What I'm Watching This Week

What I’m Watching This Week – 18 March 2024

Published on March 18, 2024 by dredheadz

The Markets (as of market close March 15, 2024)

Equities closed lower for the second straight week, with the Russell 2000 losing nearly 2.0%. A sell-off in tech shares pulled the Nasdaq down 0.7%, marking the first back-to-back weekly losses since last October. Higher-than-expected inflation data may have raised investor concerns that the Federal Reserve may keep interest rates elevated for longer than hoped for. Information technology, consumer discretionary, health care, industrials, real estate, and utilities underperformed, while energy jumped more than 4.0%. Long-term bond prices slipped, driving yields higher. The dollar ended the week higher. Crude oil prices rose 4.0%. Gold prices declined, ending a three-week rally.

Stocks mostly slipped lower to start the week, with only the Dow inching up 0.1%, as investors may have exercised caution ahead of the upcoming Consumer Price Index report. The Russell 2000 (-0.8%), the Nasdaq (-0.4%), the Global Dow (-0.4%), and the S&P 500 (-0.1%) lost value last Monday. Ten-year Treasury yields gained 1.5 basis points to close at 4.10%. Crude oil prices ticked up 0.1% to reach $78.09 per barrel. The dollar and gold prices rose 0.1%.

Wall Street saw stocks edge higher last Tuesday, despite a slight bump in the February Consumer Price Index (see below). The Nasdaq (1.5%) and the S&P 500 (1.1%) led the benchmark indexes listed here, followed by the Dow (0.6%) and the Global Dow (0.5%). The Russell 2000 declined less than 0.1%. The expected increase in prices did not dampen investors’ expectations that the Federal Reserve will cut rates, possibly in June. Tech and AI shares resumed their recent rally, helping to push stocks higher. Ten-year Treasury yields closed at 4.15% after adding 5.1 basis points. Crude oil prices slipped $0.19 to $77.74 per barrel as Houthi forces stepped up Red Sea attacks. The dollar inched up 0.1%, while gold prices fell for the first time in several sessions, declining 1.2%.

The Russell 2000 (0.3%), the Global Dow (0.2%), and the Dow (0.1%) advanced last Wednesday, while the Nasdaq (-0.5%) and the S&P 500 (-0.2%) declined, as the tech rally slowed. Yields on 10-year Treasuries gained 3.7 basis points to close at 4.19%. Crude oil prices rose to $79.73 per barrel after increasing $2.17. The dollar dipped 0.1%, while gold prices rose 0.5%.

Stocks closed lower last Thursday, likely in response to another batch of higher-than-expected inflation data. Ten-year Treasury yields also jumped 10.6 basis points to 4.29% as bond prices slid lower. Crude oil prices reached a four-month high after hitting $80.08 per barrel. The dollar advanced 0.6%, while gold prices fell 0.7%. Each of the benchmark indexes listed here lost value, led by the Russell 2000, which fell 2.0%. The Global Dow declined 0.5%, the Dow lost 0.4%, while the Nasdaq and the S&P 500 dipped 0.3%.

Friday saw stocks fall, with the Nasdaq (-1.0%) and the S&P 500 (-0.7%) dropping the furthest among the benchmark indexes listed here. The Dow lost 0.5% and the Global Dow dipped 0.3%. The Russell 2000 rose 0.4%. Ten-year Treasury yields ticked up less than 1.0 basis point. Crude oil prices followed two days of advances by slipping 0.3%. The dollar inched up 0.1%, while gold prices fell 0.3%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 3/15	Weekly Change	YTD Change
DJIA	37,689.54	38,722.69	38,714.77	-0.02%	2.72%
Nasdaq	15,011.35	16,085.11	15,973.17	-0.70%	6.41%
S&P 500	4,769.83	5,123.69	5,117.09	-0.13%	7.28%
Russell 2000	2,027.07	2,082.71	2,039.32	-2.08%	0.60%
Global Dow	4,355.28	4,592.17	4,572.84	-0.42%	5.00%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.08%	4.30%	22 bps	44 bps
US Dollar-DXY	101.39	102.75	103.43	0.66%	2.01%
Crude Oil-CL=F	$71.30	$77.88	$81.00	4.01%	13.60%
Gold-GC=F	$2,072.50	$2,184.80	$2,161.20	-1.08%	4.28%

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 News

Inflation rose for the second straight month in February. The Consumer Price Index increased 0.4% last month after rising 0.3% in January. Over the last 12 months, the CPI increased 3.2%. Prices for shelter rose 0.4% in February and prices for gasoline increased 3.8%. Combined, these two indexes contributed over 60.0% of the monthly increase. Prices for food were unchanged in February. Energy prices rose 2.3%, while prices less food and energy advanced 0.4%. Over the last 12 months, prices for food rose 2.2% while energy prices decreased 1.9%. Prices less food and energy increased 3.8% since February 2023. Shelter prices increased 5.7% over the last year, accounting for roughly two thirds of the total 12-month increase in prices less food and energy. Other indexes with notable increases over the last year include motor vehicle insurance (20.6%), medical care (1.4%), recreation (2.1%), and personal care (4.2%).
The Producer Price Index rose a higher-than-expected 0.6% in February, following a 0.3% increase in January. Excluding prices for food and energy, producer prices rose 0.3% in February. For the 12 months ended in February, the PPI advanced 1.6%, the largest increase since the 12-month period ended in September 2023. In February, nearly two thirds of the rise in producer prices could be traced to prices for goods, which advanced 1.2%. Prices for services moved up 0.3%. The increase in producer prices is in line with the Consumer Price Index, which showed price pressures have held firmer than expected.
Retail and food services sales rose 0.6% last month and 1.5% over the February 2023 rate. Retail trade sales increased 0.6% in February and 0.8% above last year. Nonstore (internet) retail sales dipped 0.1% in February but were up 6.4% over the last 12 months.
Prices for both imports and exports advanced in February. Import prices rose 0.3% last month after rising 0.8% in January. Despite the recent increases, import prices decreased 0.8% over the past 12 months. Import fuel prices rose 1.8% in February, while nonfuel import prices ticked up 0.2%. Export prices increased 0.8% in February after rising 0.9% in January. Nevertheless, since February 2023, export prices have fallen 1.8%, which was the smallest 12-month decrease since the 12-month period ended in February 2023.
The Treasury budget deficit was $296.0 billion in February, up from $22.0 billion in January. Total receipts were $271.0 billion, while outlays were $567.0 billion. Through the first five months of the fiscal year, the deficit is $828.0 billion, about $100.0 billion above the deficit over the same period for the last fiscal year.
Industrial production edged up 0.1% in February after declining 0.5% in January. In February, manufacturing rose 0.8% after declining 1.1% in January. Mining climbed 2.2%. The gains in manufacturing and mining partly reflected recoveries from weather-related declines in January. Utilities fell 7.5% in February because of warmer-than-typical temperatures. Total industrial production in February was 0.2% below its year-earlier level.
The national average retail price for regular gasoline was $3.376 per gallon on March 11, $0.026 per gallon more than the prior week’s price but $0.080 per gallon less than a year ago. Also, as of March 11, the East Coast price increased $0.025 to $3.265 per gallon; the Midwest price rose $0.018 to $3.287 per gallon; the Gulf Coast price fell $0.004 to $2.945 per gallon; the Rocky Mountain price rose $0.063 to $3.077 per gallon; and the West Coast price increased $0.067 to $4.296 per gallon.
For the week ended March 9, there were 209,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level, which was revised down by 7,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 2 was 1.2%, unchanged from the previous week’s rate, which was revised down by 0.1%. The advance number of those receiving unemployment insurance benefits during the week ended March 2 was 1,811,000, an increase of 17,000 from the previous week’s level, which was revised down by 112,000. States and territories with the highest insured unemployment rates for the week ended February 24 were Rhode Island (3.1%), New Jersey (2.9%), Massachusetts (2.6%), California (2.4%), Minnesota (2.4%), Illinois (2.2%), New York (2.2%), Connecticut (2.1%), Montana (2.0%), and Pennsylvania (2.0%). The largest increases in initial claims for unemployment insurance for the week ended February 24 were in New York (+14,176), California (+5,549), Texas (+2,102), Michigan (+979), and Florida (+783), while the largest decreases were in Massachusetts (-3,894), Rhode Island (-1,955), Oregon (-1,063), Georgia (-882), and Tennessee (-335).

Eye on the Week Ahead

The Federal Open Market Committee meets this week. It is not expected that the Committee will lower interest rates at this time, however, it may give some more discernible indication as to when rates may be decreased. The FOMC does not meet again until the beginning of May.

What I’m Watching This Week – 11 March 2024

Published on March 11, 2024 by dredheadz

The Markets (as of market close March 8, 2024)

Wall Street fell from record highs to close generally lower last week. A better-than-expected jobs report (see below) helped support the notion that the economy remains strong and that the Federal Reserve will likely cut interest rates, possibly after their June meeting. However, the unemployment rate ticked up for the first time in four months. The tech-heavy Nasdaq led the decline in the benchmark indexes for the week, with only the Global Dow and the Russell 2000 closing higher. Crude oil prices posted a weekly loss as China’s demand waned. Gold prices rallied to their largest weekly increase in five months, driven higher by optimism of mid-year interest rate cuts.

Stocks closed last Monday in the red. After reaching record highs the prior week, both the Nasdaq (-0.4%) and the S&P 500 (-0.1%) fell. The Dow lost 0.3%, while the Russell 2000 slipped 0.1%. The Global Dow was flat. Ten-year Treasury yields inched up to 4.21%. Crude oil prices settled at about $78.72 per barrel after declining $1.25. The dollar ended the session where it began, while gold prices added 1.4%.

Wall Street saw equities extend their losses last Tuesday, driven by a widespread sell-off of tech shares. The Nasdaq fell 1.7% to lead the downturn, followed by the Russell 2000, Dow, and the S&P 500 (-1.0%). The Global Dow dipped 0.3%. The yield on 10-year Treasuries fell 8.2 basis points to 4.13%. Crude oil prices also continued to decline, falling to $78.14 per barrel. The dollar was flat, while gold prices rose 0.5%.

Last Wednesday saw stocks rebound after Fed Chair Jerome Powell maintained his stance that interest rates are likely to be cut sometime this year. The Russell 2000 and the Global Dow gained 0.7%, followed by the Nasdaq (0.6%), the S&P 500 (0.5%), and the Dow (0.2%). Ten-year Treasury yields slipped 3.3 basis points to close at 4.10%. Crude oil prices gained nearly $1.00 to settle at $79.13 per barrel. The dollar fell 0.4%, while gold prices rose 0.6%.

Stocks advanced for the second straight day last Thursday, with both the Nasdaq and the S&P 500 hitting new record highs. Tech shares fueled much of the rally, particularly AI stocks. By the close of trading, the Nasdaq rose 1.5%, the S&P 500 climbed 1.0%, the Russell 2000 gained 0.8%, the Global Dow advanced 0.7%, and the Dow increased 0.3%. Ten-year Treasury yields ticked lower to close at 4.09%. Crude oil prices closed at $78.89 per barrel. The dollar continued to slide, falling 0.5%. Gold prices advanced for the fourth straight day.

