Tag: inflation

The Markets (as of market close April 12, 2024)

Stocks faltered for the second straight week as investors dealt with market-moving inflation data and a less-than-impressive start to first-quarter corporate earnings season. Both the Consumer Price Index and the Producer Price Index rose higher last week. Taken together, increases in the CPI and the PPI support a more cautious approach relative to the Federal Reserve’s current monetary policy. It is certainly not likely that the Fed will lower interest rates in June. Also, last Friday, earnings reports from some major banks fell short of expectations. Each of the benchmark indexes listed here ended the week in the red. Among the market sectors, only information technology and communication services gained. Financials, health care, real estate, and materials each lost at least 2.0%. The dollar and gold prices edged higher. Crude oil prices slipped lower.

Wall Street saw stocks open mixed last Monday, with the Russell 2000 (0.5%) and the Global Dow (0.4%) posting gains, while the S&P 500, the Dow, and the Nasdaq ended flat. Ten-year Treasuries closed at 4.42%, the highest yield in over four months. Investors seemed to be tempering expectations of an interest rate cut by the Federal Reserve, while bracing for the release of the Consumer Price Index later in the week. Real estate, consumer discretionary, and financials were the best performing sectors, while health care, industrials, and energy lagged. Crude oil prices fell for the first time in several sessions, dipping to $86.48 per barrel. The dollar slipped minimally, while gold prices rose 0.5%.

The Russell 2000 and the Nasdaq rose 0.3% last Tuesday to lead the benchmark indexes listed here. The S&P 500 gained 0.1%, while the Dow and the Global Dow were flat. Ten-year Treasury yields dipped to 4.36%. Crude oil prices fell $1.09 to settle at $85.34 per barrel. The dollar closed where it began. Gold prices gained 0.8%. Industrials and financials trended lower, while real estate outperformed the remaining sectors.

Stocks ended sharply lower last Wednesday following the release of the latest Consumer Price Index (see below), which dimmed hopes of an interest rate cut any time soon. Most now expect the federal funds target rate will remain at its 23-year high in June. Each of the benchmark indexes listed here declined. The Russell 2000 dropped 2.5%, the Dow fell 1.1%, the S&P 500 and the Global Dow lost 1.0%, and the Nasdaq slid 0.8%. The 10-year Treasury yield jumped 19.4 basis points to 4.56%, its highest since November 2023. Gold prices slipped from recent all-time highs, falling $11.20 per ounce. Crude oil prices rose $1.00 to $86.22 per barrel. The dollar gained 1.0%.

Wall Street moved generally higher by the close of trading last Thursday. The Nasdaq gained 1.7%, while the Russell 2000 and the S&P 500 advanced 0.7%. The Global Dow ticked 0.2% lower, while the Dow was flat. Ten-year Treasury yields ended the session at 4.57%. Crude oil prices dipped $0.60 to $85.86 per barrel. The dollar ended the day where it began, while gold prices rose $42.70 to $2,391.10 per ounce. A slightly lower-than-expected Producer Price Index (see below) gave some encouragement to investors following the release of a higher-than-expected Consumer Price Index.

Last Friday was not a good day for equities. Each of the benchmark indexes listed here fell by at least 1.0%, led by the Russell 2000 (-1.9%) and the Nasdaq (-1.6%). The large caps of the S&P 500 (-1.5%) and the Dow (-1.2%) also declined, while the Global Dow lost 1.0%. Ten-year Treasury yields fell 7.7 basis points to settle at 4.49%. Crude oil prices gained nearly $0.50. The dollar gained 0.7%, while gold prices fell 0.5%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 4/12	Weekly Change	YTD Change
DJIA	37,689.54	38,904.04	37,983.24	-2.37%	0.78%
Nasdaq	15,011.35	16,248.52	16,175.09	-0.45%	7.75%
S&P 500	4,769.83	5,204.34	5,123.41	-1.56%	7.41%
Russell 2000	2,027.07	2,063.47	2,003.17	-2.92%	-1.18%
Global Dow	4,355.28	4,634.14	4,552.22	-1.77%	4.52%
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%	4.37%	4.49%	12 bps	63 bps
US Dollar-DXY	101.39	104.28	106.02	1.67%	4.57%
Crude Oil-CL=F	$71.30	$86.73	$85.51	-1.41%	19.93%
Gold-GC=F	$2,072.50	$2,346.90	$2,360.90	0.60%	13.92%

