 253,000 new claims for unemployment insurance, an increase of 53,000 from the previous week’s level, which was revised up by 1,000. This is the highest level for initial claims since September 30, 2017, when it was 254,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended January 19. The advance number of those receiving unemployment insurance benefits during the week ended January 19 was 1,782,000, an increase of 69,000 from the prior week’s level.

Eye on the Week Ahead

This week is a slow one for economic news. However, with more corporate earnings reports out, the market could continue its strong showing.

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Monthly Market Review – January 2019

The Markets (as of market close January 31, 2019)

Investors celebrated a month in which several indexes posted their best January performance in three decades. A strong labor market, low inflation, and a more “patient” Federal Reserve Board all sent encouraging messages to investors who were hungry for good news after last December’s precipitous plunge. The Russell 2000 led the charge, closing the month more than 11% higher than its 2018 close, followed by a nearly 10% gain in the Nasdaq, while the S&P 500, Dow, and Global Dow all topped 7%.

By the close of trading on January 31, the price of crude oil (WTI) was $53.95 per barrel, up from the December 31 price of $45.81 per barrel. The national average retail regular gasoline price was $2.256 per gallon on January 28, down slightly from the December 31 selling price of $2.266 and $0.351 lower than a year ago. The price of gold rose by the end of January, reaching $1,325.70 by close of business on the 31st, up from $1,284.70 at the end of December.

Market/Index 2018 Close Prior Month As of January 31 Month Change YTD Change
DJIA 23327.46 23327.46 24999.67 7.17% 7.17%
NASDAQ 6635.28 6635.28 7281.74 9.74% 9.74%
S&P 500 2506.85 2506.85 2704.10 7.87% 7.87%
Russell 2000 1348.56 1348.56 1499.42 11.19% 11.19%
Global Dow 2736.74 2736.74 2945.73 7.64% 7.64%
Fed. Funds 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.68% 2.63% -5 bps -5 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Month’s Economic News

Note:  Due to the partial government shutdown earlier this month, some reports were delayed.