Last Friday’s volatile session saw stocks finish lower as a rally in chip stocks lost steam. Each of the benchmark indexes finished the session lower, with the Nasdaq falling the furthest (-2.3%), followed by the S&P 500 (-0.7%), the Dow (-0.2%), and the Russell 2000 (-0.1%). the Global Dow ended the session where it began. Ten-year Treasury yields were flat, while crude oil prices slipped 1.4%. The dollar lost less than 0.1%, while gold prices rose 0.9%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 3/8	Weekly Change	YTD Change
DJIA	37,689.54	39,087.38	38,722.69	-0.93%	2.74%
Nasdaq	15,011.35	16,274.94	16,085.11	-1.17%	7.15%
S&P 500	4,769.83	5,137.08	5,123.69	-0.26%	7.42%
Russell 2000	2,027.07	2,076.39	2,082.71	0.30%	2.74%
Global Dow	4,355.28	4,539.46	4,592.17	1.16%	5.44%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.18%	4.08%	-10 bps	22 bps
US Dollar-DXY	101.39	103.88	102.75	-1.09%	1.34%
Crude Oil-CL=F	$71.30	$79.80	$77.88	-2.41%	9.23%
Gold-GC=F	$2,072.50	$2,092.40	$2,184.80	4.42%	5.42%

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 News

Employment rose by 275,000 in February. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing. The change in employment for December was revised down by 43,000, and the change for January was revised down by 124,000. With these revisions, employment in December and January combined was 167,000 lower than previously reported. In February, the unemployment rate rose by 0.2 percentage point to 3.9%, and the number of unemployed people increased by 334,000 to 6.5 million. A year earlier, the jobless rate was 3.6%, and the number of unemployed people was 6.0 million. In February, the labor force participation rate was 62.5% for the third consecutive month, while the employment-population ratio decreased 0.1 percentage point to 60.1%. In February, average hourly earnings edged up by $0.05 to $34.57, following an increase of $0.18 in January. Average hourly earnings were up by 0.1% in February and 4.3% over the last 12 months. In February, the average workweek edged up by 0.1 hour to 34.3 hours, following a decline of 0.2 hour in January.
According to the latest Job Openings and Labor Turnover Survey, the number of job openings in January, at 8.9 million, was little changed from the previous month. The total number of hires, at 5.7 million, fell by 100,000, while total separations, at 5.3 million, decreased by 78,000.
Purchasing manager survey respondents noted a solid performance in February, according to the latest purchasing managers’ index from S&P Global. Output rose for the 13th consecutive month, while new business rose for the fourth straight month in February. Costs to service providers eased to the slowest pace since October 2020.
The international trade in goods and services deficit in January was $67.4 billion, up $3.3 billion, or 5.1% from the December deficit. January exports were $257.2 billion, $0.3 billion, or 0.1% more than December exports. January imports were $324.6 billion, $3.6 billion, or 1.1% more than December imports. Since January 2023, the goods and services deficit decreased $2.9 billion, or 4.1%. Exports decreased $1.0 billion, or 0.4%, while imports fell $3.9 billion, or 1.2%.
The national average retail price for regular gasoline was $3.350 per gallon on March 4, $0.101 per gallon more than the prior week’s price but $0.039 per gallon less than a year ago. Also, as of March 4, the East Coast price increased $0.036 to $3.240 per gallon; the Midwest price rose $0.171 to $3.269 per gallon; the Gulf Coast price climbed $0.104 to $2.949 per gallon; the Rocky Mountain price advanced $0.032 to $3.014 per gallon; and the West Coast price increased $0.147 to $4.229 per gallon.
For the week ended March 2, there were 217,000 new claims for unemployment insurance, unchanged 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 for the week ended February 24 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 24 was 1,906,000, an increase of 8,000 from the previous week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates for the week ended February 17 were New Jersey (2.8%), Rhode Island (2.7%), Minnesota (2.5%), California (2.4%), Massachusetts (2.4%), Illinois (2.2%), Montana (2.1%), Alaska (2.0%), New York (2.0%), and Pennsylvania (2.0%). The largest increases in initial claims for unemployment insurance for the week ended February 24 were in Massachusetts (+4,032), Rhode Island (+1,936), Connecticut (+429), California (+311), and Missouri (+310), while the largest decreases were in Oklahoma (-1,943), Texas (-1,121), Michigan (-980), Oregon (-823), and Florida (-752).

Eye on the Week Ahead

Inflation data for February is available this week with the Consumer Price Index, import and export prices, and the Producer Price Index. January saw prices increase across the board, although 12-month data showed prices either decreased or were unchanged.

What I’m Watching This Week – 4 March 2024

Published on March 4, 2024 by dredheadz

The Markets (as of market close March 1, 2024)

Wall Street continued its February rally into March as stocks closed last week notably higher with the exception of the Dow, which ticked lower. Investor enthusiasm about tech shares, particularly AI stocks, helped drive the upturn. Inflation data also was positive. While consumer prices ticked up in January, the 12-month rate actually declined, lessening concerns that the Federal Reserve would delay interest rate cuts beyond this year. Information technology led the market sectors, with real estate and consumer discretionary also moving higher. The yield on 10-year Treasuries fell as bond prices advanced. Crude oil prices ended the week higher. The dollar slipped lower, while an end-of-week rally helped drive gold prices up.

Last Monday saw stocks step back from the prior week’s record highs as investors awaited the latest inflation data. Among the benchmark indexes listed here, only the Russell 2000 gained, finishing the session up 0.7%. The remaining indexes closed the day in the red, with the S&P 500 falling 0.4%, while the Global Dow dropped 0.3%. the Dow and the Nasdaq dipped about 0.1%. Ten-year Treasury yields inched up to 4.29% after gaining 3.9 basis points. Crude oil prices rose $1.17 to $77.66 per barrel. The dollar and gold prices declined.

Stocks were mixed last Tuesday, with the Russell 2000 (1.4%) extending gains from the previous session. The Nasdaq advanced 0.4%, the Global Dow rose 0.3%, and the S&P 500 ticked up 0.2%. The Dow dipped 0.3%. Crude oil prices rose to $78.65 per barrel after gaining $1.07 due to supply concerns and a stronger U.S. demand. Ten-year Treasury yields settled at 4.31%. The dollar and gold prices were flat.

Wall Street saw stocks slip lower last Wednesday as investors were a bit apprehensive ahead of the upcoming inflation report. Each of the benchmark indexes listed here closed the session lower, with the Russell 2000 falling the furthest (-0.8%), followed by the Nasdaq (-0.6%), the Global Dow (-0.3%), and the Dow (-0.1%). Ten-year Treasury yields dipped 4.1 basis points to 4.27%. Crude oil prices declined $0.45 to $78.42 per barrel. The dollar and gold prices were flat.

Stocks closed higher last Thursday as investors gained some relief that the latest price inflation data matched expectations. The Nasdaq gained 0.9% to reach an all-time high. The Russell 2000 added 0.7%, the S&P 500 gained 0.5%, while the Dow and the Global Dow inched up 0.1%. Ten-year Treasury yields slipped to 4.25%. Crude oil prices settled at $78.25 per barrel after falling $0.29. The dollar and gold prices closed higher.

The Nasdaq and the S&P 500 reached new record highs last Friday. The Nasdaq gained 1.1% to lead the benchmark indexes listed here, followed by the Russell 2000 (1.0%), the S&P 500 (0.8%), the Global Dow (0.6%), and the Dow (0.2%). Ten-year Treasury yields fell 7.2 basis points to end the day at 4.18%. The dollar dipped lower while gold prices rose 1.8%. Crude oil prices gained $1.47 to reach $79.80 per barrel.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 3/1	Weekly Change	YTD Change
DJIA	37,689.54	39,131.53	39,087.38	-0.11%	3.71%
Nasdaq	15,011.35	15,996.82	16,274.94	1.74%	8.42%
S&P 500	4,769.83	5,088.80	5,137.08	0.95%	7.70%
Russell 2000	2,027.07	2,016.69	2,076.39	2.96%	2.43%
Global Dow	4,355.28	4,515.13	4,539.46	0.54%	4.23%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.26%	4.18%	-8 bps	32 bps
US Dollar-DXY	101.39	103.96	103.88	-0.08%	2.46%
Crude Oil-CL=F	$71.30	$76.56	$79.80	4.23%	11.92%
Gold-GC=F	$2,072.50	$2,045.30	$2,092.40	2.30%	0.96%

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 News

Gross domestic product (GDP) grew at an annualized rate of 3.2% in the fourth quarter of 2023, according to the second estimate. In the third quarter, GDP increased 4.9%. Compared to the third quarter of 2023, the deceleration in GDP in the fourth quarter primarily reflected a downturn in private inventory investment and slowdowns in federal government spending, residential fixed investment, and consumer spending. Imports, which are a negative in the calculation of GDP, decelerated. The personal consumption expenditures (PCE) price index increased 1.8%, an upward revision of 0.1 percentage point. Excluding food and energy prices, the PCE price index increased 2.1%, an upward revision of 0.1 percentage point. Personal consumption expenditures rose 3.0% in the fourth quarter, compared to a 3.1% advance in the third quarter.
Personal income rose 1.0% in January, while consumer spending inched up 0.2%, down from December’s 0.7% increase. The personal consumption expenditures price index, a noted measure of inflation, rose 0.3% in January after ticking up 0.1% (revised) in December. However, the 12-month rate rose 2.4%, down from 2.6% for the year ended in December, and closer to the Federal Reserve’s goal of 2.0% inflation. Core prices, less food and energy, advanced 0.4% in January (0.1% in December) and 2.8% for the year ended in January (2.9% for the 12 months ended in December).
Sales of new single-family homes rose 1.5% in January, a pace that was slightly below expectations. Since January 2023, sales rose 1.8%. The median sales price of new single-family houses sold in January was $420,700 ($413,100 in December). The average sales price was $534,300 ($493,400 in December). Inventory of homes for sale stood at an 8.3-month supply in January, the same as in December.
New orders for manufactured durable goods decreased 6.1% in January, marking the third monthly decline out of the last four months. Excluding transportation, new orders decreased 0.3%. Excluding defense, new orders decreased 7.3%. Transportation equipment, also down three of the last four months, led the decrease, falling 16.2%.
The international trade in goods deficit was $90.2 billion in January, up $2.3 billion, or 2.6%, from $87.9 billion in December. Exports of goods for January were $170.4 billion, $0.4 billion, or 0.2%, more than December exports. Imports of goods for January were $260.6 billion, $2.7 billion, or 1.1%, more than December imports.
Manufacturing accelerated in February for the second straight month, according to the S&P survey of purchasing managers. The February S&P Global US Manufacturing Purchasing Managers’ Index™ was 52.2, up from 50.7 in January. The February reading marked the strongest improvement in operating conditions in the manufacturing sector since July 2022. New orders grew at the fastest pace in 21 months, while export orders expanded for the first time in three months. Overall, total sales rose at the sharpest pace since May 2022.
The national average retail price for regular gasoline was $3.249 per gallon on February 26, $0.020 per gallon less than the prior week’s price and $0.093 per gallon less than a year ago. Also, as of February 26, the East Coast price decreased $0.026 to $3.204 per gallon; the Midwest price fell $0.024 to $3.098 per gallon; the Gulf Coast price decreased $0.056 to $2.845 per gallon; the Rocky Mountain price advanced $0.060 to $2.982 per gallon; and the West Coast price increased $0.025 to $4.082 per gallon.
For the week ended February 24, there were 215,000 new claims for unemployment insurance, an increase of 13,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 17 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 17 was 1,905,000, an increase of 45,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended February 10 were New Jersey (2.8%), Rhode Island (2.7%), Minnesota (2.5%), Massachusetts (2.4%), California (2.3%), Illinois (2.3%), Montana (2.1%), Alaska (2.0%), New York (2.0%), Pennsylvania (2.0%), and Washington (2.0%). The largest increases in initial claims for unemployment insurance for the week ended February 17 were in Oklahoma (+1,802), Ohio (+915), Tennessee (+490), Iowa (+387), and the District of Columbia (+198), while the largest decreases were in California (-8,980), Kentucky (-3,671), Michigan (-1,905), New York (-1,643), and Illinois (-1,431).

