inflation – Page 9 – What I'm Watching This Week

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.

What I’m Watching This Week – 18 December 2023

Published on December 17, 2023 by dredheadz

The Markets (as of market close December 15, 2023)

Last week saw stocks rally after the Federal Reserve policy statement released last Wednesday suggested no more interest rate hikes, while predicting rate cuts in 2024 (see below). Despite losing momentum at the end of the week, stocks enjoyed their seventh consecutive week of gains, with the S&P 500 marking its longest winning streak since 2017 and the Dow’s longest since 2018. Each of the market sectors ended the week higher, led by real estate, consumer discretionary, materials, and financials. Bond yields continued to be volatile, dropping 32.0 basis points as investors tried to determine the direction interest rates will take. Crude oil prices ended a stretch of six weeks of losses. The dollar registered its largest weekly drop in a month against a basket of currencies.

Wall Street began last week on a positive note as investors awaited the upcoming release of the latest inflation data and the Federal Reserve meeting. Each of the benchmark indexes listed here closed higher last Monday, led by the Dow, the S&P 500, and the Global Dow, which each rose 0.4%. The Russell 2000 and the Nasdaq inched up 0.2%. Ten-year Treasury yields slipped minimally to 4.23%. Crude oil prices rose 0.3% to $71.45 per barrel. The dollar ticked higher, while gold prices fell nearly 1.0%.

Markets closed generally higher last Tuesday. The Consumer Price Index (see below) showed inflation held steady with the Federal Reserve’s final meeting of 2023 on tap for Wednesday. The Dow and the S&P 500 gained 0.5%, while the Nasdaq added 0.7%, with all three indexes closing at their highest levels since January 2022. The Global Dow ticked up 0.2%, while the Russell 2000 dipped 0.1%. Crude oil prices gave back recent gains, falling 3.6% to $68.73 per barrel. Yields on 10-year Treasuries fell 3.3% to 4.20%. The dollar fell 0.3%, while gold prices rose less than 0.1%.

Wall Street reacted favorably to the outcome of the Federal Reserve’s meeting last Wednesday (see below) as stocks climbed to record highs. Each of the benchmark indexes listed here posted solid gains led by the Russell 2000, which climbed 3.5%. The Dow, the Nasdaq, and the S&P 500 each rose 1.4%, while the Global Dow added 1.1%. Ten-year Treasury yields fell to 4.03%, the lowest rate since August, while two-year yields tumbled 30.0 basis points to 4.43%, all in response to the Fed’s statement. Crude oil prices swung higher, closing at $69.74 per barrel after gaining 1.65%. The dollar fell 0.9%, while gold prices rose 2.3%.

Stocks continued to climb higher last Thursday as investors rode momentum from the Fed’s aforementioned policy statement. The Dow jumped 0.4% to hit another record high, while the S&P 500 (0.3%) and the Nasdaq (0.2%) notched gains. But the interest-sensitive small caps of the Russell 2000 posted notable gains after advancing 2.7%, while the Global Dow rose 1.3%. Ten-year Treasuries dipped to 3.93%, falling below 4.0% for the first time since August. Crude oil prices rose 3.2% to $71.70 per barrel. The dollar declined 0.9%, while gold prices climbed 2.7%.

Stocks cooled to end last week. Of the benchmark indexes listed here, only the Nasdaq (0.4%) and the Dow (0.2%) advanced. The Russell 2000 lost 0.7%, the Global Dow fell 0.2%, while the S&P 500 was flat. Crude oil prices rose for the fourth day out of five, gaining 0.7%. The dollar ended a three-day losing streak after gaining 0.6%. Gold prices dipped 0.6%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 12/15	Weekly Change	YTD Change
DJIA	33,147.25	36,247.87	37,305.16	2.92%	12.54%
Nasdaq	10,466.48	14,403.97	14,813.92	2.85%	41.54%
S&P 500	3,839.50	4,604.37	4,719.19	2.49%	22.91%
Russell 2000	1,761.25	1,880.82	1,985.13	5.55%	12.71%
Global Dow	3,702.71	4,191.86	4,285.04	2.22%	15.73%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.24%	3.92%	-32 bps	5 bps
US Dollar-DXY	103.48	103.98	102.61	-1.32%	-0.84%
Crude Oil-CL=F	$80.41	$71.25	$71.62	0.52%	-10.93%
Gold-GC=F	$1,829.70	$2,019.40	$2,033.40	0.69%	11.13%

