Stocks moved higher last week despite mixed economic data, with the Dow and S&P 500 reaching new record highs. Stock traders looked past a softer-than-expected jobs report, while midweek profit-taking in technology and AI shares failed to derail broader market momentum. Small-cap stocks outperformed, led by strength in industrials, health care, and financials. Nine of the 11 S&P 500 sectors finished higher, with materials, industrials, and energy leading the gains. Treasury yields edged slightly lower, while crude oil prices rose amid geopolitical tensions in the Middle East and ongoing concerns surrounding Venezuelan supply.
Last Week’s Economic News
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Job growth slowed in December, with payrolls rising by 50,000 and the unemployment rate dipping to 4.4%. Wage growth remained steady, while revisions lowered prior-month employment totals.
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Job openings declined further, signaling continued cooling in labor demand, while hiring activity also softened compared to earlier in the fall.
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Services sector activity expanded at a slower pace, as new business growth weakened and cost pressures from tariffs and labor expenses remained elevated.
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The trade deficit narrowed sharply in October, as exports increased and imports declined, though the deficit remains higher than a year ago.
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Housing activity softened, with declines in building permits and housing starts, while completions remained well below year-ago levels.
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Weekly unemployment claims ticked higher, though insured unemployment rates were unchanged.
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Gasoline prices continued to trend lower, remaining well below year-ago levels across all regions.
Eye on the Week Ahead
Markets will focus on upcoming inflation data, including the Consumer Price Index and retail sales reports, though release timing remains uncertain as government agencies continue to work through reporting delays.
Have a nice week!
Sincerely,
Robert G. Carpenter