Eye on the Week Ahead

The employment sector is front and center this week with the releases of the latest Job Openings and Labor Turnover Survey and the employment situation. The numbers of job openings, hires and separations have been relatively consistent over the past few months and are expected to stay in line with recent trends. On the other hand, employment rose by an unexpectedly high 353,000 in January, which, when coupled with upward revisions for November and December, shows the employment sector has remained strong.

Monthly Market Review – February 2024

Published on March 1, 2024 by dredheadz

The Markets (as of market close February 29, 2024)

Stocks ended February on a high note as each of the benchmark indexes listed here closed up. The Nasdaq and the S&P 500 notched all-time highs, as tech shares, particularly those linked to AI, helped drive stocks. Inflation data released at the end of the month, was in line with expectations, which also supported stocks. February’s gains marked the fourth straight month of advances for the S&P 500, the Dow, and the Nasdaq. For the year, the Nasdaq and the S&P 500 have risen about 7.0%, while the small caps of the Russell 2000 recouped losses from January.

Inflationary data showed price pressures remained marginally elevated, driven higher by rising prices for services. However, the rate of growth for the 12 months ended in February slowed, according to the personal consumption expenditures price index (see below), which rose 2.4%, nearing the 2.0% target set by the Federal Reserve. The U.S. economy, as measured by gross domestic product, continued to show strength in the fourth quarter of 2023 (see below). Consumer spending was solid reflecting greater confidence that inflation is coming down leading to increased spending power, especially where incomes are also rising.

The most recent inflation data showed prices inched higher in January for the second straight month. Both the Consumer Price Index (CPI) and the personal consumption expenditures price index increased in January. However, the 12-month rate for the CPI was unchanged for the year ended in January, while the PCE price index declined 0.2 percentage point.

Job growth vaulted higher in January (see below). In addition, both December and November were revised higher, adding 126,000 new jobs. Wages continued to rise, increasing 4.5% over the last 12 months. New unemployment claims decreased from a year ago, while total claims paid increased (see below).

With most of the reporting for fourth-quarter corporate earnings completed, the earnings growth rate for S&P 500 was 3.2%, marking the second straight quarter of year-over-year earnings growth, according to FactSet. The growth rate for revenue for the S&P 500 for the fourth quarter was 4.0%. While this is below both the five-year and the 10-year averages, growth in the fourth quarter marks the 13th consecutive quarter of revenue growth for the S&P 500. Eight of the 11 sectors reported revenue growth in the fourth quarter, with utilities, materials, and energy declining.

Sales of both new and existing homes increased in January, as inventory increased somewhat and mortgage rates decreased.

Industrial production ticked lower in January after no growth in December. Manufacturing declined 0.5% in January and 0.9% since January 2023. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, the manufacturing sector saw improvement in January for the first time since April 2023. The services sector saw business accelerate to a seven-month high in January.

All 11 market sectors ended January higher, led by industrials and materials. In fact, only real estate, communication services, utilities, and energy failed to advance at least 3.0%.

Bond yields gained as bond prices declined in January. Ten-year Treasury yields generally closed the month higher. The 2-year Treasury yield rose nearly 43.0 basis points to about 4.62% in February. The dollar inched higher against a basket of world currencies. Gold prices rode a topsy-turvy month, ultimately closing lower. Crude oil prices advanced in January on the heels of production cuts and shipping interruptions in the Middle East. The retail price of regular gasoline was $3.249 per gallon on February 26, $0.154 above the price a month earlier but $0.093 lower than a year ago.

Stock Market Indexes

Market/Index	2023 Close	Prior Month	As of February 29	Monthly Change	YTD Change
DJIA	37,689.54	38,150.30	38,996.39	2.22%	3.47%
Nasdaq	15,011.35	15,164.01	16,091.92	6.12%	7.20%
S&P 500	4,769.83	4,845.65	5,096.27	5.17%	6.84%
Russell 2000	2,027.07	1,947.34	2,054.84	5.52%	1.37%
Global Dow	4,355.28	4,375.95	4,508.75	3.03%	3.52%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	3.96%	4.25%	29 bps	39 bps
US Dollar-DXY	101.39	103.55	104.13	0.56%	2.70%
Crude Oil-CL=F	$71.30	$75.76	$78.32	3.38%	9.85%
Gold-GC=F	$2,072.50	$2,057.90	$2,052.10	-0.28%	-0.98%

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

Latest Economic Reports

Employment: Total employment increased by 353,000 in January following an upwardly revised December total of 333,000 new jobs. Employment trended up in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry. Employment increased by an average of 255,000 per month in 2023. Overall, in 2023 total employment was revised up by 359,000. In January, the unemployment rate was unchanged at 3.7% but was 0.3 percentage point higher than the rate a year earlier. The number of unemployed persons declined by 144,000 to 6.1 million but was 405,000 above the January 2023 figure. In January, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.3 million, was little changed from December and accounted for 20.8% of all unemployed people. The labor force participation rate, at 62.5%, was unchanged from the December figure, while the employment-population ratio, at 60.2%, ticked up 0.1 percentage point. In January, average hourly earnings increased by $0.19, or 0.6%, to $34.55. Since January 2023, average hourly earnings rose by 4.5%. The average workweek decreased by 0.2 hour to 34.1 hours in January, and was down 0.5 hours over the last 12 months.
There were 215,000 initial claims for unemployment insurance for the week ended February 24, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,905,000. A year ago, there were 221,000 initial claims, while the total number of workers receiving unemployment insurance was 1,718,000.
FOMC/interest rates: The Federal Open Market Committee did not meet in February after maintaining the target range for the federal funds rate at the current 5.25%-5.50% following its meeting in January.
GDP/budget: The economy, as measured by gross domestic product, accelerated at an annualized rate of 3.2% in the fourth quarter, according to the second estimate. GDP increased 4.9% in the third quarter. Compared to the third quarter, personal consumption expenditures dipped from 3.1% to 3.0%. Fixed investment rose 2.5%, a 0.1 percentage point decline from the third quarter. Nonresidential fixed investment rose 1.0 percentage point to 2.4%, while residential fixed investment fell 3.8 percentage points to 2.9%. Exports increased from 5.4% to 6.4%. Imports decreased from 4.2% to 2.7%. Government spending decreased 1.6 percentage points to 4.2%. Consumer spending, as measured by the personal consumption expenditures index, rose 3.0% in the fourth quarter, down from 3.1% in the previous quarter. The personal consumption expenditures price index increased 1.8% in the fourth quarter, compared with an increase of 1.7% in the third quarter.
January saw the federal budget deficit come in at $22.0 billion, down roughly $107.0 billion from the December 2023 deficit. The deficit for the first four months of fiscal year 2024, at $531.9 billion, is roughly $70.0 billion higher than the first four months of the previous fiscal year. So far in fiscal year 2024, total government receipts were $1.6 trillion ($1.5 trillion in 2023), while government outlays were $2.1 trillion through the first four months of fiscal year 2024, compared to $1.9 trillion over the same period in the previous fiscal year.
Inflation/consumer spending: According to the latest personal income and outlays report, personal income rose 1.0% in January (0.3% in December), while disposable personal income increased 0.3% in January, unchanged from the prior month. The notable advance in personal income in January reflects increases in minimum wages in several states and the annual cost of living increase for Social Security recipients. Consumer spending advanced 0.2% in January after increasing 0.7% the previous month. Consumer prices climbed 0.3% in January after inching up 0.1% in December. Excluding food and energy (core prices), consumer prices rose 0.4% in January, 0.3 percentage point above the December advance. Consumer prices rose 2.4% since January 2023, 0.2 percentage point less than the advance for the 12 months ended in December. Core prices increased 2.8% over the same period, 0.1 percentage point lower than the year ended in December.
The Consumer Price Index rose 0.3% in January after ticking up 0.2% in December. Over the 12 months ended in January, the CPI rose 3.1%, down 0.3 percentage point from the period ended in December. Excluding food and energy prices, the CPI rose 0.4% in January, up 0.1 percentage point from the previous month, and 3.9% from January 2023, unchanged from the 12-month period ended in December. The January increase was the largest since September 2023. Prices for shelter, up 0.6%, continued to rise in January, contributing to over two-thirds of the monthly all items increase. Energy fell 0.9% over the month, due in large part to a 3.3% decrease in gasoline prices and a 4.5% drop in prices for fuel oil. Food prices increased 0.4% in January.
Prices that producers received for goods and services rose 0.3% in January after falling 0.1% in December. Producer prices increased 0.9% for the 12 months ended in January, down 0.1 percentage point from the 12 months ended in December. Producer prices less foods, energy, and trade services inched up 0.6% in January (0.2% in December), while prices excluding food and energy increased 0.5%. For the 12 months ended in January, prices less foods, energy, and trade services moved up 2.6%, a 0.1 percentage point increase over the 12 months ended in December. Prices less foods and energy increased 2.0% for the year ended in January (1.8% for the period ended in December). In January, prices for food fell 0.3% for the month and 3.6% for the year. Energy prices were down 1.7% in January.
Housing: Sales of existing homes rose 3.1% in January from December. However, sales were down 1.7% from January 2023. The median existing-home price was $379,100 in January, lower than the December price of $381,400 but higher than the January 2023 price of $360,800. Unsold inventory of existing homes represented a 3.0-month supply at the current sales pace, down slightly from 3.1 months in December but above the 2.9-month supply in January 2023. Sales of existing single-family homes increased 3.4% in January but declined 1.4% for the year. The median existing single-family home price was $383,500 in January, down marginally from $385,800 in December but above the January 2023 price of $365,400. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.77% as of February 15, up from 6.64% the previous week and 6.32% one year ago.
New single-family home sales increased in January, climbing 1.5% from December’s total. Sales were up 1.8% from January 2023. The median sales price of new single-family houses sold in January was $420,700 ($413,100 in December). The January average sales price was $534,300 ($493,400 in December). The inventory of new single-family homes for sale in January represented a supply of 8.1 months at the current sales pace, down from 9.2 months in December.
Manufacturing: Industrial production edged down 0.1% in January after being unchanged in the previous month. Manufacturing output declined 0.5% in January after ticking up 0.1% in December. Mining fell 2.3%, while utilities jumped 6.0% as demand for heating surged as milder December weather preceded colder temperatures in January. Over the past 12 months ended in January, total industrial production was identical to its year-earlier reading. For the 12 months ended in January, manufacturing decreased 0.9%, utilities increased 9.0%, while mining fell 1.2%.
New orders for durable goods fell 6.1% in January following a 0.3% decrease in December. New orders for durable goods fell 0.8% since January 2023. Excluding transportation, new orders declined 0.3% in January. Excluding defense, new orders decreased 7.3%. New orders for transportation equipment dropped 16.2% in January, while new orders for nondefense aircraft and parts plunged 58.9%.
Imports and exports: U.S. import prices advanced 0.8% in January following a 0.7% decline in the previous month. The January increase was the first one-month rise in import prices since September 2023 and the largest monthly advance since March 2022. Despite the January increase, U.S. import prices fell 1.3% over the past year and have not risen on a 12-month basis since January 2023. Prices for import fuel rose 1.2% in January following a 7.7% drop in December. Import fuel prices fell 10.0% from for the 12 months ended in January. Prices for nonfuel imports increased 0.7% in January after being unchanged in December. Nonfuel imports fell 0.3% since January 2023. Export prices advanced 0.8% in January after falling 0.7% in December. The January increase was the first monthly increase in export prices since September 2023. Higher nonagricultural export prices in January more than offset lower agricultural prices. Despite the January increase, U.S. export prices decreased 2.4% over the past 12 months.
The international trade in goods deficit was $90.2 billion in January, up $2.3 billion, or 2.6%, from December. Exports of goods were $170.4 billion in January, 0.4$ billion, or 0.2%, less than in December. Imports of goods were $260.6 billion in January, $2.7 billion, or 1.1%, more than in December. Since January 2023, exports declined 2.9%, while imports fell 1.8%.
The latest information on international trade in goods and services, released February 7, is for December and revealed that the goods and services trade deficit was $62.2 billion, up $0.3 billion from the November deficit. December exports were $258.2 billion, 1.5% more than November exports. December imports were $320.4 billion, 1.3% more than November imports. For 2023, the goods and services deficit decreased $177.8 billion, or 18.7%, from 2022. Exports increased $35.0 billion, or 1.2%. Imports decreased $142.7 billion, or 3.6%.
International markets: Most countries continued to monitor inflationary pressures. Germany saw its rate of price increases slow to 2.5% in February, down from 2.9% in the previous month and more than market expectations. Elsewhere, Canada’s annual inflation rate fell from 3.4% to 2.9%, the Eurozone saw inflation tick down from 2.9% to 2.8%, while the rate of inflation in the United Kingdom remained unchanged at 4.0%. Japan’s consumer prices rose 2.2% for the 12 months ended in January, the slowest pace of growth since March 2022. For February, the STOXX Europe 600 Index rose 2.4%; the United Kingdom’s FTSE gained 0.4%; Japan’s Nikkei 225 Index gained 8.8%; and China’s Shanghai Composite Index rose 8.8%.
Consumer confidence: Consumer confidence declined in February after three consecutive months of increases. The Conference Board Consumer Confidence Index® decreased in February to 106.7, following a downwardly revised 110.9 reading in January. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell back to 147.2 in February, down from 154.9 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, slipped to 79.8 in February, down from a revised 81.5 in January.