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

• Consumer prices rose 0.4% in March, the same increase as in February and slightly higher than expectations. Core prices, less food and energy, also rose 0.4%, unchanged from the February pace. For the year, the Consumer Price Index rose 3.5%, rising at the fastest rate since the 12-month period ended in September 2023. Core prices are up 3.8% since March 2023. In March, prices for shelter rose 0.4%, while gasoline prices advanced 1.7%. Combined, these two indexes contributed over half of the monthly increase in the March CPI. Energy prices rose 1.1% over the month, while prices for food ticked up 0.1% in March. While the preferred inflation indicator for the Federal Reserve is the personal consumption expenditures price index, the increase in the CPI over the past few months certainly supports the notion that getting inflation down to the Fed’s 2.0% objective is going to take time and patience.
• The Producer Price Index increased 0.2% in March after advancing 0.6% in February. For the 12 months ended in March, producer prices rose 2.1%, the largest advance since rising 2.3% for the 12 months ended April 2023. In March, prices for services increased 0.3%, while prices for goods edged down 0.1%. In March, producer prices excluding food and energy rose 0.2%, down from the 0.3% increase in February.
• Prices for both imports and exports advanced in March for the third straight month. Import prices rose 0.4% last month and 1.4% over the first quarter of 2024, the largest three-month increase since the February-May 2022 period. Imports advanced 0.4% for the year ended in March. Rising fuel prices contributed to the increase in import prices. Fuel import prices rose 4.7% in March after increasing 1.3% the previous month. The March advance was the largest increase since September 2023. Nonfuel imports rose 0.1% in March and have not declined since October 2023. Prices for exports advanced 0.3% in March, after rising 0.7% in February and 0.8% in January. Higher nonagricultural prices in March more than offset lower agricultural prices. Despite the recent increases, export prices fell 1.4% from March 2023 to March 2024, the smallest 12-month drop since the 12 months ended February 2023.
• The Federal Treasury budget deficit was $236.0 billion in March, roughly $60.0 billion less than the February monthly deficit. In March, government receipts were $332.0 billion, while outlays totaled $569.0 billion. Thus far in fiscal year 2024, the deficit sits at $1,065 billion compared to $1,101 billion over the same period in fiscal year 2023.
• The national average retail price for regular gasoline was $3.591 per gallon on April 8, $0.074 per gallon more than the prior week’s price but $0.005 per gallon less than a year ago. Also, as of April 8, the East Coast price increased $0.009 to $3.391 per gallon; the Midwest price rose $0.094 to $3.460 per gallon; the Gulf Coast price increased $0.099 to $3.215 per gallon; the Rocky Mountain price rose $0.029 to $3.380 per gallon; and the West Coast price increased $0.192 to $4.748 per gallon.
• For the week ended April 6, there were 211,000 new claims for unemployment insurance, a decrease of 11,000 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 March 30 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 30 was 1,817,000, an increase of 28,000 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 March 23 were New Jersey (2.6%), California (2.4%), Rhode Island (2.4%), Minnesota (2.3%), Massachusetts (2.2%), Illinois (2.0%), New York (1.9%), Alaska (1.8%), Connecticut (1.8%), Pennsylvania (1.8%), and Washington (1.8%). The largest increases in initial claims for unemployment insurance for the week ended March 30 were in California (+2,147), Pennsylvania (+1,913), Iowa (+1,383), New Jersey (+1,230), and Illinois (+1,195), while the largest decreases were in Texas (-3,248), Missouri (-2,369), Georgia (-935), Arkansas (-459), and North Carolina (-400).

Eye on the Week Ahead

This is a light week for important economic news. The March report on retail sales is out this Monday. The previous month saw retail sales rise 0.6%, partially reflective of rising consumer prices. The report from the Federal Reserve on industrial production is also available this week. Industrial production ticked up 0.1% in February, while manufacturing rose 0.8%.

