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Stocks closed down slightly on Friday. The Dow lost 0.6 percent, the S&P 500 dropped 0.7 percent, and the Nasdaq had the largest slide at 0.9 percent for the day. The Russell 2000 Index also dipped 1.49 percent for the day.

For the week, the small-cap Russell 2000 Index was the lone gainer among the major indexes, rising 1.51 percent. The Nasdaq slid 1.54 percent, the S&P 500 Index 1.48 percent and the Dow Jones Industrial Average 0.91 percent.

Crude oil prices decreased on Friday. West Texas Intermediate (WTI) crude oil prices fell 3.13 percent to $52.04 per barrel. The international benchmark Brent Crude (BZ: NMX) also dropped by 2.84 percent to $54.82 per barrel. Gold declined to $1,826.47 per ounce.

Three sectors were positive on the week: energy, utilities and financials. SPDR Energy (XLE) added 3.21 percent, SPDR Utilities (XLU) 1.04 percent and SPDR Financial (XLF) 0.16 percent. First Trust ISE Revere Natural Gas (FCG) increased 8.37 percent and SPDR S&P Regional Banking (KRE) climbed 2.30 percent. The biotechnology subsector extended its winning streak. iShares Nasdaq Biotechnology (IBB) increased 2.21 percent.

Lockdowns hit small business confidence in December. The National Federation of Independent Business said its index slipped from 101.4 in November to 95.9 in December.

Consumer prices met expectations in December. The headline CPI rose 0.4 percent and core CPI rose 0.1 percent. Producer prices increased 0.3 percent, missing forecasts of 0.4 percent.

December retail sales were hurt by lockdowns. Sales fell 0.7 percent, more than the 0.1-percent drop projected by economists. Sales ex-autos slumped 1.4 percent. One surprise was a 5.8 percent decline in online sales, indicating the tailwind for online retail could be ending.

Initial jobless claims climbed to 965,000 in the week ended January 9. Economists were looking for 800,000 claims. As with the other data, the intensified lockdowns in some states was responsible for most of the data misses.

Despite the flat spending data following the holiday retail season, the University of Michigan’s consumer sentiment index only came in at 79.2, only 0.3 points lower than the consensus forecast of 79.5. December’s final level was 80.7.

J.P. Morgan (JPPM) kicked off earnings season with an impressive earnings beat. Analysts were looking for $2.72 per share in earnings, but the bank turned in $3.79 per share.  Citigroup (C) also beat with $2.08 per share in profit versus $1.35 forecast. Wells Fargo (WFC) did too with $0.64 versus $0.59 projected.

In light of the $1.9 trillion federal stimulus package proposal touted by President-elect Biden, which includes a proposed $1,400 direct payments to individual taxpayers, Bank of America has improved its projection for growth in the first quarter from 1 percent to 4 percent. Along those lines, Bank of America also adjusted its 12-month GDP growth forecast from 4.6 percent to 5 percent.

On Thursday, Federal Reserve Chairman Jerome Powell publicly confirmed the Fed’s commitment to its asset purchase plans and its near-zero interest rate policy. Notably, Powell commented that should the Fed decide to ease back or reverse course on its asset purchase plans, that would necessarily follow the Fed’s signal of a tiered approach to avoid any panic over a sudden shift in Fed policy. Powell’s public statements should rebuff any short-term concerns surrounding a potential uptick in inflation necessitating an interest rate hike, especially as the Fed continues to target an inflation rate of close to 2 percent. On Friday, the 10-year Treasury yield fell to 1.096 percent. Similarly, the 30-year Treasury yield dropped 4 basis points on the day to 1.838 percent. The U.S. dollar was up for the day, with an increase of 0.6 percent to 90.77.

In observation of the Martin Luther King Jr. federal holiday, U.S. markets will be closed for the day. For the week ahead, key housing data will be reported, including existing home sales, PMI breakdowns, housing starts, and new permits for building.

The week opened with a bit of a slip for the major stock indexes. The S&P 500 dropped 0.66 percent, the Nasdaq lost 1.25 percent, and the Dow declined 0.29 percent. Real estate and technology were the major sector underperformers for the S&P 500. The Russell 2000 Index was down slightly for the day with a loss of .03 percent.