Eye on the Month Ahead

Economic data throughout the first two months of the year has been generally solid. However, the upward movement of inflation cooled any expectations of the Federal Reserve lowering interest rates when it meets in March.

What I’m Watching This Week – 26 February 2024

Published on February 26, 2024 by dredheadz

The Markets (as of market close February 23, 2024)

Stocks advanced last week, driven higher by tech shares that were bolstered by favorable corporate earnings reports. The Dow, the Nasdaq, and the S&P 500 posted weekly gains for the 16th time out of the last 18 trading weeks. Among the benchmark indexes listed here, only the small caps of the Russell 2000 closed the week in the red. Each of the 11 market sectors ended the week higher, led by consumer staples, materials, and health care. Bond prices ticked higher, pulling yields lower, with 10-year Treasuries slipping 3.0 basis points. The dollar slipped lower, while gold prices advanced. Crude oil prices fell over $3.00 per barrel.

Wall Street opened last Tuesday lower, dragged down by underperforming megacap technology stocks. The Russell 2000 fell 1.4%, followed by the Nasdaq (-0.9%), the S&P 500 (-0.6%), and the Dow (-0.2%), while the Global Dow was flat. Yields on 10-year Treasuries ticked lower to 4.27%. Crude oil prices edged down $0.92 to $78.27 per barrel. The dollar dipped to its lowest level in about two weeks. Gold prices advanced 0.6%.

Stocks got off to a slow start last Wednesday but were able to pare some of their early losses by the end of trading. The Dow, the Global Dow, and the S&P 500 ticked up 0.1%, while the Russell 2000 (-0.5%) and the Nasdaq (-0.3%) declined. Ten-year Treasury yields gained 5.0 basis points to reach 4.32%. Crude oil prices added $1.02 to close at about $78.06 per barrel. The dollar and gold prices declined.

Last Thursday saw an upbeat earnings report from a chip-making giant help drive stocks higher. The better-than-expected earnings results spurred investor optimism enough to drive both the S&P 500 (2.1%) and the Dow (1.2%) to new record highs, while the Nasdaq gained nearly 3.0%. The Global Dow advanced 1.1% and the Russell 2000 added 1.0% to round out the benchmark indexes listed here. The yield on 10-year Treasuries moved little, ending the session where it started at 4.32%. Crude oil prices gained nearly $0.50 to close at $78.38 per barrel. Gold prices and the dollar ended marginally lower.

Stocks were mixed last Friday, with the Global Dow (0.3%) gaining the most, while the Dow and the Russell 2000 inched up 0.2%. The S&P 500 ended the day flat. The tech-heavy Nasdaq couldn’t maintain the previous day’s momentum, sliding 0.3% by the close of trading. Ten-year Treasury yields fell 6.7 basis points to 4.26%. Crude oil prices dropped $2.00 per barrel. The dollar was flat, while gold prices rose 0.8%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 2/23	Weekly Change	YTD Change
DJIA	37,689.54	38,627.99	39,131.53	1.30%	3.83%
Nasdaq	15,011.35	15,775.65	15,996.82	1.40%	6.56%
S&P 500	4,769.83	5,005.57	5,088.80	1.66%	6.69%
Russell 2000	2,027.07	2,032.74	2,016.69	-0.79%	-0.51%
Global Dow	4,355.28	4,443.56	4,515.13	1.61%	3.67%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.29%	4.26%	-3 bps	40 bps
US Dollar-DXY	101.39	104.28	103.96	-0.31%	2.53%
Crude Oil-CL=F	$71.30	$79.25	$76.56	-3.39%	7.38%
Gold-GC=F	$2,072.50	$2,025.30	$2,045.30	0.99%	-1.31%

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 News

Existing-home sales grew by 3.1% in January, with sales accelerating in the Midwest, South, and West, while remaining steady in the Northeast. Despite the recent increase, sales were 1.7% under the January 2023 pace. Total housing inventory in January represented a 3.0-month supply, down slightly from the 3.1-month supply in December. The median existing-home price was $379,100 in January, down from $381,400 in December, but up from the January 2023 price of $360,800. Sales of single-family existing homes rose 3.4% last month but were 1.4% under the total from a year earlier. The median existing single-family home price was $383,500 in January, down from December’s $385,800, but well above the January 2023 price of $365,400.
The national average retail price for regular gasoline was $3.269 per gallon on February 19, $0.077 per gallon higher than the prior week’s price but $0.110 per gallon less than a year ago. Also, as of February 19, the East Coast price increased $0.079 to $3.230 per gallon; the Midwest price rose $0.078 to $3.122 per gallon; the Gulf Coast price decreased $0.094 to $2.901 per gallon; the Rocky Mountain price advanced $0.131 to $2.922 per gallon; and the West Coast price increased $0.046 to $4.057 per gallon.
For the week ended February 17, there were 201,000 new claims for unemployment insurance, a decrease of 12,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 10 was 1.2%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 10 was 1,862,000, a decrease of 27,000 from the previous week’s level, which was revised down by 6,000. States and territories with the highest insured unemployment rates for the week ended February 3 were New Jersey (2.9%), Rhode Island (2.7%), California (2.5%), Minnesota (2.5%), Massachusetts (2.4%), Illinois (2.2%), Alaska (2.1%), Montana (2.1%), Connecticut (2.0%), New York (2.0%), Pennsylvania (2.0%), and Washington (2.0%). The largest increases in initial claims for unemployment insurance for the week ended February 10 were in Kentucky (+3,264), California (+2,053), Nevada (+364), Maryland (+290), and Washington (+91), while the largest decreases were in Missouri (-3,519), Pennsylvania (-1,477), Texas (-1,431), Illinois (-1,213), and Oregon (-941).

Eye on the Week Ahead

This week is loaded with important, market-moving economic information. The second estimate of the fourth-quarter gross domestic product is available. The initial release had the economy accelerating at an annualized rate of 3.3%. The January report on personal income and outlays is also out at the end of this week. Most investors will be focused on the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve. Prices advanced 0.2% in December. However, January has seen other inflation indicators accelerate at a rate higher than expected, so it is likely the same will hold true for the PCE price index.

What I’m Watching This Week – 20 February 2024

Published on February 20, 2024 by dredheadz

The Markets (as of market close February 16, 2024)

Rising inflation heightened investor concerns that the Federal Reserve may not consider lowering interest rates during the first half of the year. Among the benchmark indexes listed here, only the small caps of the Russell 2000 and the Global Dow were able to gain ground. The Dow snapped a five-week winning streak, while the Nasdaq and the S&P 500 also finished the week lower. With the stock market closed on Monday for President’s Day, investors will have to wait a little longer to try to begin another rally. Materials, utilities, financials, and industrials were better-performing sectors, while information technology and communication services lagged. Ten-year Treasury yields rose for the second straight week. Crude oil prices climbed higher, while the national average for regular gasoline jumped to a two-month high.

Last week began with what turned out to be a choppy day of trading. The Dow added 0.3% to hit a fresh record last Monday. The tech-heavy Nasdaq fell 0.3% and the S&P 500 dipped 0.1%. The small caps of the Russell 2000 jumped 1.8%, while the Global Dow gained 0.4%. Ten-year Treasury yields closed at 4.17%. Gold prices rose $0.17 to $77.01 per barrel. The dollar was flat while gold prices fell 0.2%.

