Stocks finished last week a bit lower as stocks traders speculated over a heavy flow of fourth-quarter earnings, economic data, elevated valuations, and the Federal Reserve’s decision to hold interest rates steady. Several benchmarks reached intraday highs midweek, including the S&P 500 briefly topping the 7,000 level, but most indexes pulled back by Friday’s close. The S&P 500 and the Global Dow ended the week higher. Communication services and energy led sector performance, while health care lagged. Treasury yields and the U.S. dollar were little changed, while crude oil prices climbed again amid rising geopolitical tensions.
Last Week’s Economic News
- The Federal Reserve held interest rates steady, maintaining the federal funds target range at 3.50%–3.75%, following three consecutive rate cuts. Policymakers cited steady economic growth, low job gains, and inflation that remains somewhat elevated.
- Producer prices accelerated in December, with the Producer Price Index rising 0.5%, led by higher service-sector costs. Core producer prices posted their eighth straight monthly increase.
- Durable goods orders rebounded sharply, increasing 5.3% in November after October’s decline, driven primarily by a surge in transportation equipment orders.
- The U.S. trade deficit widened significantly, as imports rose and exports declined in November, reflecting stronger domestic demand and weaker overseas shipments.
- Weekly unemployment claims edged lower, and continuing claims fell to their lowest level since September 2024, signaling ongoing stability in the labor market.
- Gasoline prices rose slightly, tracking higher crude oil prices, though pump prices remain well below year-ago levels.
Eye on the Week Ahead
The January jobs report is due this week. With hiring having slowed in recent months and unemployment edging higher, the data will be closely watched for insight into labor market momentum and future Federal Reserve policy.
Have a nice week!
Sincerely,
Robert G. Carpenter