The Markets (first quarter through March 29, 2024)

Wall Street got off to a fast start to begin 2024. Investors were encouraged by strength in the economy, the likelihood of interest rate cuts, possibly beginning in June, and opportunities in artificial intelligence. Each of the benchmark indexes listed here posted solid first-quarter gains led by the S&P 500 and the Nasdaq. Several indexes reached new highs throughout the quarter. The S&P 500 hit its first record high in two years late in January, leading to its best first-quarter performance since 2019. The Federal Reserve provided encouraging news following its meeting in March as it projected three interest rate cuts by the end of the year. Ten-year Treasury yields stayed around 4.20% for most of the quarter, up from 3.86% at the close of 2023. Roughly 76.0% of S&P 500 companies reported fourth-quarter corporate earnings that exceeded analysts’ expectations. Some of the “Magnificent Seven” megacap stocks stumbled a bit in the first quarter. Nevertheless, they were responsible for nearly 40.0% of the S&P 500’s year-to-date gain, which is down from over 60.0% last year. Ten of the 11 market sectors posted quarterly gains, with industrials, information technology, communication services, financials, and energy climbing more than 10.0%.

The U.S. dollar underwent several ups and downs, ultimately closing the first quarter higher. Gold prices advanced to reach record highs. Crude oil prices, which began the year at about $71.00 per barrel, climbed nearly 16.0% to over $82.00 per barrel as oil exporting countries cut back on supplies. Home mortgage rates began the year at about 6.62% for the 30-year fixed rate, according to Freddie Mac. Rates jumped as high as 6.94% at the end of February, before falling to 6.79% at the end of March. The retail price for regular gasoline was $3.523 per gallon on March 25, $0.027 above the February 26 price and $0.407 higher than the price three months earlier. Regular retail gas prices increased $0.102 from a year ago. Gold prices declined in the third quarter, nearing a seven-month low.

January saw stocks get off to a slow start as investors took some recent gains, particularly from tech shares, and moved into sectors that lagged in 2023, including consumer staples, health care, and energy. By the end of the month, each of the benchmark indexes listed here posted gains, with the exception of the Russell 2000. Inflation data showed prices inched higher, with the Consumer Price Index (CPI) and the personal consumption expenditures (PCE) price index increasing, both monthly and annually. The Federal Reserve met in January and maintained the federal funds target rate range at 5.25%-5.50%. The economy proved resilient in January, despite the ongoing war in Ukraine and the turmoil in the Middle East. Gross domestic product rose 3.2%, while personal consumption expenditures, a measure of consumer spending, rose 3.0%. Job growth remained steady, while industrial production inched higher. All 11 market sectors ended January higher, led by industrials and materials. Bond returns were slightly negative, with yields on 10-year Treasuries inching up 10.0 basis points.

Large-cap stocks advanced for the fourth consecutive month in February. Several of the benchmark indexes listed here reached record highs, with the S&P 500 off to its strongest start to a year since 2019. Value stocks and small caps also enjoyed a favorable month. Among the benchmark indexes listed here, the Nasdaq and the Russell 2000 led the way. In contrast, bond values dipped lower, pushing yields up. The economy continued to expand, despite operating in the highest interest-rate environment in nearly 20 years. The CPI and PCE price index climbed higher as inflationary pressures continued to prove stubborn. However, the annual rates for both indexes declined. Retail sales dropped 0.8%, pulled lower by declines in sales for motor vehicles and parts and gasoline stations. Job gains were robust, adding more than 300,000 new jobs. Investors’ hopes for an interest rate reduction waned on stubborn inflationary pressures, coupled with strength in the labor market and the economy.

March continued the bull run for stocks. Each of the benchmark indexes listed here advanced, with the Global Dow, the Russell 2000, and the S&P 500 each gaining over 3.0%. Utilities, financials, materials, and energy led the market sectors in March. Consumer spending and gross domestic product expanded in March. Inflationary pressures continued to increase as the Consumer Price Index rose 0.4% for the month and 3.2% for the year. Producer prices rose 0.6%, more than double most analysts’ expectations. Overall, price pressures remained firmer than expected. Crude oil prices rose nearly 6.0%, while prices at the pump increased by about $0.274 for a gallon of regular gasoline.

