Stocks notched their eighth straight week of gains heading into the holiday-shortened week. While trading was generally light, traders remained bullish toward stocks as they clung to the hope that the economy has survived the restrictive inflation-reducing policy of the Federal Reserve. The S&P 500 enjoyed its longest weekly winning streak since late 2017, while the Nasdaq and the Dow marked the streaks since early 2019. With one week to go in 2023, the S&P 500 is within 1.0% of reaching its all-time high, achieved in January 2022. The Russell 2000, which was below its 2022 closing value in August, now is more than 15.0% above that level. Traders were also encouraged by economic data released last week, which showed inflation continuing to trend lower, while new orders for durable goods advanced, a good sign for corporations. Crude oil prices ticked higher but remained below $75.00 per barrel. Yields on 10-year Treasuries moved marginally lower, while the dollar weakened on declining interest rates.
Last Week’s Economic News
- The third and final estimate of third-quarter gross domestic product showed the economy accelerated at an annualized rate of 4.9%.
- Recent data continues to evidence declining inflation.
- New home construction may be picking up.
- Sales of existing homes advanced in November, the first monthly increase since May. However, sales were down 7.3% over the last 12 months.
- Sales of new single-family homes dropped 12.2% in November and were up only 1.4% over the last 12 months. The decline in sales was likely due to rising mortgage rates in October and November.
- New orders for manufactured durable goods in November, up two of the last three months, rose 5.4% to $295.4 billion.
- The national average retail price for regular gasoline was $3.053 per gallon on December 18, $0.083 per gallon lower than the prior week’s price and $0.067 less than a year ago.
- For the week ended December 16, there were 205,000 new claims for unemployment insurance, an increase of 2,000 from the previous week’s level.
Eye on the Week Ahead
Christmas week is a slow one for the release of economic news. The advance report on international trade in goods for November is out toward the end of the week. The trade in goods deficit was $89.6 billion in October, largely due to a 1.4% decrease in exports.
Have a nice week!
Sincerely,
Robert G. Carpenter