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The final full week of January offered some important clues as to the strength of the economy. It also provided some context for what the Federal Reserve may do over the next several months. On Wednesday, the first impactful pieces of news was released with the Flash Manufacturing PMI and Flash Services PMI reports being released.

The Flash Manufacturing PMI came in at 50.3 percent, which was higher than the expected 47.6 percent. As for the Flash Services PMI, that report came in at 52.9 percent, which beat the expected 51.4 percent. Anything over 50 percent is considered a sign of an expanding market, which means that both the manufacturing and service sectors may experience growth in the first half of the year. If this is the case, it may indicate that the Fed will have to reconsider cutting rates as doing so in a strong economy could reignite inflation risks.

On Thursday, perhaps the most important data point of the week was released when the advance gross domestic product (GDP) for the previous quarter was made public. It was expected that the economy grew by 2 percent in the final months of 2023. However, the official report indicated that the economy actually grew by 3.3 percent during the period.

However, it was also revealed on Thursday that unemployment claims rose to 214,000 compared to 189,000 last week. Furthermore, prices of goods accounted for in GDP calculations only rose 1.5 percent compared to an expected 2.3 percent. This could be evidence of downward pressures on wages and prices of goods that might otherwise drive inflation higher.

On Friday, it was revealed that the Core PCE Price Index came in at .2 percent month-over-month in December, which was in line with expectations. Also on Friday, it was revealed that new home sales jumped by 8.3 percent compared to an expected 2.1 percent. This is important because demand for homes can lead to a rapid increase in prices, and housing costs have been one of the biggest hurdles to overcome in the quest to get inflation back to 2 percent.

The S&P 500 once again flirted with all-time highs as it finished the week at 4,890. For the week, the market was up .73 percent and is now up 2.45 percent for the year. On Wednesday, the S&P would make its high of the week at 4,903 while it would make a low of 4,844 on Tuesday morning.

The Dow would also finish the week higher, finishing up .45 percent at 38,109. On Wednesday afternoon, the market hit its weekly low of 37,816 before rebounding and closing at the high of the week. A rally that started on Thursday afternoon and lasted through Friday would account for almost all of the gains the market realized this week.

Finally, the Nasdaq would finish the week up .41 percent to close at 15,455. It would reach a high of 15,624 on Wednesday before easing back the rest of the week. The low of the week was hit on Tuesday when the Nasdaq dipped to 15,354.

In international news, the Bank of Japan (BOJ) held its interest rate steady at -.10 percent on Monday as inflation in the country cooled from 2.8 percent to 2.6 percent. The Bank of Canada (BOC) held that nation’s interest rate at 5 percent for the fourth straight meeting, which is seen by some as a sign that a rate cut may be forthcoming there too. On Thursday, the European Central Bank also kept the main refinancing rate at 4.5 percent.

The upcoming week will feature a couple of major reports as nonfarm payroll and unemployment numbers for January are expected to be released on Feb. 3. On Wednesday, the FOMC is scheduled to meet and release its upcoming rate decision. It is widely expected that the interest rate will remain in a range between 5.25 percent and 5.5 percent. Other important news include the CB Consumer Confidence Report and Job Openings and Labor Turnover Survey (JOLTS) that will be released on Tuesday.

Overseas, Australia will release its inflation figures for the previous month on Tuesday night. It is expected that the country’s inflation rate will have dipped from 4.3 percent to 3.7 percent on an annualized basis. In addition, Canada will release GDP numbers for the previous quarter while Great Britain will make another interest rate decision. As with most other developed nations, Great Britain is expected to hold rates steady.

The third week in January was another truncated one as markets were closed Monday for the Martin Luther King Day holiday, there was still a significant amount of interesting news. The first major piece of news to be released in the United States was on Wednesday when retail figures were made available.

Over the past month, retail sales were up .6 percent while core retail sales were up .4 percent over that same period. Analysts had expected increases of .2 percent and .4 percent respectively. It’s possible that the higher figures were reflective of the holiday season during when consumers tend to be enthusiastically spending. It may also be a sign that the economy is still too hot to handle a rate cut soon.

On Thursday, unemployment claim figures for the past seven days were made available, and it was revealed that 187,000 people had filed for benefits during that period. This was compared to 203,000 a week ago and an expected 206,000 for the current period.

On Friday, preliminary consumer sentiment and inflation expectation data were released by the University of Michigan. The reports found that consumer sentiment was 78.8 percent, which was significantly higher than the projected 69.8 percent and much higher than last month’s reading of 69.7 percent. Inflation was expected to be at 2.9 percent a year from now compared to an expectation of 3.1 percent during last month’s reading.

The S&P 500 finished the week up .89 percent to close at 4.839. On Wednesday, the market reached its low of the week at 4,717 while it closed at the high of the week on Friday. The index is currently at an all-time high and some analysts believe it has the potential to eclipse 5,000 at some point this year.