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 Federal Reserve decided to maintain the target range for the federal funds rate at 5.25%-5.50% for the third straight meeting. Based on Fed projections for interest rates by the end of next year, it appears the Fed anticipates making three rate cuts of 0.25% each over the course of 2024.
The Consumer Price Index increased 0.1% in November, after being unchanged in October. The index less food and energy rose 0.3% in November, after rising 0.2% in October. Prices for shelter continued to rise in November, offsetting a decline in gasoline prices. Prices for energy fell 2.3%, while prices for food increased 0.2%. The CPI rose 3.1% for the 12 months ended in November, a smaller increase than the 3.2% advance for the 12 months ended in October. Prices less food and energy rose 4.0% for the year ended in November, the same increase as for the 12 months ended in October. Energy prices decreased 5.4% for the 12 months ended in November, while food prices increased 2.9% over the last year.
The Producer Price Index, which measures prices producers receive for goods and services, was unchanged in November after declining 0.4% in October. Last month, prices for both goods and services were unchanged. For the year ended in November, the PPI increased 0.9%. Producer prices less foods, energy, and trade services edged up 0.1% in November, the sixth consecutive monthly advance. For the 12 months ended in November, prices less foods, energy, and trade services rose 2.5%.
Retail sales rose by 0.3% in November and were up 4.1% from November 2022. Retail trade sales rose 0.1% last month and 3.1% from November 2022.
Prices for imports decreased 0.4% in November following a 0.6% decline the previous month. The November decline was the first one-month declines since June 2023. Lower fuel prices in November more than offset an increase in nonfuel prices. Prices for imports fell 1.4% for the year ended in November. Export prices fell 0.9% for the second consecutive month in November. Lower prices for nonagricultural exports in November more than offset higher agricultural prices. The price index for exports also declined over the past 12 months, decreasing 5.2% from November 2022.
Industrial production increased 0.2% in November. Manufacturing output jumped 0.3%, largely due to a 7.1% increase in motor vehicles and parts production following the resolution of strikes at several major automakers. Excluding motor vehicles and parts, manufacturing fell 0.2%. The output of utilities moved down 0.4%, and the output of mines moved up 0.3%. Total industrial production in November was 0.4% below its year-earlier level.
The November deficit for the federal government was $314.0 billion, $247.5 billion above the October deficit and $65.5 billion higher than the November 2022 deficit. Total government receipts in November were $274.8 billion and government outlays totaled $588.8 billion. Through the first two months of fiscal year 2024, the government budget deficit sat at $380.6 billion compared to $336.4 billion over the same period last fiscal year.
The national average retail price for regular gasoline was $3.126 per gallon on December 11, $0.095 per gallon lower than the prior week’s price and $0.103 less than a year ago. Also, as of December 11, the East Coast price decreased $0.083 to $3.123 per gallon; the Midwest price fell $0.090 to $2.901 per gallon; the Gulf Coast price declined $0.116 to $2.622 per gallon; the Rocky Mountain price dropped $0.116 to $2.899 per gallon; and the West Coast price decreased $0.111 to $4.141 per gallon.
For the week ended December 9, there were 202,000 new claims for unemployment insurance, a decrease of 19,000 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 December 2 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 December 2 was 1,876,000, an increase of 20,000 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 November 25 were New Jersey (2.4%), California (2.3%), Alaska (2.2%), Puerto Rico (1.9%), Washington (1.9%), Hawaii (1.8%), Massachusetts (1.8%), Minnesota (1.8%), New York (1.8%), and Oregon (1.8%). The largest increases in initial claims for unemployment insurance for the week ended December 2 were in California (+13,478), New York (+9,073), Texas (+8,321), Georgia (+6,728), and Oregon (+5,406), while the largest decreases were in Kansas (-893), Vermont (-14), and Delaware (-14).

Eye on the Week Ahead

The final estimate of third-quarter gross domestic product is available this week. The second estimate had the economy accelerating at an annualized rate of 5.2%. The November data on personal income and outlays is also out this week. Consumer spending rose 0.2% in October, while the personal consumption expenditures price index, a measure of inflation, was flat. Consumer prices continue to inch lower, although they remain above the Federal Reserve’s target of 2.0%.