  • Employment: Total employment rose by 312,000 in December after adding 176,000 (revised) new jobs in November. Notable employment increases for the month occurred in health care (50,000), food services and drinking places (41,000), construction (38,000), manufacturing (32,000), and transportation and warehousing (25,000). The unemployment rate advanced from 3.7% in November to 3.9% in December. The number of unemployed persons increased by 276,000 to 6.3 million. A year earlier, the jobless rate was 4.1%, and the number of unemployed persons was 6.6 million. The labor participation rate rose 0.2% from November to 63.1% in December. The employment-population ratio remained at 60.6%. The average workweek increased 0.1 hour to 34.5 hours in December. Average hourly earnings increased by $0.11 to $27.48. Over the last 12 months, average hourly earnings have risen $0.84, or 3.2%.
  • FOMC/interest rates: At its two-day meeting on January 29 and 30, the Federal Open Market Committee decided to leave rates unchanged, and, in an apparent reversal from opinions expressed last month, did not predict whether future hikes were in the future. “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.” The next FOMC meeting is scheduled for March 19 and 20.
  • GDP/budget: The advance estimate of the fourth-quarter gross domestic product, scheduled for release earlier this week, was delayed.
  • Inflation/consumer spending: The Consumer Price Index fell 0.1% in December after being unchanged in November. Over the previous 12 months, the CPI rose 1.9%. Core prices, which exclude food and energy, climbed 0.2% for the month and were up 2.2% over the previous 12 months. According to the Producer Price Index, the prices companies received for goods and services dropped 0.2% in December following a 0.1% increase in November. Producer prices increased 2.5% over the 12 months ended in December. Prices less food, energy, and trade services were unchanged in December after rising 0.3% the prior month, and were up 2.8% over the previous 12 months. The Personal Income and Outlays report, scheduled for release earlier this week, was delayed.
  • Housing: The housing sector has been slow to pick up speed primarily due to higher mortgage rates and scant inventory. Sales of existing homes plunged 6.4% in December from November. Year-over-year, existing home sales were down 10.3%. The December median price for existing homes was $253,600, down from $257,700 in November. However, existing home prices were up 2.9% from December 2017. Total housing inventory for existing homes for sale fell from 1.74 million in November to 1.55 million in December, rendering a 3.7-month supply at the then-current sales pace. By contrast, sales of new single-family homes jumped by 17% from October to November 2018, but were nearly 7.7% lower than in November 2017. The median sales price for new homes was $302,400, down from $325,100 in October and $41,000 lower than a year prior.
  • Manufacturing: The manufacturing sector gained momentum in December. Industrial production edged up 0.3% following a 0.4% advance in November. For the fourth quarter, industrial production advanced at an annual rate of 3.8%. Manufacturing output increased 1.1% — its largest gain since February 2018. The index for mining increased 1.5%, but utilities dropped 6.3%, as warmer-than-usual temperatures lowered the demand for heating. The advance report on durable goods, scheduled for release on January 25, was delayed.
  • Imports and exports: The advance report on international trade in goods, scheduled for release earlier this week, was delayed.
  • International markets: Global stocks responded well to news that the Federal Reserve was hitting the pause button on interest rate hikes, closing out a strong month. And after two days of high-level trade discussions between U.S. and Chinese officials, President Trump confirmed plans to meet with Chinese President Xi Jinping to try to finalize a deal between the two countries by March 1. He also announced that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would travel to China to further the negotiations in the interim. In the eurozone, fourth-quarter growth was tepid, with reports indicating that Italy had fallen into a recession. Global investors were also concerned about reports that China’s manufacturing sector had dipped for the second month in a row, and have been monitoring what happens with Brexit as the March 2019 deadline approaches for a deal to pave the way for the United Kingdom’s exit from the European Union.
  • Consumer confidence: The Conference Board Consumer Confidence Index® declined in January, following a dip in December. The index now stands at 120.2, down from 126.6 in December. The Present Situation Index, which gauges how consumers feel about current business and labor market conditions, dropped by a minimal 0.3. By contrast, the Expectations Index, which measures how consumers view the short-term outlook for income, business, and labor market conditions, dropped more than 10 points. Lynn Franco, Senior Director of Economic Indicators at the organization, attributed the decline to concerns surrounding financial market volatility and the government shutdown.

Eye on the Month Ahead

With the federal government now back at full staff (for at least a few weeks), investors look forward to receiving additional data as it becomes available, offering a more comprehensive view of the nation’s economy. Ears will also be carefully attuned to news of any progress in the U.S.-China trade talks.

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What I’m Watching This Week – 28 January 2019

The Markets (as of market close January 25, 2019)

Last week did not start off well in the market. However, stocks rebounded on Friday, recouping much of the value lost earlier in the week. Nevertheless, stocks ended last week relatively flat. Of the benchmark indexes listed here, only the S&P 500 lost value. Otherwise, the Global Dow gained over a half a point, while the Dow, Nasdaq, and Russell 2000 eked out minimal gains. News last Friday of the temporary end of the government shutdown may give investors some confidence moving into the last week of January.

Oil prices fell slightly last week, closing at $53.55 per barrel by late Friday, down from the prior week’s closing price of $53.83 per barrel. The price of gold (COMEX) climbed to its highest price since last June, closing at $1,308.20 by last Friday evening, up from the prior week’s price of $1,280.60. The national average retail regular gasoline price was $2.251 per gallon on January 21, 2019, $0.004 higher than the prior week’s price but $0.316 less than a year ago.

Market/Index 2018 Close Prior Week As of 1/25 Weekly Change YTD Change
DJIA 23327.46 24706.35 24737.20 0.12% 6.04%
Nasdaq 6635.28 7157.23 7164.86 0.11% 7.98%
S&P 500 2506.85 2670.71 2664.76 -0.22% 6.30%
Russell 2000 1348.56 1482.50 1482.85 0.02% 9.96%
Global Dow 2736.74 2901.05 2919.57 0.64% 6.68%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.78% 2.76% -2 bps 8 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

Note:  Due to the partial government shutdown, some reports have not been updated. If and when this information becomes available, it will be included in the corresponding market report.