Stock Market Indexes

Market/Index	2023 Close	As of March 29	Monthly Change	Quarterly Change	YTD Change
DJIA	37,689.54	39,807.37	2.08%	5.62%	5.62%
Nasdaq	15,011.35	16,379.46	1.79%	9.11%	9.11%
S&P 500	4,769.83	5,254.35	3.10%	10.16%	10.16%
Russell 2000	2,027.07	2,124.55	3.39%	4.81%	4.81%
Global Dow	4,355.28	4,676.17	3.71%	7.37%	7.37%
fed. funds target rate	5.25%-5.50%	5.25%-5.50%	0 bps	0 bps	0 bps
10-year Treasuries	3.86%	4.20%	48 bps	76 bps	76 bps
US Dollar-DXY	101.39	104.55	0.40%	3.12%	3.12%
Crude Oil-CL=F	$71.30	$83.06	6.05%	16.49%	16.49%
Gold-GC=F	$2,072.50	$2,244.70	9.39%	8.31%	8.31%

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.

Latest Economic Reports

• Employment: Total employment increased by 275,000 in February following a downwardly revised January total of 229,000 new jobs. Employment trended up in health care, government, food services and drinking places, social assistance, and transportation and warehousing. Over the 12 months ended in February, employment increased by an average of 230,000 per month. In February, the unemployment rate rose by 0.2 percentage point to 3.9% and was 0.3 percentage point higher than the rate a year earlier. The number of unemployed persons rose by 334,000 to 6.5 million, which was nearly 500,000 above the February 2023 figure. In February, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, fell by 74,000 and accounted for 18.7% of all unemployed people. The labor force participation rate, at 62.5%, was unchanged from the January figure, while the employment-population ratio, at 60.1%, ticked down 0.1 percentage point. In February, average hourly earnings increased by $0.05 to $34.57 following an increase of $0.18 in January. Since February 2023, average hourly earnings rose by 4.3%. The average workweek increased by 0.1 hour to 34.3 hours in February.
• 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 made no change to the federal funds target rate range following its meeting in March. The Committee decided to maintain interest rates at their current level primarily because inflation, while showing signs of general easing, remained elevated. The Fed continued to forecast three interest rate reductions this year, although that could change based on the course of inflation and the economy.
• GDP/budget: The economy, as measured by gross domestic product, accelerated at an annualized rate of 3.4% in the fourth quarter, according to the third and final estimate from the Bureau of Economic Analysis. GDP increased 4.9% in the third quarter. Compared to the third quarter, personal consumption expenditures rose from 3.1% to 3.3%. Fixed investment rose 2.6% to 3.5%. Nonresidential fixed investment increased from 1.4% to 3.7%. Residential fixed investment fell 3.9 percentage points to 2.8%. Exports decreased from 5.4% to 5.1%. Imports decreased from 4.2% to 2.2%. Government spending decreased 1.2 percentage points to 4.6%. The personal consumption expenditures price index increased 1.8% in the fourth quarter, compared with an increase of 1.7% in the third quarter.
• February saw the federal budget deficit come in at $296.0 billion, well above the $22.0 billion from the January deficit. Through the first five months of fiscal year 2024, the total deficit sits at $828.0 billion, is roughly $105.0 billion higher than the first five months of the previous fiscal year. So far in fiscal year 2024, total government receipts were $1.9 trillion ($1.7 trillion in 2023), while government outlays were $2.7 trillion through the first five months of fiscal year 2024, compared to $2.5 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 0.3% in February (1.0% in January), while disposable personal income increased 0.2% in February, down from 0.4% in January. Consumer prices climbed 0.3% in February, the same increase as in the previous month. Excluding food and energy (core prices), consumer prices rose 0.3% in February, down from January’s 0.5% increase. Consumer prices rose 2.5% since February 2023, 0.1 percentage point more than the advance for the 12 months ended in January. Core prices increased 2.8% over the same period, 0.1 percentage point lower than the year ended in January.
• The Consumer Price Index rose 0.4% in February after advancing 0.3% in January. Over the 12 months ended in February, the CPI rose 3.2%, up 0.1 percentage point from the period ended in January. Excluding food and energy prices, the CPI rose 0.4% in February, unchanged from the previous month, and 3.8% from February 2023, 0.1 percentage point less than the rate for the 12-month period ended in January. Prices for shelter, up 0.4%, continued to rise in February, as did gasoline prices (3.8%). Combined, these two indexes contributed to over 60.0% of the monthly all items increase. Food prices were unchanged in February. Over the last 12 months ended in February, food prices rose 2.2%, shelter prices increased 5.7%, while energy prices fell 1.9%.
• Prices that producers received for goods and services rose 0.6% in February following a 0.3% increase in the previous month. Producer prices increased 1.6% for the 12 months ended in February, up from the 0.9% increase for the 12 months ended in January. Producer prices less foods, energy, and trade services advanced 0.4% in February (0.6% in January), while prices excluding food and energy increased 0.3%. For the 12 months ended in February, prices less foods, energy, and trade services moved up 2.8%, a 0.2 percentage point increase over the 12 months ended in January. Prices less foods and energy increased 2.0% for the year ended in February, unchanged from the prior 12-month period.