Stocks closed sharply lower last Tuesday following a hotter-than-expected Consumer Price Index (see below). After reaching record highs, each of the benchmark indexes listed here declined. The small caps of the Russell 2000 fell 4.0%, the tech-heavy Nasdaq lost 1.8%, the Dow and the S&P 500 declined 1.4%, while the Global Dow dropped 0.9%. The latest inflation data probably prompted investors to reconsider their expectations of a rate cut by the Federal Reserve in March or May. Yields on 10-year Treasuries jumped 14.4 basis points to 4.31%. Crude oil prices advanced, gaining $0.88 to $77.80 per barrel. The dollar rose 0.7%, while gold prices decreased 1.3%.

Last Wednesday saw stocks rebound from the prior day’s selloff. The Russell 2000 gained 2.4%, followed by the Nasdaq, which added 1.3%. The S&P 500 rose 1.0%, while the Dow and the Global Dow advanced 0.4%. Ten-year Treasury yields declined 4.9 basis points to 4.26%. Crude oil prices fell $1.37 to $76.60 per barrel, The dollar and gold prices slid lower.

Stocks continued to climb higher last Thursday led by the Russell 2000, which gained 2.5%. Investors assessed a slew of favorable corporate earnings centered around information technology, consumer spending, and energy. The Dow and the Global Dow added 0.9%, while the S&P 500 rose 0.6% and the Nasdaq advanced 0.3%. Ten-year Treasury yields dipped to 4.24%. Crude oil prices rose to $78.20 per barrel, up about $1.56 from the prior day’s close. The dollar fell 0.4%, while gold prices rose 0.6%.

Most of the benchmark indexes listed here lost ground last Friday. The Global Dow proved to be the exception, eking out a 0.1% gain. The Russell 2000 fell 1.4%, the Nasdaq dropped 0.8%, the S&P 500 declined 0.5%, and the Dow slipped 0.4%. Ten-year Treasury yields added 5.5 basis points to close at 4.29%. Crude oil prices gained 1.5% to settle just shy of $80.00 per barrel. The dollar was flat, while gold prices rose 0.5%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 2/16	Weekly Change	YTD Change
DJIA	37,689.54	38,671.69	38,627.99	-0.11%	2.49%
Nasdaq	15,011.35	15,990.66	15,775.65	-1.34%	5.09%
S&P 500	4,769.83	5,026.61	5,005.57	-0.42%	4.94%
Russell 2000	2,027.07	2,009.99	2,032.74	1.13%	0.28%
Global Dow	4,355.28	4,406.42	4,443.56	0.84%	2.03%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.18%	4.29%	11 bps	43 bps
US Dollar-DXY	101.39	104.06	104.28	0.21%	2.85%
Crude Oil-CL=F	$71.30	$76.55	$79.25	3.53%	11.15%
Gold-GC=F	$2,072.50	$2,039.50	$2,025.30	-0.70%	-2.28%

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 News

The Consumer Price Index rose 0.3% in January, exceeding expectations with the largest monthly gain since September 2023. Core prices, excluding food and energy, rose 0.4% in January, 0.1 percentage point higher than the December increase. Despite the January increase, the 12-month rate declined from 3.4% to 3.1%, while core prices were unchanged at 3.9%. Prices for shelter, which rose 0.6% last month, contributed more than two thirds of the overall monthly increase. Food prices advanced 0.4%, while energy prices fell 0.9%. In addition to food and shelter, other areas which saw prices increase included motor vehicle insurance and medical care. Prices for used cars and trucks and for apparel were among those that decreased over the month. For the 12 months ended in January, prices for food rose 2.6% and shelter prices advanced 6.0%. Prices for energy declined 4.6%.
The Producer Price Index rose 0.3% in January after falling 0.1% in December. Since January 2023, producer prices have risen 0.9%. Last month, producer prices for services advanced 0.6%, the largest increase since July 2023. Prices for goods declined 0.2%. Producer prices less foods, energy, and trade services rose 0.6% in January, the largest advance since moving up 0.6% in January 2023. For the 12 months ended January 2024, prices for final demand less foods, energy, and trade services increased 2.6%.
Retail sales declined 0.8% in January from the previous month but were up 0.6% from January 2023. Retail trade sales were down 1.1% from December 2023 and 0.2% below sales from a year earlier. Nonstore (online) retail sales were up 6.4% from last year, while sales at food services and drinking places were up 6.3% from January 2023.
Both import prices and export prices rose 0.8% in January after declining 0.7% in December. The January increase in import prices was the first monthly advance since September 2023 and was the largest monthly increase since March 2022. Despite the January increase, import prices fell 1.3% over the past year and have not risen on a 12-month basis since January 2023. Import fuel prices increased 1.2% in January following declines of 7.7% in December and 6.3% in November. The January increase in export prices was also the first monthly increase since September 2023. Over the past 12 months ended in January, export prices decreased 2.4%.
Industrial production edged down 0.1% in January after recording no change in December. Manufacturing output declined 0.5% last month after increasing in both November and December. Mining fell 2.3%, while an increased demand for heating drove utilities up 6.0%. Total industrial production was identical to its year-earlier level. Within the manufacturing sector, durables edged up 0.1% in January, which was more than offset by manufacturing of nondurables, which fell 1.1%.
The Treasury budget deficit was $22.0 billion in January, down from December’s $129.4 billion. January receipts were $477.3 billion, while expenditures were $499.3 billion. Through the first four months of the current fiscal year, the deficit sat at $531.9 billion, about $72.0 billion above the deficit over the same period last fiscal year. Last month, individual income taxes ($283.0 billion) contributed more than half of the total receipts, while Social Security and Medicare payments ($204.0 billion) represented the largest expenditures.
The number of building permits issued for residential construction decreased 1.5% in January from December but were 8.6% above the January 2023 figure. Building permits for single-family residential construction increased 1.6% last month. Housing starts fell 14.8% in January and were 0.7% under the January 2023 rate. Single-family housing starts also declined, falling 4.7%. January home completions were 8.1% below the December estimate but 2.8% above the rate from a year earlier.
The national average retail price for regular gasoline was $3.192 per gallon on February 12, $0.056 per gallon higher than the prior week’s price but $0.198 per gallon less than a year ago. Also, as of February 12, the East Coast price increased $0.034 to $3.151 per gallon; the Midwest price rose $0.133 to $3.044 per gallon; the Gulf Coast price decreased $0.014 to $2.807 per gallon; the Rocky Mountain price advanced $0.045 to $2.791 per gallon; and the West Coast price increased $0.028 to $4.011 per gallon.
For the week ended February 10, there were 212,000 new claims for unemployment insurance, a decrease of 8,000 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 for the week ended February 3 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 3 was 1,895,000, an increase of 30,000 from the previous week’s level, which was revised down by 6,000. States and territories with the highest insured unemployment rates for the week ended January 27 were New Jersey (2.8%), Rhode Island (2.7%), Minnesota (2.5%), Massachusetts (2.4%), California (2.3%), Illinois (2.3%), Montana (2.2%), Alaska (2.1%), Connecticut (2.1%), Pennsylvania (2.1%), and Washington (2.1%). The largest increases in initial claims for unemployment insurance for the week ended February 3 were in Missouri (+1,921), Texas (+1,514), Colorado (+783), Illinois (+612), and Florida (+399), while the largest decreases were in Oregon (-4,561), California (-4,312), Ohio (-4,090), New York (-3,165), and Pennsylvania (-3,075).

Eye on the Week Ahead

There’s very little in terms of market-moving economic data being released this week. The Federal Open Market Committee releases the minutes from its last meeting, which might provide some insight as to the direction the Committee may be headed with respect to interest rates. Also out this week is the January data on sales of existing homes. Sales declined 1.0% in December and 6.2% year over year.

What I’m Watching This Week – 12 February 2024

Published on February 12, 2024 by dredheadz

The Markets (as of market close February 9, 2024)

Stocks closed higher last week, with the S&P 500 and the Nasdaq reaching record highs. Investors were encouraged by generally favorable fourth-quarter corporate earnings data and a downwardly revised Consumer Price Index for December. Each of the benchmark indexes listed here gained ground, led by the Russell 2000 and the Nasdaq. Last week saw information technology, communication services, industrials, and consumer discretionary lead the market sectors, while utilities and consumer staples trended lower. Crude oil prices continued to rise last week amid ongoing Middle East tensions.

The week kicked off with stocks falling as bond yields advanced. The small caps of the Russell 2000 took the brunt of the downturn, giving back 1.3%, followed by the Dow (-0.7%), the Global Dow (-0.5%), the S&P 500 (-0.3%), and the Nasdaq (-0.2%). Yields on 10-year Treasuries gained 13.1 basis points to close at 4.16%. Crude oil prices gained 0.8%, settling at $72.82 per barrel. The dollar advanced 0.5%, while gold prices fell 0.6%.

Equities closed up last Tuesday following a selloff in the prior session. Materials and real estate were solid sectors, offsetting a decline by information technology. Among the benchmark indexes listed here, the Russell 2000 gained the most after adding 0.9%. The Global Dow rose 0.8%, the Dow advanced 0.4%, the S&P 500 climbed 0.2%, while the Nasdaq inched up 0.1%. Ten-year Treasury yields closed at 4.09% after falling 7.4 basis points. Crude oil prices rose roughly $0.70 to $73.48 per barrel. The dollar ticked lower, while gold prices rose 0.4%. With earnings season reaching the half-way mark, 75% of S&P 500 companies have reported actual earnings per share (EPS) above estimates. In aggregate, S&P 500 companies have exceeded estimates by 7.3%, leading to a net $16.0 billion increase in earnings for the fourth quarter since January 19.

Stocks climbed higher last Wednesday as investors chewed over another batch of corporate earnings. The Nasdaq gained 1.0% to lead the benchmark indexes listed here. The S&P 500 rose 0.8% to hit a new record high. The Dow added 0.4% and the Global Dow ticked up 0.2%. The small caps of the Russell 2000 dipped 0.2%. Yields on 10-year Treasuries inched up 2.0 basis points to 4.11%. Crude oil prices rose $0.76 to $74.07 per barrel. The dollar and gold prices declined.

Last Thursday saw the S&P 500 reach 5,000 for the first time in its history, only to close slightly below that mark. A strong performance from chip makers helped advance the Nasdaq by 0.2%. The Dow edged up 0.1%. The small caps of the Russell 2000 led the benchmarks, gaining 1.5%. Despite the gain, the Russell 2000 remains in bear territory (down by 20% from a prior peak in 2021). The Global Dow dipped 0.2%. Crude oil prices jumped $2.60 to $76.46 per barrel. Ten-year Treasury yields closed at 4.17% after gaining 6.0 basis points. The dollar ticked up 0.1%, while gold prices fell 0.1%.