  • Sales of existing homes dropped sharply in December after increasing each of the prior two months. Total existing-home sales fell 6.4% from November’s total and are now down 10.3% from a year ago. The median existing-home price in December was $253,600, up 2.9% from December 2017 ($246,500). December’s price increase marks the 82nd straight month of year-over-year gains. Rising interest rates and declining inventory are major factors in the decrease in existing home sales. Available inventory of existing homes for sale fell from 1.74 million in November to 1.55 million in December, which equates to a 3.7-month supply at the current sales pace.
  • For the week ended January 19, there were 199,000 new claims for unemployment insurance, a decrease of 13,000 from the previous week’s level, which was revised down by 1,000. According to the Department of Labor, this is the lowest level for initial claims since November 15, 1969. The advance rate for insured unemployment claims remained at 1.2% for the week ended January 12. The advance number of those receiving unemployment insurance benefits during the week ended January 12 was 1,713,000, a decrease of 24,000 from the prior week’s level.

Eye on the Week Ahead

The last week of the month is potentially full of important economic information, including this year’s first meeting of the Federal Open Market Committee. The employment figures for January are out as well. With the temporary end of the government shutdown, more economic information may be available.

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What I’m Watching This Week – 22 January 2019

The Markets (as of market close January 18, 2019)

Rhetoric that trade tensions between the United States and China may be easing helped quell investors’ concerns, prompting a stock market rally last week. The large caps of the S&P 500 and the Dow led the way, followed by the Nasdaq, the Russell 2000, and the Global Dow. This marks the fourth consecutive week of positive returns, the longest such streak since last August. For the month (and year), each of the benchmark indexes listed here are well ahead of their 2018 closing values. The small-cap Russell 2000 is nearly 10.0% above its 2018 closing value, while the Nasdaq is ahead by almost 8.0% since the end of December.

Oil prices climbed again last week, closing at $53.83 per barrel by late Friday, up from the prior week’s closing price of $51.67 per barrel. The price of gold (COMEX) fell for the first time in several weeks, closing at $1,280.60 by last Friday evening, down from the prior week’s price of $1,288.50. The national average retail regular gasoline price was $2.247 per gallon on January 14, 2019, $0.010 higher than the prior week’s price but $0.310 less than a year ago.

Market/Index 2018 Close Prior Week As of 1/18 Weekly Change YTD Change
DJIA 23327.46 23995.95 24706.35 2.96% 5.91%
Nasdaq 6635.28 6971.48 7157.23 2.66% 7.87%
S&P 500 2506.85 2596.26 2670.71 2.87% 6.54%
Russell 2000 1348.56 1447.38 1482.50 2.43% 9.93%
Global Dow 2736.74 2847.60 2901.05 1.88% 6.00%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.69% 2.78% 9 bps 10 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

Note:  Due to the partial government shutdown, some reports have not been updated. If and when this information becomes available, it will be included in the corresponding market report.

  • Prices producers receive for goods and services fell 0.2% in December after rising 0.1% and 0.6% in November and October, respectively. Producer prices climbed 2.5% in 2018, the same increase as in 2017. A closer look shows that prices for goods dropped 0.4%, largely due to a 13.1% decrease in gasoline prices. Overall, energy prices fell 5.4% in December. Prices for services edged down 0.1% last month following three straight months of increases. The drop in prices for services was led by a 0.3% decrease in trade services (the margin between wholesale prices and retail prices) and a 0.2% drop in transportation and warehousing services.
  • Prices paid for imported goods decreased 1.0% in December after falling 1.9% in November. Lower fuel prices drove the decline in December, as nonfuel prices recorded no change. Prices received for exported goods fell 0.6% last month following a 0.8% drop in November. For 2018, import prices decreased 0.6% following a 3.2% increase in 2017. The decline in 2018 was the first calendar-year drop since import prices fell 8.3% in 2015. On the other hand, export prices increased 1.1% in 2018, and have not recorded a calendar year decrease since falling 6.6% in 2015.
  • According to the Federal Reserve, industrial production increased 0.3% in December after rising 0.4% in November. Manufacturing output increased 1.1% last month, its largest gain since February 2018. The output of mines rose 1.5%, but the index for utilities fell 6.3%, as warmer-than-usual temperatures lowered the demand for heating. Overall, total industrial production was 4.0% higher in December than it was a year earlier.
  • For the week ended January 12, there were 213,000 new claims for unemployment insurance, a decrease of 3,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended January 5. The advance number of those receiving unemployment insurance benefits during the week ended January 5 was 1,737,000, an increase of 18,000 from the prior week’s level, which was revised down by 3,000.

