After pulling off a surprisingly strong rally in the fourth quarter of 2023, the stock market took a break during the first week of the new year. All major stock indexes ended lower, with the Russell 2000 and the Nasdaq seeing the largest losses. Information Technology and Consumer Discretionary were the two worst-performing sectors, while health care, utilities, and energy posted decent gains. A solid jobs report pushed ten-year Treasury yields above 4.0% on Friday. Oil prices were volatile but ended the week 3.4% higher, primarily due to rising tensions in the Red Sea.
Last Week’s Economic News
- According to the Labor Department’s closely watched payrolls report, there were 216,000 new jobs added in December, up from 173,000 in November. For all of 2023, employers added 2.7 million jobs, less than the 4.8 million added in 2022. The unemployment rate and number of unemployed persons were essentially unchanged at 3.7% and 6.3 million, respectively, in December. One year ago in December 2022, the jobless rate was 3.5% and there were 5.7 million unemployed persons.
- According to the S&P Global US Manufacturing Purchasing Managers’ Index™, the manufacturing sector slipped further into contraction in December. Output declined and the downturn in new orders picked up speed. Inflationary pressures intensified, as cost burdens rose sharply and selling prices increased at the quickest pace since April.
- The pace of expansion in the U.S. service sector picked up marginally in December, driven by the fastest upturn in new business since June.
- According to the latest Job Openings and Labor Turnover Summary, the number of job openings in November was little changed. The moderation in quits in recent months may indicate that Americans are less confident in their ability to find new or better-paying jobs. All in all, the report seemed to confirm the Fed’s expectation that a cooling labor market will limit wage increases and help slow inflation.
- The national average retail price for regular gasoline continues to be high at $3.089 per gallon on January.
- For the week ended December 30, there were 202,000 new claims for unemployment insurance.
Eye on the Week Ahead
The market will likely be attuned to two important inflation measures to be released later this week. The Consumer Price Index (CPI) for December will be available on Thursday, followed by the Producer Price Index (PPI) on Friday. The CPI increased 0.1% in November and saw its annual rate drop to 3.1%. The PPI was unchanged in November and increased just 0.9% over the previous 12 months.
Have a nice week!
Sincerely,
Robert G. Carpenter