Last Friday saw the S&P 500 (0.6%) top the 5,000 mark, while the Nasdaq (1.3%) closed at a record high. The Russell 2000 enjoyed a second solid day, adding 1.5%. The Global Dow was flat, while the Dow dipped 0.1%. Ten-year Treasury yields inched up 1.7 basis points to 4.18%. Crude oil prices increased $0.32 to $76.55 per barrel. The dollar and gold prices closed the session in the red.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 2/9	Weekly Change	YTD Change
DJIA	37,689.54	38,654.42	38,671.69	0.04%	2.61%
Nasdaq	15,011.35	15,628.95	15,990.66	2.31%	6.52%
S&P 500	4,769.83	4,958.61	5,026.61	1.37%	5.38%
Russell 2000	2,027.07	1,962.73	2,009.99	2.41%	-0.84%
Global Dow	4,355.28	4,395.76	4,406.42	0.24%	1.17%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.03%	4.18%	15 bps	32 bps
US Dollar-DXY	101.39	103.92	104.06	0.13%	2.63%
Crude Oil-CL=F	$71.30	$72.15	$76.55	6.10%	7.36%
Gold-GC=F	$2,072.50	$2,054.10	$2,039.50	-0.71%	-1.59%

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 News

Business activity in the services sector expanded in January at the fastest pace since June 2023. New orders increased in both the domestic market and for exports. The increase in demand spurred more hirings by service firms. At the same time, inflationary pressures softened, with costs to service providers rising at the slowest pace since June 2020. The S&P Global US Services PMI Business Activity Index posted 52.5 in January, up from 51.4 in December. The latest reading marks the fourth straight month of expansion in the services sector.
The latest data from the Bureau of Economic Analysis shows the December trade deficit was $62.2 billion, up $0.3 billion, or 0.5%, from the November deficit. December exports were $258.2 billion, $3.9 billion, or 1.5%, more than November exports. December imports were $320.4 billion, $4.2 billion, or 1.3%, more than November imports. For 2023, the goods and services deficit was $773.4 billion, a decrease of $177.8 billion, or 18.7%, from 2022. This is the lowest annual trade deficit in three years. Exports increased $35.0 billion, or 1.2%. Imports decreased $142.7 billion, or 3.6%.
The national average retail price for regular gasoline was $3.136 per gallon on February 5, $0.041 per gallon higher than the prior week’s price but $0.308 per gallon less than a year ago. Also, as of February 5, the East Coast price increased $0.034 to $3.117 per gallon; the Midwest price rose $0.039 to $2.911 per gallon; the Gulf Coast price increased $0.068 to $2.821 per gallon; the Rocky Mountain price advanced $0.014 to $2.746 per gallon; and the West Coast price increased $0.046 to $3.983 per gallon.
For the week ended February 3, there were 218,000 new claims for unemployment insurance, a decrease of 9,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 27 was 1.2%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 27 was 1,871,000, a decrease of 23,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended January 20 were New Jersey (2.8%), Rhode Island (2.7%), Minnesota (2.6%), California (2.5%), Massachusetts (2.4%), Illinois (2.3%), Montana (2.3%), Alaska (2.2%), Oregon (2.1%), Pennsylvania (2.1%), and Washington (2.1%). The largest increases in initial claims for unemployment insurance for the week ended January 27 were in Oregon (+5,458), California (+5,015), New York (+4,133), Georgia (+1,032), and Texas (+900), while the largest decreases were in Illinois (-2,278), Missouri (-1,588), Massachusetts (-898), Montana (-717), and New Jersey (-507).

Eye on the Week Ahead

January inflation data is available this week with the release of the Consumer Price Index, the Producer Price Index, and the report on import and export prices. Consumer prices rose marginally in December, with the CPI increasing 0.3% for the month and 3.4% for the 12 months ended in December. Producer prices, on the other hand, ticked down 0.1% in December and were up only 1.0% for the year.

What I’m Watching This Week – 5 February 2024

Published on February 5, 2024 by dredheadz

The Markets (as of market close February 2, 2024)

A strong labor report and solid earnings data from megatech companies helped drive stocks higher last week. Each of the benchmark indexes listed here posted solid gains with the exception of the Russell 2000. Nine of the 11 market sectors advanced last week, led by consumer discretionary, consumer staples, and health care, while real estate and energy declined. Ten-year Treasury yields trended lower for most of the week, only to vault higher on Friday. Crude oil prices, which had been surging, fell last week as continued unrest in the Middle East has irritated oil markets. The dollar inched higher, while gold prices advanced.

The S&P 500 (0.8%) and the Dow (0.6%) reached new record highs to kick off the week ahead of several key earnings reports. The tech-heavy Nasdaq gained 1.1% to reach a 52-week high. The Russell 2000 gained 1.6% and the Global Dow rose 0.5% as investors were bullish on stocks as they awaited fourth-quarter earnings data from more than 100 S&P 500 companies released later in the week. Ten-year Treasury yields fell 6.9 basis points to 4.09%. Crude oil prices stepped back following last week’s surge, falling nearly 1.3% to $77.00 per barrel. Gold prices advanced 0.7%, while the dollar was flat.

The Nasdaq lost 0.8% last Tuesday ahead of earnings reports from some major tech companies. The small caps of the Russell 2000 also slipped 0.8%, while the S&P 500 dipped 0.1%. The Dow rose 0.4% and the Global Dow ticked up 0.1%. Ten-year Treasury yields declined for the second straight day, losing 3.2 basis points to settle at 4.05%. Crude oil prices reversed course, closing at about $77.88 per barrel after gaining 1.4%. The dollar fell 0.2%, while gold prices continued their mini bull run after advancing 0.5%.

Last Wednesday saw Wall Street react negatively to the Federal Reserve’s indication that interest rates will not be coming down any time soon. Each of the benchmark indexes declined, with the Russell 2000 (-2.3%) and the Nasdaq (-2.2%) falling the furthest, followed by the S&P 500 (-1.6%), the Dow (-0.8%), and the Global Dow (-0.4%). Bond prices increased, pulling yields lower, with 10-year Treasury yields falling 9.2 basis points to 3.96%. Crude oil prices dropped 2.6%, settling at $75.78 per barrel. The dollar rose 0.2%, while gold prices ticked up 0.1%.

Stocks rebounded last Thursday, with each of the benchmark indexes listed here closing higher. Investors were not deterred by Federal Reserve Chair Jerome Powell’s indication that interest rates would not likely be lowered in March, when the Fed next meets. Several major corporations posted solid fourth-quarter earnings data, which also helped support equities. The Russell 2000 advanced 1.4% to lead the benchmark indexes listed here, followed by the Dow (1.0%), the Nasdaq and the S&P 500 (0.3%), and the Global Dow (0.2%). Ten-year Treasury yields fell to 3.86%, a decrease of 10.4 basis points. Crude oil prices dropped 2.5% to $73.92 per barrel as traders focused on attempts to broker a cease-fire between Israel and Hamas. The dollar slid 0.2%, while gold prices rose 0.2%.

Equities closed higher last Friday with the exception of small caps which lagged. By the close of trading, the Dow (0.4%) and the S&P 500 (1.1%) reached new record highs. The Nasdaq jumped 1.7%, bolstered by strong earnings results from megatech companies. The Global Dow inched up 0.2%, while the Russell 2000 declined 0.6%. As investors moved to stocks, demand for bonds fell, sending yields higher. Ten-year Treasury yields climbed 17.0 basis points to 4.03%. Crude oil prices continued to slide, falling 2.3%. The dollar gained 0.8%, while gold prices lost 0.8%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 2/2	Weekly Change	YTD Change
DJIA	37,689.54	38,109.43	38,654.42	1.43%	2.56%
Nasdaq	15,011.35	15,455.36	15,628.95	1.12%	4.11%
S&P 500	4,769.83	4,890.97	4,958.61	1.38%	3.96%
Russell 2000	2,027.07	1,978.33	1,962.73	-0.79%	-3.17%
Global Dow	4,355.28	4,372.08	4,395.76	0.54%	0.93%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.16%	4.03%	-13 bps	17 bps
US Dollar-DXY	101.39	103.46	103.92	0.44%	2.50%
Crude Oil-CL=F	$71.30	$78.19	$72.15	-7.72%	1.19%
Gold-GC=F	$2,072.50	$2,018.40	$2,054.10	1.77%	-0.89%

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 News

As expected, the Federal Open Market Committee maintained the federal funds target rate range at its current 5.25%-5.50%. While economic activity and employment were solid, inflation remained elevated. The Committee appeared to discourage any expectations of an impending interest rate reduction by indicating, “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”
January saw employment increase by 353,000, well above expectations. January’s total, coupled with December’s upwardly revised total of 333,000, clearly shows strength in the labor sector. Last month, job gains occurred in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry. In January, the unemployment rate was 3.7% for the third month in a row, and the number of unemployed people declined by 144,000 to 6.1 million. The labor participation rate, at 62.5% was unchanged from the December estimate. The employment-population ratio edged up 0.1 percentage point to 60.2%. In January, average hourly earnings rose by $0.19, or 0.6%, to $34.55. Over the past 12 months, average hourly earnings have increased by 4.5%. The average workweek decreased by 0.2 hour to 34.1 hours in January and was down by 0.5 hour over the year.
Manufacturing improved in January for the first time since April 2023. The S&P Global US Manufacturing Purchasing Managers’ Index™ was 50.7 in January, up from 47.9 in December. The latest advance in the purchasing managers’ index ended two months of declines and marked the strongest improvement in operating conditions since September 2022.
The number of job openings, at 9.0 million, ticked up 101,000 in December from November, according to the latest Job Openings and Labor Turnover Summary. Nevertheless, this measure is down from a series high of 12.0 million in March 2022. Job openings increased in professional and business services (+239,000) but decreased in wholesale trade (-83,000). In December, the number of hires, at 5.6 million, increased marginally from the November total. The number of hires decreased in health care and social assistance (-119,000) but increased in state and local government, excluding education (+35,000). In December, the number of total separations, which includes quits, layoffs, discharges, and other separations, changed little at 5.4 million. Over the month, the number of total separations decreased in health care and social assistance (-91,000) but increased in wholesale trade (+39,000).
The national average retail price for regular gasoline was $3.095 per gallon on January 29, $0.033 per gallon higher than the prior week’s price but $0.394 less than a year ago. Also, as of January 29, the East Coast price increased $0.062 to $3.083 per gallon; the Midwest price declined $0.017 to $2.872 per gallon; the Gulf Coast price increased $0.068 to $2.753 per gallon; the Rocky Mountain price rose $0.061 to $2.732 per gallon; and the West Coast price increased $0.011 to $3.937 per gallon.
For the week ended January 27, there were 224,000 new claims for unemployment insurance, an increase of 9,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 20 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 20 was 1,898,000, an increase of 70,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended January 13 were New Jersey (2.6%), Rhode Island (2.6%), Minnesota (2.4%), Massachusetts (2.3%), Alaska (2.2%), California (2.2%), Illinois (2.2%), Montana (2.1%), Puerto Rico (2.1%), Pennsylvania (2.0%), and Washington (2.0%). The largest increases in initial claims for unemployment insurance for the week ended January 20 were in Wisconsin (+1,048) and Washington (+428), while the largest decreases were in Texas (-5,636), California (-4,632), New York (-4,208), Georgia (-3,477), and Oregon (-2,388).