Eye on the Week Ahead

The housing sector is front and center next week with reports on new and existing home sales in December. Also of interest is the December report on durable goods orders. November saw orders for core capital goods (excluding aircraft and goods produced for the Defense Department) fall 0.6% in November — not a good sign for manufacturers moving forward.

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What I’m Watching This Week – 14 January 2019

The Markets (as of market close January 11, 2019)

For the third straight week, stocks posted positive returns by the close of last week. Each of the indexes listed here gained at least 2.40%, with the small caps of the Russell 2000 zooming up by almost 5.0%. Energy shares had a strong week as oil prices rallied. Investors were also encouraged by rhetoric from Federal Reserve chairman Jerome Powell, who advised that the economy remained on solid ground and that the Fed would be sensitive to changes in the economy when determining whether to raise interest rates.

Oil prices climbed last week, closing at $51.67 per barrel by late Friday, up from the prior week’s closing price of $48.26 per barrel. The price of gold (COMEX) increased last week, closing at $1,288.50 by last Friday evening, up from the prior week’s price of $1,286.70. The national average retail regular gasoline price was $2.237 per gallon on January 7, 2019, $0.029 lower than the prior week’s price and $0.285 less than a year ago.

Market/Index 2018 Close Prior Week As of 1/11 Weekly Change YTD Change
DJIA 23327.46 23433.16 23995.95 2.40% 2.87%
Nasdaq 6635.28 6738.86 6971.48 3.45% 5.07%
S&P 500 2506.85 2531.94 2596.26 2.54% 3.57%
Russell 2000 1348.56 1380.75 1447.38 4.83% 7.33%
Global Dow 2736.74 2772.41 2847.60 2.71% 4.05%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.66% 2.69% 3 bps 1 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

  • Consumer prices fell slightly in December, dropping 0.1%, after being unchanged in November. Over the last 12 months ended in December, the index has increased 1.9% — the first time the 12-month change has been under 2.0% since August 2017. Driving the December decrease was a 7.5% decline in the gasoline index. The index less food and energy increased 0.2% in December, the same increase as in October and November. Over the last 12 months, prices excluding food and energy have risen 2.2%.
  • Though a bit dated, the latest figures from the Job Openings and Labor Turnover Summary revealed that the number of job openings fell to 6.9 million on the last business day of November. There were 7.1 million job openings in October. The number of hires fell from 5.9 million in October to 5.7 million in November. Total separations also fell from 5.6 million in October to 5.5 million in November. Over the 12 months ended in November, hires totaled 68.0 million and separations totaled 65.6 million, yielding a net employment gain of 2.4 million.
  • According to the December 2018 Non-Manufacturing ISM® Report On Business®, the services sector slowed last month. The non-manufacturing index dropped 3.1 percentage points lower in December from November. Business activity fell 5.3 percentage points, employment receded 2.1 percentage points, and prices plummeted 6.7 percentage points. New orders posted a marginal 0.2 percentage point uptick in December, while exports jumped 2.0 percentage points. Respondents remained concerned about tariffs and available employment resources.
  • For the week ended January 5, 2019, there were 216,000 new claims for unemployment insurance, a decrease of 17,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended December 29, 2018. The advance number of those receiving unemployment insurance benefits during the week ended December 29 was 1,722,000, a decrease of 28,000 from the prior week’s level, which was revised up by 10,000.