The Dow was relatively flat this week finishing up .13 percent over the past four trading days. On Wednesday, the market hit a low of 37,141 before rebounding and closing at the high of the week at 37,863. In fact, the Dow spent most of the week in the red before surging 345 points on Friday to eke out a modest gain.

Finally, the Nasdaq was up 1.98 percent this week to close at 15,310 and is now just 215 points away from its all-time high. On Wednesday, the market hit its low of 14,722 and would continue to rally through the end of the day on Friday.

Oil would continue to remain range bound making a low of $70.72 on Wednesday and a high of $74.70 on Friday. During the week, an American oil tanker was attacked in the Red Sea near Yemen, which likely spooked markets during the middle of the week. Any prolonged conflict involving American oil interests may help the market break out of its recent trading range.

Gold made a high near $2,060 an ounce on Monday before falling back to $2,005 an ounce on Wednesday. The market would rebound to close the week at $2,030 an ounce.

In international news, it was revealed on Tuesday that inflation in Canada increased to 3.6 percent on an annualized basis from 3.3 percent a month ago. China revealed that retail sales were up 7.4 percent on an annual basis while gross domestic product was up 5.2 percent on an annualized basis over the past quarter. In Great Britain, inflation was up to 4 percent from 3.9 percent a month ago while retail sales fell 3.2 percent compared to last month. Finally, in Australia, the unemployment rate remained at 3.9 percent from November to December.

A number of important reports will be released this week. On Wednesday, the Flash Services PMI and Flash Manufacturing PMI figures will be made public. On Thursday, advance GDP data for the last quarter will be made available while the Core PCE Price Index will be released on Friday.

A slew of monetary policy decisions will be forthcoming from central banks around the globe including Japan and most of the major economies in the European Union (EU). The Bank of Canada (BOC) will also release its latest rate decision, and when taken as a whole, what other banks do might provide some insight into what the Fed has planned in March.

The first full trading week of 2024 featured the release of December’s inflation figures, which could have an impact on future interest rate decisions. On Thursday, it was revealed that inflation during the final month of the year was 3.4 percent, surprising most observers who believed that inflation was going to come in at 3.2 percent. While that figure would have still been higher than the 3.1 percent recorded in November, it probably would have been enough to assume that the worst was over in terms of the Fed’s inflation fight.

It is worth noting that the news wasn’t significant enough for anyone from the Fed to say that rate cuts were off the table. However, it may give pause to some voting members who may believe that the battle against inflation isn’t over until the Fed’s target of 2 percent is reached.

Prior to Thursday’s release, it was expected that the Fed could enact a rate cut in March. However, after the release Fed Member Mester said that she doesn’t believe the time is right for a rate cut and that inflation probably won’t come back to 2 percent at any point in 2024.

In other news this week, unemployment claims data was also released on Thursday morning, and it was revealed that 202,000 people sought benefits over the last seven days. This was just below the 203,000 claims reported last week and well below the analyst estimate of 209,000 claims.

On Friday, it was revealed that Core PPI was flat for the month, which means that prices for goods excluding food and energy prices remained unchanged. Overall PPI was down .1 percent for the month, which was in line with the previous month and lower than what analysts expected prior to the release.

The S&P 500 was up 1.58 percent this week to close at 4,783. On Friday, the market touched a record high of 4,802 before easing back later in the day. The market opened trading at the low of the week of 4,706 before steadily climbing.

The Dow was also up this week finishing .82 percent higher to close at 37,592. As with the S&P, the Dow would also make its weekly open at the open on Monday before climbing. The low for the week was 37,470 while the high for the past five trading days was 37,825.

Finally, the Nasdaq was up 2.67 percent to finish at 14,972 for the week. The market would make a high on Friday of 15,039 and a low of 14,586 on Monday. While it didn’t make an all-time high like the S&P did this week, it is only 2 percent off the mark and could break the existing record of 15,497 with a strong finish to the month.

Oil prices continued to remain range bound for the month as traders can’t seem to push the market above $75 a barrel or below $70. The market has been stuck in a rather tight range for the past two months.

Gold spent most of Monday and Tuesday confined to a range between $2,020 and $2,040 per ounce. However, the market broke out on Wednesday to reach a weekly low of $2,010 before rebounding to hit a weekly high of close to $2,070 on Friday.

In international news, the Swiss central bank revealed that inflation was flat over the previous month on an annualized basis. Inflation in Japan remained at 2.1 percent while price pressures eased slightly in Australia as the CPI reading for December came in at 4.3 percent compared to 4.4 percent a month ago. In China, prices fell about .3 percent compared to a fall of .4 percent last month. In Great Britain, the gross domestic product (GDP) was up .3 percent monthly.

This upcoming week will be another that is likely to start slowly thanks to the Martin Luther King Day holiday on Monday. However, the action is likely to pick up on Wednesday when retail sales figures are released. It’s expected that sales will be up .4 percent on a monthly basis. Unemployment, home sales and other key reports will also be released throughout the week while several members of the Fed are expected to give speeches that might create market volatility.