Eye on the Week Ahead

This week is light on economic data. Most of the attention will remain on the escalating conflict in the Middle East and the presidential primaries. The January survey of purchasing managers in the services sector is out this week. December saw the Purchasing Managers’ Index expand modestly.

Monthly Market Review – January 2024

Published on February 1, 2024 by dredheadz

The Markets (as of market close January 31, 2024)

Stocks closed January generally higher. Each of the benchmark indexes listed here ended January higher, with the exception of the small caps of the Russell 2000. Historically, positive market returns in January are often a precursor to favorable market performance for the remainder of the year. Of course, past performance is no guarantee of future results. Despite the end results, January proved to be a month of ebbs and flows. It began with stocks closing in the red, only to pick up momentum throughout the rest of the month.

The most recent inflation data showed prices inched higher in December after falling the previous month. Both the Consumer Price Index and the personal consumption expenditures price index increased, both monthly and annually. However, core prices, excluding the more volatile food and energy indexes, declined over the 12 months ended in December.

The Federal Reserve met in January and maintained the federal funds target rate range at its current 5.25%-5.50%. According to the Fed, the economy continued to show strength and job gains were steady. While noting that inflation had slowed, it remained above the Fed’s target of 2.0%, all of which bolstered the Fed’s reluctance to begin lowering interest rates.

The economy has proven resilient despite the ongoing war in Ukraine and turmoil in the Middle East. Fourth-quarter gross domestic product expanded at an annualized rate of 3.3%, according to the initial estimate. Consumer spending, the largest contributor to GDP, was 2.8%.

Job growth remained steady, with 216,000 new jobs added in December, an increase from November’s 173,000. Wages continued to rise, increasing 4.1% over the last 12 months. Unemployment claims increased from a year ago (see below).

Fourth-quarter earnings season for S&P 500 companies has been lackluster so far. While the majority of companies have yet to release earnings data, the percentage of S&P 500 companies that have reported positive earnings surprises is below average according to FactSet, while actual earnings reported have been below estimates in aggregate. Companies in the financial sector have been particularly subpar. Roughly 25% of the S&P 500 companies have reported fourth-quarter earnings. Of these companies, 69% exceeded estimates, which is below the five-year average of 77%. In aggregate, companies reported earnings that are 5.3% below estimates, which is below the five-year average of 8.5%.

Sales of existing homes retreated in December, primarily due to lack of inventory, high prices, and advancing mortgage rates. Sales of new single-family homes increased 8.0% in December and 4.4% over the past 12 months.

Industrial production ticked higher in December after no growth in November and an 0.8% decline in October. Manufacturing ticked up 0.1% in December but declined 2.2% in the fourth quarter. Excluding motor vehicles and parts, factory output declined 0.1% in December and 0.3% in the fourth quarter. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, the manufacturing sector slipped further into contraction in December. The services sector saw business accelerate marginally.

Eight of the 11 market sectors ended December higher, led by communication services and information technology. Last month saw real estate, consumer discretionary, materials, and utilities decline.

Bond prices gained some momentum at the end of January, particularly following the Fed’s decision to maintain interest rates for longer than some had expected. Despite the late-month surge in bond prices, 10-year Treasury yields generally closed the month higher. The 2-year Treasury yield fell nearly 11.0 basis points to about 4.21% in January. The dollar inched higher against a basket of world currencies. Gold prices rode a topsy-turvy month, ultimately closing lower. Crude oil prices advanced in January on the heels of production cuts and shipping interruptions in the Middle East. The retail price of regular gasoline was $3.095 per gallon on January 29, $0.233 above the price a month earlier but $0.394 lower than a year ago.

Stock Market Indexes

Market/Index	2023 Close	Prior Month	As of January 31	Monthly Change	YTD Change
DJIA	37,689.54	37,689.54	38,150.30	1.22%	1.22%
Nasdaq	15,011.35	15,011.35	15,164.01	1.02%	1.02%
S&P 500	4,769.83	4,769.83	4,845.65	1.59%	1.59%
Russell 2000	2,027.07	2,027.07	1,947.34	-3.93%	-3.93%
Global Dow	4,355.28	4,355.28	4,375.95	0.47%	0.47%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	3.86%	3.96%	10 bps	10 bps
US Dollar-DXY	101.39	101.39	103.55	2.13%	2.13%
Crude Oil-CL=F	$71.30	$71.30	$75.76	6.26%	6.26%
Gold-GC=F	$2,072.50	$2,072.50	$2,057.90	-0.70%	-0.70%

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

Latest Economic Reports

Employment: Total employment increased by 216,000 in December. Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs. Employment rose by 2.7 million in 2023 (an average monthly gain of 225,000), less than the increase of 4.8 million in 2022 (an average monthly gain of 399,000). Employment in October was revised down by 45,000 and the change for November was revised down by 26,000. With these revisions, employment in October and November combined was 71,000 lower than previously reported. In December, the unemployment rate was unchanged at 3.7% but was 0.2 percentage point higher than the rate a year earlier. The number of unemployed persons was relatively unchanged at 6.3 million but was 570,000 above the December 2022 figure. In December, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was little changed from November and over the year. These individuals accounted for 19.7% of all unemployed persons. The labor force participation rate, at 62.5%, and the employment-population ratio, at 60.1%, both decreased by 0.3 percentage point in December and showed little or no change over the year. In December, average hourly earnings increased by $0.15 to $34.27. For 2023, average hourly earnings rose by 4.1% (average hourly earnings were $32.29 in December 2022). The average workweek decreased by 0.1 hour to 34.3 hours in December, down 0.1 hour from December 2022.
There were 214,000 initial claims for unemployment insurance for the week ended January 20, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,833,000. A year ago, there were 194,000 initial claims, while the total number of workers receiving unemployment insurance was 1,658,000.
FOMC/interest rates: As expected, the Federal Open Market Committee maintained the target range for the federal funds rate at the current 5.25%-5.50% following its meeting in January. In arriving at its decision, the Committee noted that the economy had expanded at a solid pace, job gains moderated since last year but remained strong, the unemployment rate was low, and inflation eased over the past year but remained elevated. Essentially, while progress has been made in achieving employment and inflation goals, more moderating needs to be done. Interest rates are not expected to be reduced until the Committee has gained greater confidence that inflation is moving sustainably toward 2.0%.
GDP/budget:The economy, as measured by gross domestic product, accelerated at an annual rate of 3.3% in the fourth quarter. GDP increased 2.5% in 2023 (from the 2022 annual level to the 2023 annual level), compared with an increase of 1.9% in 2022. The increase in GDP in 2023 primarily reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by decreases in residential fixed investment and inventory investment. Imports decreased. Consumer spending, as measured by the personal consumption expenditures index, rose 2.8% in the fourth quarter, down from 3.1% in the previous quarter. Spending on services rose 2.4% in the fourth quarter compared with a 2.2% increase in the third quarter. Consumer spending on durable goods increased 4.6% in the fourth quarter, while consumer spending on nondurable goods increased 3.4%. Fixed investment advanced 2.1% in the fourth quarter after increasing 10.0% in the third quarter. The personal consumption expenditures price index increased 1.7% in the fourth quarter, compared with an increase of 2.6% in the third quarter.
December saw the federal budget deficit come in at $129.4 billion, down roughly $185.0 billion under the November 2023 deficit. The deficit for the first three months of fiscal year 2024, at $509.9 billion, is $88.5 billion higher than the first three months of the previous fiscal year. So far in fiscal year 2024, total government receipts were $1.1 trillion ($1.0 trillion in 2023), while government outlays were $1.6 trillion through the first three months of fiscal year 2024, compared to $1.4 trillion over the same period in the previous fiscal year.
Inflation/consumer spending: According to the latest personal income and outlays report, personal income and disposable personal income rose 0.3% in December after increasing 0.4% in November. Consumer spending advanced 0.7% in December after increasing 0.4% the previous month. Consumer prices inched up 0.2% in December after falling 0.1% in November. Excluding food and energy (core prices), consumer prices rose 0.2% in December, 0.1 percentage point above the November advance. Consumer prices rose 2.6% since December 2022, unchanged from the 12 months ended in November. Core prices increased 2.9% over the same period, 0.3 percentage point lower than the year ended in November.
The Consumer Price Index rose 0.3% in December after ticking up 0.1% in November. Over the 12 months ended in December, the CPI rose 3.4%, up 0.3 percentage point from the period ended in November. Excluding food and energy prices, the CPI rose 0.3% in December, unchanged from the previous month, and 3.9% for the year ended in December, down 0.1 percentage point from the 12-month period ended in November. Prices for shelter, up 0.5%, continued to rise in December, contributing to over half of the monthly all items increase. Energy rose 0.4% over the month. Food prices increased 0.2% in December.
Prices that producers received for goods and services declined 0.1% in December after being unchanged in November. Producer prices increased 1.0% for the 12 months ended in December, up from a 0.9% increase for the year ended in November. Producer prices less foods, energy, and trade services inched up 0.2% in December (0.1% in November), while prices excluding food and energy were flat for the second straight month. For the 12 months ended in December, prices less foods, energy, and trade services moved up 2.5%, the same increase as for the 12 months ended in November. Prices less foods and energy increased 1.8% for the year ended in December (2.0% for the period ended in November). In December, prices for food fell 0.9% for the month and 5.0% year over year. Energy prices were down 1.2% in December and 4.8% since December 2022.
Housing: Sales of existing homes decreased 1.0% in December and 6.2% from December 2022. The median existing-home price was $382,600 in December, lower than the November price of $387,700 but higher than the December 2022 price of $366,500. Unsold inventory of existing homes represented a 3.2-month supply at the current sales pace, down slightly from November (3.5 months) but above the 2.9-month supply in December 2022. Sales of existing single-family homes decreased 0.3% in December and 7.3% since December 2022. The median existing single-family home price was $387,000 in December, down from $392,200 in November but above the December 2022 price of $372,000.
New single-family home sales increased in December, climbing 8.0% after dropping 7.4% in November. Sales were up 4.4% from December 2022. The median sales price of new single-family houses sold in December was $413,200 ($426,000 in November). The December average sales price was $487,300 ($485,500 in November). The inventory of new single-family homes for sale in December represented a supply of 9.1 months at the current sales pace.
Manufacturing: Industrial production increased 0.1% in December after being unchanged in the previous month. Manufacturing edged up 0.1% in December after increasing 0.2% in November. Mining rose 0.9%, while utilities fell 1.0%. Over the past 12 months ended in December, total industrial production was 1.0% below its year-earlier reading. For the 12 months ended in December, manufacturing increased 1.2%, utilities declined 4.9%, while mining increased 4.3%.
New orders for durable goods were flat in December following a 5.5% increase in November. New orders for durable goods rose 4.4% since December 2022. Excluding transportation, new orders increased 0.6% in December. Excluding defense, new orders increased 0.5%. Primary metals, up three of the last four months, drove the overall increase, after increasing 1.4% in December.
Imports and exports: U.S. import prices were unchanged in December after declining 0.5% in November. Import prices fell 1.6% over the past year. Prices for import fuel declined 0.3% in December following a 6.4% drop in November. Import fuel prices fell 9.4% from December 2022 to December 2023. Prices for nonfuel imports were unchanged in December after ticking up 0.1% in November. Nonfuel imports fell 0.8% since December 2022. Export prices declined 0.9% in December after falling 0.9% in November. Prices for exports decreased 0.9% for the third consecutive month in December. Those were the first one-month declines since June 2023. Lower prices for both agricultural and nonagricultural exports contributed to the December drop. U.S. export prices fell 3.2% over the past year. Despite the recent declines, the December decrease was the smallest 12-month drop since February 2023.
The international trade in goods deficit was $88.5 billion in December, down $0.9 billion, or 1.0%, from November. Exports of goods were $169.8 billion in December, $4.1 billion, or 2.5%, less than in November. Imports of goods were $258.3 billion in December, $3.2 billion, or 1.3%, less than in November. Since December 2022, exports rose 1.0%, while imports declined 0.3%.
The latest information on international trade in goods and services, released January 9, is for November and revealed that the goods and services trade deficit was $63.2 billion, a decrease of $1.3 billion from the October deficit. November exports were $253.7 billion, 1.9% less than October exports. November imports were $316.9 billion, 1.9% less than October imports. Year to date, the goods and services deficit decreased $161.8 billion, or 18.4%, from the same period in 2022. Exports increased $28.8 billion, or 1.0%. Imports decreased $133.0 billion, or 3.6%.
International markets: Inflation continued to fall in most major countries at the end of 2023. However, several central banks, including those of Japan, Germany, the European Union, Canada, and the United Kingdom are maintaining their current monetary policies. While Europe’s economic growth hasn’t quite kept up with the United States, it appears reasonably certain that the recession some feared will not come to fruition. The EU’s economy was flat in the fourth quarter, Japan’s economy declined 0.7%, Germany saw its economy recede 0.3%, while the U.K.’s economy dipped 0.1%. This is compared to the U.S. GDP, which expanded by 3.3%. For January, the STOXX Europe 600 Index rose 2.7%; the United Kingdom’s FTSE was flat; Japan’s Nikkei 225 Index gained 8.4%; and China’s Shanghai Composite Index lost 6.0%.
Consumer confidence: Consumers began the new year with a surge in confidence and restored optimism for 2024. The Conference Board Consumer Confidence Index® increased in January to 114.8, following a 108.0 reading in December. The reading was the highest since December 2021 and marked the third straight monthly increase. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose to 161.3 in January, up from 147.2 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, improved to 83.8 in January from 81.5 in December.

