Rising inflation heightened traders’ concerns that the Federal Reserve may not consider lowering interest rates during the first half of the year. Among the major stock benchmark indexes, only the small caps of the Russell 2000 and the Global Dow were able to gain ground. The Dow snapped a five-week winning streak, while the Nasdaq and the S&P 500 also finished the week lower. With the stock market closed on Monday for President’s Day, traders will have to wait a little longer to try to begin another rally. Materials, utilities, financials, and industrials were better-performing sectors, while information technology and communication services lagged. Ten-year Treasury yields rose for the second straight week. Crude oil prices climbed higher, while the national average for regular gasoline jumped to a two-month high.
Last Week’s Economic News
- The Consumer Price Index rose in January, exceeding expectations with the largest monthly gain since September 2023. Despite the January increase, the 12-month rate declined from 3.4% to 3.1%, while core prices were unchanged at 3.9%.
- The Producer Price Index rose in January after falling in December. Since January 2023, producer prices have risen.
- Retail sales declined in January from the previous month but were up from January 2023.
- Both import prices and export prices rose in January after declining in December. The January increase in export prices was also the first monthly increase since September 2023. Over the past 12 months ended in January, export prices decreased 2.4%.
- Industrial production edged down in January after recording no change in December. Total industrial production was identical to its year-earlier level.
- The Treasury budget deficit was $22.0 billion in January, down from December’s $129.4 billion. January receipts were $477.3 billion, while expenditures were $499.3 billion. Through the first four months of the current fiscal year, the deficit sat at $531.9 billion, about $72.0 billion above the deficit over the same period last fiscal year. Last month, individual income taxes ($283.0 billion) contributed more than half of the total receipts, while Social Security and Medicare payments ($204.0 billion) represented the largest expenditures.
- The number of building permits issued for residential construction decreased in January from December but were 8.6% above the January 2023 figure. Single-family housing starts declined, falling 4.7%. January home completions were 8.1% below the December estimate but 2.8% above the rate from a year earlier.
- The national average retail price for regular gasoline was $3.192 per gallon on February 12, $0.056 per gallon higher than the prior week’s price.
- For the week ended February 10, there were 212,000 new claims for unemployment insurance, a decrease of 8,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 3 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 February 3 was 1,895,000, an increase of 30,000 from the previous week’s level, which was revised down by 6,000.
Eye on the Week Ahead
There’s very little in terms of market-moving economic data being released this week. The Federal Open Market Committee releases the minutes from its last meeting, which might provide some insight as to the direction the Committee may be headed with respect to interest rates. Also out this week is the January data on sales of existing homes. Sales declined 1.0% in December and 6.2% year over year.
Have a nice week!
Sincerely,
Robert G. Carpenter