• Housing: Sales of existing homes rose 9.5% in February from January. However, sales were down 3.3% from February 2023. The median existing-home price was $384,500 in February, up from the January price of $378,600 and well above the February 2023 price of $363,600. Unsold inventory of existing homes represented a 2.9-month supply at the current sales pace, down slightly from 3.0 months in January but above the 2.6-month supply from a year earlier. Sales of existing single-family homes increased 10.3% in February but declined 2.7% for the year. The median existing single-family home price was $388,700 in February, up from $382,900 in January and above the February 2023 price of $368,100. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.74% as of March 14, down from 6.88% the previous week and from 6.60% one year ago.
• New single-family home sales decreased in February after increasing in December and January. Sales of new single-family homes fell 0.3% in February. Nevertheless, sales were up 5.9% from February 2023. The median sales price of new single-family houses sold in February was $400,500 ($414,900 in January). The February average sales price was $485,000 ($523,400 in January). The inventory of new single-family homes for sale in February represented a supply of 8.4 months at the current sales pace, down from 9.3 months in January.
• Manufacturing: Industrial production edged up 0.1% in February after declining 0.5% in the previous month. Manufacturing output rose 0.8% in February after falling 1.1% in January. Mining increased 2.2%, while utilities dropped 7.5% because of warmer-than-typical temperatures. Over the past 12 months ended in February, total industrial production was down 2.0%. For the 12 months ended in February, manufacturing decreased 0.7%, mining rose 1.4%, while utilities increased 0.8%.
• New orders for durable goods rose 1.4% in February following two consecutive monthly decreases. Excluding transportation, new orders increased 0.5% in February. Excluding defense, new orders rose 2.2%. New orders for transportation equipment advanced 3.3% in February, contributing to the overall increase in new orders. New orders for nondefense capital goods in February increased 4.4%, while new orders for defense capital goods decreased 12.7%.
• Imports and exports: U.S. import prices advanced 0.3% in February following a 0.8% advance in the previous month. The February and January advances were the first consecutive increases since September and August 2023. Despite the recent advances, prices for imports decreased 0.8% over the past year. Prices for import fuel rose 1.8% in February after advancing 1.2% in January. The February increase was the largest advance since a 6.4% rise in September 2023. In spite of the recent advances, import fuel prices fell 4.1% over the past year. Prices for nonfuel imports increased 0.2% in February following a 0.7% increase the previous month. Despite the recent increases, prices for nonfuel imports declined 0.5% over the past 12 months. Export prices advanced 0.8% in February after rising 0.9% in January. Despite the recent increases, export prices declined 1.8% for the year ended in February. That was the smallest 12-month drop since export prices decreased 0.8% for the period from February 2022 to February 2023.
• The international trade in goods deficit was $91.8 billion in February, up $1.3 billion, or 1.5%, from January. Exports of goods were $175.1 billion in February, $4.8 billion, or 2.8%, more than in January. Imports of goods were $266.9 billion in February, $6.1 billion, or 2.3%, more than in January. Since February 2023, exports rose 3.6%, while imports increased 2.8%.
• The latest information on international trade in goods and services, released March 7, is for January and revealed that the goods and services trade deficit was $67.4 billion, up $3.3 billion from the December deficit. January exports were $257.2 billion, 0.1% more than December exports. January imports were $324.6 billion, 1.1% more than December imports. Year over year, the goods and services deficit decreased $2.9 billion, or 4.1%, from January 2023. Exports decreased $1.0 billion, or 0.4%. Imports decreased $3.9 billion, or 1.2%.
• International markets: The United Kingdom appears headed for a period of consumer-led economic growth. Falling inflation and rising purchasing power have increased hopes of a further economic rebound in the U.K. European countries may be heading to an interest rate decrease. While the Bank of England held rates in March, Switzerland became the first European country to cut rates. China’s industrial profits expanded to start the year, offering further evidence that the Chinese economy may be stronger than some suggested. For March, the STOXX Europe 600 Index rose 3.8%; the United Kingdom’s FTSE gained 4.5%; Japan’s Nikkei 225 Index gained 2.6%; and China’s Shanghai Composite Index dipped 0.2%.
• Consumer confidence: Consumer confidence was little changed in March from February. The Conference Board Consumer Confidence Index® was 104.7 in March, essentially unchanged from a downwardly revised 104.8 in February. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose to 151.0 in March, up from 147.6 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, slipped to 73.8 in March, down from 76.3 in February.

