This was another consequential week for market participants as the prices of gold, silver and Bitcoin whipsawed dramatically. The tech sector was hit hard by losses, while the Dow Jones Industrial Average hit a new record high. Economic data featured a mixed bag of news that offered little market clarity.
On Monday, some good news came in for the market with the release of the ISM Manufacturing PMI. In January, the index was at 52.6, which was higher than the projected 48.5 and higher than last month’s reading of 47.9. On Wednesday, the ISM Services PMI was released and came in at 53.8. This was higher than the expected 53.5 and was also only slightly lower than last month’s reading of 54.4.
However, the ADP nonfarm payroll report revealed that the economy added just 22,000 jobs in December. It was believed prior to the release that the economy had added 46,000 jobs for the month. This figure was also lower than the 37,000 positions created in December. The BLS version of the nonfarm payroll report was supposed to be made public on Friday, but it is now scheduled for next Wednesday.
Thursday saw the release of the JOLTS job reports figure for January as well as the unemployment claims figures for the past seven days. In January, there were 6.54 million openings in the United States, compared to an expected 7.25 million. This was slightly lower than the 6.93 million positions available in December.
The data reflects a growing trend among workers and employers to maintain the status quo. Employees don’t want to leave their current jobs because they fear that they won’t find better opportunities. Meanwhile, employers don’t want the added costs and uncertainty associated with laying off employees. Furthermore, they are generally focused on how to improve productivity as opposed to increasing their head counts.
As far as unemployment claims are concerned, there were 231,000 requests for benefits. This was up from 209,000 a week ago and well above the projected 212,000 claims prior to the release.
On Friday, the University of Michigan released its consumer sentiment and inflation expectations reports. Consumer sentiment came in at 57.3, which was higher than the projected 55. Respondents also said that inflation was going to be at 3.5 percent in 12 months.
The S&P 500 was relatively flat again this week gaining almost 13 points to close at 6,932. For the week, the market made a high of 6,989 on Tuesday before falling to a low of 6,782 on Thursday. The index then reversed on Friday to settle in the middle of the weekly range.
The Dow Jones Industrial Average was more volatile this week closing up 2.74 percent to finish at 50,115. On Friday, the index climbed above the 50,000 level for the first time in history. For the week, the index forced traders to endure choppy trading until breaking out on Friday. The low of the week was 48,483 which occurred on Thursday while it closed near the weekly high.
Finally, the Nasdaq was the big loser this week, dropping 1.78 percent to close at 25,075. This represented a drop of over 400 points led by big losses for names such as Amazon, Coinbase and Robin Hood. As with the S&P 500, the Nasdaq opened near its high of 25,760 and made a low of 24,460 on Thursday.
In international news, Australia raised the country’s key interest rate by 25 basis points to 3.85 percent. Great Britain kept the nation’s interest rate at 3.75 percent on Thursday morning while the Eurozone kept its base interest rate at 2.15 percent.
Next week will certainly be an interesting one as the BLS nonfarm payroll report is scheduled to be released. Retail sales numbers as well as inflation data come out on Tuesday and Friday. Unemployment claims for the past week will come out on Thursday.