What I’m Watching This Week – 2 January 2018

The Markets (as of market close December 29, 2017)

While 2017 surely was a strong year for equities overall, the last week of the year was lackluster at best. Each of the benchmark indexes listed here posted week-over-week losses, except for the Global Dow, which increased 0.23%. Much of last week’s performance could be attributable to nothing more than light trading during the holiday-shortened week. The Nasdaq, which led the way for the year, lost the most ground, followed by the small-cap Russell 2000. The large-cap indexes of the Dow and S&P 500, which had been consistent gainers all year, pulled back the last week of 2017. Long-term bond prices rose, pushing yields on the 10-year Treasuries down more than 7 basis points by the end of the week.

The price of crude oil (WTI) climbed to $60.10 per barrel last Friday, up from the prior week’s closing price of $58.35 per barrel. The price of gold (COMEX) rose to $1,305.10 by early Friday evening, ahead of the prior week’s price of $1,279.10. The national average retail regular gasoline price increased to $2.472 per gallon on December 25, 2017, $0.022 above the prior week’s price and $0.163 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/29 Weekly Change YTD Change
DJIA 19762.60 24754.06 24719.22 -0.14% 25.08%
Nasdaq 5383.12 6959.96 6903.39 -0.81% 28.24%
S&P 500 2238.83 2683.34 2673.61 -0.36% 19.42%
Russell 2000 1357.13 1542.93 1535.51 -0.48% 13.14%
Global Dow 2528.21 3078.46 3085.41 0.23% 22.04%
Fed. Funds target rate 0.50%-0.75% 1.25%-1.50% 1.25%-1.50% 0 bps 75 bps
10-year Treasuries 2.44% 2.48% 2.41% -7 bps -3 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

  • The international trade deficit was $69.7 billion in November, up $1.6 billion, or 2.3%, from $68.1 billion in October. Exports of goods for November were $133.7 billion, $3.8 billion more than October exports. Imports of goods for November were $203.4 billion, $5.4 billion more than October imports.
  • The Conference Board Consumer Confidence Index® fell to 122.1 in December, down from 128.6 in November. The Present Situation Index, which measures consumers’ views on the present state of the economy, increased from 154.9 to 156.6, although the Expectations Index declined from 111.0 in November to 99.1 in December.
  • In the week ended December 23, initial claims for unemployment insurance was 245,000, unchanged from the previous week’s level. The advance insured unemployment rate remained 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended December 16 was 1,943,000, an increase of 7,000 from the previous week’s level, which was revised up 4,000.

Eye on the Week Ahead

The first week of 2018 should see trading pick up. The December 2017 employment report is out this Friday, which could reveal a slight drop in the unemployment rate.