Stocks fell sharply last week as favorable economic data furthered sentiment that the Federal Reserve would keep interest rates elevated for a longer period of time this year. The major benchmark stock indexes lost value with only energy and health care advancing, while the remaining market sectors ended the week in the red. Crude oil prices rose to levels not seen since October as new sanctions against Russia’s oil sector raised concerns of global supply disruptions. Ten-year Treasury yields ended the week at their highest levels in 14 months. The dollar index closed at its strongest rate since 2022. Gold prices climbed above $2,700.00 per ounce, extending gains for the fourth straight session
Last Week’s Economic News
- Employment rose by 256,000 in December, well above the 2024 average monthly gain of 186,000.
- The S&P Global US Services PMI® Business Activity Index reached a 33-month high in December. According to a survey of purchasing managers by S&P Global, the services sector saw a strengthening in business activity and new orders in December as customers showed a greater willingness to spend following the results of the presidential election.
With the number of orders growing, companies increased employment for the first time in five months. Meanwhile, cost inflation eased to the slowest pace in almost a year, with charges rising only modestly. - The goods and services trade deficit report, released January 7, was for November 2024 and revealed the trade deficit was $78.1 billion, 6.2% above the October deficit.
Year to date, the goods and services deficit increased $93.9 billion, or 13.0%, from the same period in 2023. - According to the Job Openings and Labor Turnover Summary, the number of job openings changed little, to 8.1 million in November, but it was down by 833,000 from a year earlier.
- The national average retail price for regular gasoline was $3.047 per gallon on January 6, $0.041 per gallon above the prior week’s price.
- For the week ended January 4, there were 201,000 new claims for unemployment insurance, a decrease of 10,000 from the previous week’s level.
This was the lowest level in 11 months.
Eye on the Week Ahead
Plenty of important economic data was released this week. Most of the economic reports will cover December and include annual figures for 2024. Most investors will pay particular attention to the Consumer Price Index, the Producer Price Index, and the report on industrial production.
Have a nice week!
Sincerely,
Robert G. Carpenter