Eye on the Month Ahead

Entering February, much of the focus will be on the economy, inflation, and global unrest, particularly in the Middle East. Recent data has shown that the economy has weathered the aggressive interest-rate policy adopted by the Federal Reserve, which does not meet again until March. Inflationary pressures continued to slowly recede, prompting speculation as to when the Fed will begin lowering interest rates.

What I’m Watching This Week – 29 January 2024

Published on January 29, 2024 by dredheadz

The Markets (as of market close January 26, 2024)

Stocks closed higher last week, with the S&P 500 and the Nasdaq reaching record highs. Investors spent most of the week parsing through corporate earnings results and important economic data. Among the market sectors, communication services and energy rose over 5.0%, while health care ended the week in the red. Ten-year Treasury yields ticked up marginally. Crude oil prices rose nearly 6.0% as production cuts have begun to drive prices higher. The dollar advanced, while gold prices fell 0.6%.

Wall Street opened last week on a high note, with the small caps of the Russell 2000 advancing 1.9%, while the Dow (0.4%) and the S&P 500 (0.2%) notched new record highs. The Nasdaq and the Global Dow rose 0.3%. Industrials, information technology, and health care garnered solid gains among the sectors. Ten-year Treasury yields slid 5.2 basis points to 4.09%. Crude oil prices rose 2.2% to $75.01 per barrel on supply disruptions and strong demand. The dollar was flat, while gold prices fell 0.4%.

Stocks closed last Tuesday mixed, with the Nasdaq (0.4%) and the S&P 500 (0.3%) hitting new record highs as investors dissected the latest batch of earnings reports. The Global Dow edged up 0.1%, while the Russell 2000 slid 0.4% and the Dow dipped 0.3%. Ten-year Treasury yields added 4.8 basis points to close at 4.14%. Crude oil prices ended the day at about $74.54 per barrel after falling 0.3%. The dollar and gold prices gained 0.2% and 0.4%, respectively.

Equities were mixed for the second straight session last Wednesday, with the Nasdaq (0.4%) and the S&P 500 (0.1%) achieving new all-time highs, while the Russell 2000 (-0.7%) and the Dow (-0.3%), slid lower. The Global Dow edged up 0.5%. Several tech companies reported strong earnings, which helped offset several declining sectors, including real estate, materials, consumer staples, health care, and utilities. Long-term bond values continued to decline, pushing yields higher. Ten-year Treasury yields closed at 4.17%, an increase of 3.6 basis points. Crude oil prices jumped 1.5% to $75.46 per barrel. The dollar and gold prices declined.

Last Thursday saw the S&P 500 hit a record high for the fifth straight session. The Dow and the Russell 2000 led the benchmark indexes listed here, each gaining 0.6%, followed by the S&P 500, which added 0.5%. The Nasdaq and the Global Dow edged up 0.2%. Investors digested another batch of corporate earnings, along with a favorable report on fourth-quarter gross domestic product (see below). Ten-year Treasury yields fell 4.6 basis points, settling at 4.13%. Crude oil prices rose 2.8% to $77.71 per barrel. The dollar and gold prices moved higher.

In yet another day of uneven returns, stocks closed last Friday mixed, with the Dow, the Global Dow, and the Russell 2000 each edging up 0.2%, while the Nasdaq (-0.4%) and the S&P 500 (-0.1%) ticked lower. Ten-year Treasury yields settled at 4.16% after gaining 2.8 basis points. Crude oil prices neared $80.00 per barrel. The dollar dipped 0.1%, while gold prices closed the day flat.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 1/26	Weekly Change	YTD Change
DJIA	37,689.54	37,863.80	38,109.43	0.65%	1.11%
Nasdaq	15,011.35	15,310.97	15,455.36	0.94%	2.96%
S&P 500	4,769.83	4,839.81	4,890.97	1.06%	2.54%
Russell 2000	2,027.07	1,944.39	1,978.33	1.75%	-2.40%
Global Dow	4,355.28	4,318.47	4,372.08	1.24%	0.39%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps
10-year Treasuries	3.86%	4.14%	4.16%	2 bps	30 bps
US Dollar-DXY	101.39	103.25	103.46	0.20%	2.04%
Crude Oil-CL=F	$71.30	$73.79	$78.19	5.96%	9.66%
Gold-GC=F	$2,072.50	$2,031.50	$2,018.40	-0.64%	-2.61%

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 News

The initial estimate of gross domestic product for the fourth quarter of 2023, revealed that the economy accelerated at an annualized rate of 3.3%, down from the third quarter rate of 4.9%, but well above expectations that hovered around 2.0%. Compared to the third quarter of 2023, the deceleration in GDP in the fourth quarter primarily reflected slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending. Personal consumption expenditures, a measure of consumer spending, rose 2.8% in the fourth quarter and was the largest contributor to GDP. Spending on durable goods rose 4.6%, while nondurable goods spending advanced 3.4%. Services gained 2.4%. Despite rising interest rates, gross domestic investment rose 2.1% in the fourth quarter, well below the third-quarter rate of 10.0%. Nevertheless, both residential and nonresidential fixed investment increased 1.1% and 1.9%, respectively. Exports increased 6.3%, while imports, which are a negative in the calculation of GDP, increased 1.9%. The personal consumption expenditures price index increased 1.7%, compared with an increase of 2.6% in the third quarter. Excluding food and energy prices, the PCE price index increased 2.0%, the same change as the third quarter.
According to the latest report on personal income and outlays, consumer prices edged up 0.2% in December, while core prices, excluding food and energy, also increased 0.2%. For the 12 months ended in December, consumer prices rose 2.6%, unchanged from the previous 12-month period. Core prices rose 2.9%, the lowest 12-month advance since the period ended March 2021. Both personal income and disposable (after-tax) personal income rose 0.3% in December. Consumer spending, as measured by the personal consumption expenditures index, outpaced income growth after climbing 0.7% last month.
The advance report on international trade in goods showed the deficit was $88.5 billion in December, down $0.9 billion, or 1.0%, from the November figure. Exports of goods for December were $169.8 billion, $4.1 billion, or 2.5%, more than November exports. Imports of goods for December were $258.3 billion, $3.2 billion, or 1.3%, more than November imports. New orders for transportation fell 0.9% last month, while new orders for defense declined 2.9%. New orders for capital goods decreased 1.1% in December after increasing 13.0% in November. The largest drag on new orders for capital goods in December was a 14.5% decline in defense capital goods.
The advance report on durable goods orders for December showed new orders inched up $0.1 billion for a net 0.0% change after advancing 5.5% in November. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 0.5%.
December saw sales of new single-family homes increase 8.0% from November and 4.4% from December 2022. The median sales price of new houses sold in December 2023 was $413,200. The average sales price was $487,300. Inventory of new single-family homes for sale in December represented an 8.2-month supply at the current sales pace, down from the 8.8-month supply in November.
The national average retail price for regular gasoline was $3.062 per gallon on January 22, $0.004 per gallon higher than the prior week’s price but $0.353 less than a year ago. Also, as of January 22, the East Coast price decreased $0.018 to $3.021 per gallon; the Midwest price rose $0.066 to $2.889 per gallon; the Gulf Coast price increased $0.015 to $2.685 per gallon; the Rocky Mountain price fell $0.062 to $2.671 per gallon; and the West Coast price decreased $0.050 to $3.926 per gallon.
For the week ended January 20, there were 214,000 new claims for unemployment insurance, an increase of 25,000 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 for the week ended January 13 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 13 was 1,833,000, an increase of 27,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended January 6 were New Jersey (2.7%), Rhode Island (2.6%), Minnesota (2.5%), California (2.4%), Alaska (2.3%), Massachusetts (2.3%), Illinois (2.2%), Puerto Rico (2.2%), Montana (2.1%), and Washington (2.1%). The largest increases in initial claims for unemployment insurance for the week ended January 13 were in Texas (+2,433), California (+1,949), Oregon (+1,111), Kansas (+1,054), and Florida (+1,025), while the largest decreases were in New York (-17,358), Wisconsin (-4,505), Michigan (-4,427), Pennsylvania (-3,835), and South Carolina (-3,042).

Eye on the Week Ahead

The Federal Open Market Committee meets this week. The consensus is that interest rates will remain unchanged, however, it will be interesting to glean the direction of the Committee moving forward. The employment figures for January are also out this week. Employment grew by 216,000 in December, well above expectations.