Stocks were volatile last week and finished mostly lower, despite a brief rally late in the week. The Dow, S&P 500, and NASDAQ all ended in the red, while small-cap stocks and the Global Dow posted modest gains. Market sentiment was shaped by the start of fourth-quarter earnings season, mixed results from major banks, and strength in semiconductor stocks. Stock traders also weighed inflation data, geopolitical developments, and uncertainty surrounding tariffs and monetary policy. Treasury yields moved higher, the U.S. dollar strengthened, and crude oil prices rose for a second consecutive week amid lingering geopolitical risks.
Last Week’s Economic News
- Consumer prices rose modestly in December, with the CPI up 0.3% for the month and 2.7% year over year. Shelter costs were the largest contributor, while food and energy prices also increased.
- Producer prices continued to advance, rising 0.2% in November and 3.0% over the past year, driven primarily by higher goods prices.
- Retail sales strengthened, increasing 0.6% in November and showing solid year-over-year growth, led by online sales and food services.
- Industrial production increased in December, supported by gains in manufacturing and utilities, while mining output declined.
- Housing data was mixed, with new home sales slightly lower month over month but well above year-ago levels, while existing home sales rose and inventory tightened.
- The federal budget deficit narrowed in December, though it remained above last year’s level, with Social Security and defense accounting for the largest outlays.
- Weekly unemployment claims declined, signaling continued stability in the labor market.
- Gasoline prices edged lower, remaining well below year-ago levels across most regions.
Eye on the Week Ahead
The final estimate of third-quarter GDP is scheduled for release this week, with investors watching closely to see whether economic growth remains as strong as previously reported.
Have a nice week!
Sincerely,
Robert G. Carpenter