Eye on the Quarter Ahead

The second quarter of 2024 will likely focus on election campaign rhetoric, first-quarter corporate earnings, and the ongoing turmoil in Ukraine and the Middle East. Investors will be watching for an interest rate reduction by the Federal Reserve, possibly in June.

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

Stocks finished the month of March in solid fashion. Each of the benchmark indexes listed here posted gains, with the exception of the Nasdaq. Bond yields dipped lower. Crude oil prices advanced, while energy shares ended up being a top performer. The dollar inched higher, while gold prices continued to climb.

Investors seemed to take a breath to begin last week, as stocks ticked lower by the close of trading last Monday. Of the benchmark indexes listed here, only the Russell 2000 was able to eke out a minimal 0.1% gain. The Dow fell 0.4%, while the Nasdaq and the S&P 500 dipped 0.3%, and the Global Dow lost 0.1%. Ten-year Treasury yields gained 3.5 basis points to 4.25%. Crude oil prices reached $82.02 per barrel after gaining $1.39. The dollar slipped 0.3%, while gold prices rose 0.6%.

Last Tuesday saw stocks lose steam after a favorable start to the day, ultimately closing lower for the second straight day. The Nasdaq fell 0.4%, the S&P 500 lost 0.3%, the Russell 2000 dropped 0.2%, the Dow slipped 0.1%, while the Global Dow broke even. Ten-year Treasury yields settled at 4.23%. Crude oil prices lost $0.50 to close at about $81.46 per barrel. The dollar and gold prices inched up minimally.

Stocks finally rebounded last Wednesday, ending a short-lived slump. Each of the benchmark indexes listed here posted notable gains, led by the Russell 2000, which rose 2.1%. the Dow climbed 1.2%, followed by the S&P 500 (0.9%), the Global Dow (0.8%), and the Nasdaq (0.5%). Ten-year Treasury yields declined 3.8 basis points to 4.19%. Crude oil prices ticked up marginally to $81.70 per barrel. The dollar was flat, while gold prices rose 0.7%. Real estate and utilities led the market sectors.