Eye on the Week Ahead

More reports relating to consumer prices and inflation are on tap for this week. The Federal Reserve’s report on industrial production and capacity utilization for December will be worth examining, particularly following purchasing managers’ indication last week that manufacturing is slowing.

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What I’m Watching This Week – 7 January 2019

The Markets (as of market close January 4, 2019)

Stocks posted solid gains by the close of the first week of the new year. A favorable jobs report helped push the benchmark indexes listed here higher last Friday, as stocks recovered from an ominous start at the beginning of the week. Helping ease investors’ fears of a slowing economy, Fed Chair Jerome Powell indicated economic data is pointing to a good start to the economy in 2019, but, more importantly, the Federal Reserve is amenable to making adjustments if necessary. The small caps of the Russell 2000 led the way last week, followed by the Nasdaq and the Global Dow. The large caps of the S&P 500 and the Dow also advanced by more than 1.50%.

Oil prices advanced slightly last week, closing at $48.26 per barrel by late Friday, up from the prior week’s closing price of $45.07 per barrel. The price of gold (COMEX) increased last week, closing at $1,286.70 by last Friday evening, up from the prior week’s price of $1,283.10. The national average retail regular gasoline price was $2.266 per gallon on December 31, 2018, $0.055 lower than the prior week’s price and $0.254 less than a year ago.

Market/Index 2018 Close Prior Week As of 1/4 Weekly Change YTD Change
DJIA 23327.46 23062.40 23433.16 1.61% 0.45%
Nasdaq 6635.28 6584.52 6738.86 2.34% 1.56%
S&P 500 2506.85 2485.74 2531.94 1.86% 1.00%
Russell 2000 1348.56 1337.92 1380.75 3.20% 2.39%
Global Dow 2736.74 2718.19 2772.41 1.99% 1.30%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.71% 2.66% -5 bps -2 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

  • Note: Due to the government shutdown, some economic reports are unavailable. If and when information is released, it will be included in the corresponding What I’m Watching This Week report.
  • There were 312,000 new jobs added in December, but the unemployment rate rose 0.2 percentage point to 3.9%. Job gains occurred in health care, food services and drinking places, construction, manufacturing, and retail trade. The number of unemployed persons increased by 276,000 to 6.3 million. Comparatively, the unemployment rate was 4.1% and the number of unemployed was 6.6 million in December 2017. The labor force participation rate was 63.1%, and the employment-population ratio was 60.6% for the third consecutive month. The average workweek increased by 0.1 hour to 34.5 hours in December. Average hourly earnings rose $0.11 to $27.48. Over the year, average hourly earnings have increased by $0.84, or 3.2%.
  • Purchasing managers noted a drop-off in confidence among manufacturers in December, with the degree of optimism dipping to the lowest point since October 2016. The IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 53.8 in December, down from 55.3 in November. Overall, manufacturers’ optimism and production fell to their lowest respective levels in 15 months. Job creation sputtered to an 18-month low.
  • The report from the Institute for Supply Management® followed the Markit results. The December PMI® registered 54.1%, a decrease of 5.2 percentage points from the November reading of 59.3%. The New Orders Index registered 51.1%, a decrease of 11 percentage points from the November reading of 62.1%. The Production Index registered 54.3%, 6.3 percentage point decrease compared to the November reading of 60.6%. The Employment Index registered 56.2%, a decrease of 2.2 percentage points from the November reading of 58.4%.
  • For the week ended December 29, there were 231,000 new claims for unemployment insurance, an increase of 10,000 from the previous week’s level, which was revised up by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended December 22. The advance number of those receiving unemployment insurance benefits during the week ended December 22 was 1,740,000, an increase of 32,000 from the prior week’s level, which was revised up by 7,000.

Eye on the Week Ahead

Can the market sustain its push upward, or was last week merely the result of investors taking advantage of lower stock prices? If the government shutdown ends, we should see many economic reports come out this week, including the latest releases on international trade, the federal budget deficit, and the Consumer Price Index.

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