Wall Street closed the holiday week on Thursday, with equities generally advancing. The Russell 2000 gained 0.5%, while the Dow and the S&P 500 eked out 0.1% increases. The Nasdaq dipped 0.1%, while the Global Dow was flat. Ten-year Treasury yields inched up 1.0 basis point to close at 4.20%. The dollar rose 0.2%, while gold prices jumped 1.3%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 3/29	Weekly Change	YTD Change
DJIA	37,689.54	39,475.90	39,807.37	0.84%	5.62%
Nasdaq	15,011.35	16,428.82	16,379.46	-0.30%	9.11%
S&P 500	4,769.83	5,234.18	5,254.35	0.39%	10.16%
Russell 2000	2,027.07	2,072.00	2,124.55	2.54%	4.81%
Global Dow	4,355.28	4,645.33	4,676.17	0.66%	7.37%
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%	4.21%	4.20%	-1 bps	76 bps
US Dollar-DXY	101.39	104.42	104.55	0.12%	3.12%
Crude Oil-CL=F	$71.30	$80.88	$83.06	2.70%	16.49%
Gold-GC=F	$2,072.50	$2,168.10	$2,244.70	3.53%	8.31%

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

• Personal income rose 0.3% and disposable personal income advanced 0.2% in February, according to the latest data from the Bureau of Economic Analysis. Consumer spending, as measured by personal consumption expenditures, increased 0.8%. The personal consumption expenditures price index increased 0.3%, about where analysts expected. Excluding food and energy, prices rose 0.3%. Over the last 12 months, prices increased 2.5%, while core prices, excluding food and energy, advanced 2.8%.
• Gross domestic product rose at an annual rate of 3.4% in the fourth quarter, according to the third and final estimate released by the Bureau of Economic Analysis. GDP increased by 4.9% in the third quarter. 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 and residential fixed investment. Imports decelerated. The personal consumption expenditures (PCE) price index increased 1.8%, while the PCE index excluding food and energy prices increased 2.0%. Personal consumption expenditures rose 3.3% in the fourth quarter, nonresidential fixed investment increased 3.7%, and residential fixed investment rose 2.8%. Exports advanced 5.1%, while imports edged up 2.2%.
• The advance report on international trade in goods showed the deficit rose 1.5% in February. Exports increased 2.8%, while imports rose 2.3%. Since February 2023, exports are up 3.6% and imports climbed 2.8%.
• Sales of new single-family homes dipped 0.3% in February, but were 5.9% above the February 2023 estimate. The median sales price in February was $400,500, while the average sales price was $485,000. February inventory of new single-family homes for sale sat at a supply of 8.4 months at the current sales pace.
• New orders for manufactured durable goods in February rose 1.4%, marking the first monthly increase since November 2023. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders increased 2.2%. Transportation equipment, also up following two consecutive monthly decreases, led the increase, rising 3.3%. New orders for nondefense capital goods in February increased 4.4%. New orders for defense capital goods in February decreased 12.7%.
• The national average retail price for regular gasoline was $3.523 per gallon on March 25, $0.070 per gallon greater than the prior week’s price and $0.102 per gallon more than a year ago. Also, as of March 25, the East Coast price increased $0.039 to $3.388 per gallon; the Midwest price rose $0.097 to $3.406 per gallon; the Gulf Coast price increased $0.077 to $3.176 per gallon; the Rocky Mountain price rose $0.126 to $3.292 per gallon; and the West Coast price increased $0.080 to $4.460 per gallon.
• For the week ended March 23, there were 210,000 new claims for unemployment insurance, a decrease of 2,000 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 March 16 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 16 was 1,819,000, an increase of 24,000 from the previous week’s level, which was revised down by 12,000. States and territories with the highest insured unemployment rates for the week ended March 9 were New Jersey (2.8%), Rhode Island (2.6%), California (2.4%), Minnesota (2.4%), Massachusetts (2.3%), Illinois (2.1%), New York (2.0%), Connecticut (1.9%), Montana (1.9%), Pennsylvania (1.9%), and Washington (1.9%). The largest increases in initial claims for unemployment insurance for the week ended March 16 were in Missouri (+1,443), Michigan (+1,204), Tennessee (+538), Mississippi (+353), and Arkansas (+279), while the largest decreases were in California (-5,794), Oregon (-1,651), Texas (-856), Pennsylvania (-740), and Illinois (-626).

Eye on the Week Ahead

The March employment data is available this week. Employment rose by 275,000 in February as the labor sector continued to show strength. The March surveys of purchasing managers for the manufacturing and services industries are also out this week. February saw both sectors expand.

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.

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.