Tech companies, specifically social media platforms, took a tumble on Monday after contentious developments over the weekend regarding several companies’ decisions to ban President Trump from their platforms. Facebook (FB) shares lost 4 percent and Twitter (TWTR) shares dipped 6.4 percent. Amazon.com (AMZN) shares lost 2.15 percent, while Apple (AAPL) shares declined 2.3 percent. Microsoft (MSFT) shares dropped 1 percent on the day.

Tesla declined on news that Faraday Future was in talks with a special purpose acquisition company (SPAC). Property Solutions Acquisition Corporation (PSAC) gained 18.81 percent on news it was in talks with electric car maker Faraday. It’s debatable how much competition Faraday will give Tesla in the electric vehicle market, but it’s entry into the stock market could draw capital away from Tesla. Tesla has gained 800 percent over the past year. It dipped 7.82 percent on Monday.  SPDR Consumer Discretionary (XLY) dipped 1.87 percent on Monday. Tesla is 18.65 percent of the fund, behind only Amazon (AMZN).

West Texas Intermediate (WTI) crude oil prices decreased to $52.10 per barrel on Monday, a loss of 0.3 percent. After fighting past intraday lows on Monday, prices per barrel on the international benchmark Brent Crude (BZ: NMX) likewise fell 0.95 percent to $ 55.46. Copper also lost 3 percent for the day at $3.56 a pound. Gold gained 0.39 percent on Monday and is up to $ 1,849.70 per ounce.

The 10-year Treasury note yield increased for the fifth day in a row to 1.13 percent, its peak since last March 2020. Although not nearly close to the point of concern, an increase in the 10-year yield can spell out inflation issues down the line. Stocks typically respond negatively to the strong possibility of this trend. The U.S. Dollar also increased 0.62 percent on Monday. Both the dollar and bond rates bumped up for the day on the expectation that the newly confirmed Democratic controlled house and senate will accelerate additional coronavirus stimulus relief spending.

The strength of the dollar was one of the factors in cryptocurrencies taking a tumble on Monday. Bitcoin experienced its largest two-day loss since last March after dropping over 21 percent between Sunday and Monday. This represented around $140 billion in losses for the market.

iShares MSCI Emerging Markets (EEM) declined 1.35 percent and iShares MSCI EAFE (EFA) 1.31 percent. Rumors that Alibaba (BABA) could be nationalized by the Chinese government weighed on emerging market funds with hefty China tech exposure. iShares China Large Cap (FXI) has less and fell 1.35 percent, Invesco Golden Dragon (PGJ) has more and dipped 2.77 percent.

December retail sales are out this week. Analysts forecast declines of 0.1 percent and 0.4 percent ex-autos. Economists predict producer and consumer prices both increased 0.4 percent last month.

President-elect Biden announced that he will outline his new stimulus funding proposals on Thursday. U.S. initial jobless claims numbers are also out that day. The week will close with the release of the latest U.S. retail sales data, industrial production levels, business inventories and consumer sentiment figures.

Earnings season kicks off this week with Charles Schwab (SCHW), Delta Air Lines (DAL) on Thursday. Friday brings the mega banks J.P. Morgan (JPM), Citigroup (C), Wells Fargo (WFC) and regional giant PNC Financial Services (PNC). The consensus forecast coming into earnings season calls for an 8.8 percent drop in S&P 500 earnings. Analysts predict financial sector earnings will fall 7.5 percent. Prior quarters have seen the banks handily beat expectations.

The three major indexes posted gains on Friday, including new record highs for the S&P 500. This was welcome news for investors following an eventful week, including the congressional confirmation of the presidential electoral vote, the upheaval at the Capitol Building, two Georgia runoff elections for the U.S. Senate, new records set for U.S. coronavirus case counts and hospitalizations.  Stocks benefited as anticipation for the potential for increases in the amount of direct payments to individual taxpayers from $600 to $2,000 through additional stimulus funding proposals favored by the incoming Biden administration.

The S&P 500 closed up 0.55 on Friday, the Dow 0.18 percent, and the Nasdaq 1.03 percent for the day. For the week, the S&P 500 posted a weekly gain of 1.8 percent, the Dow 1.94 percent, and the Nasdaq an impressive 2.4 percent. The Russell 2000 Index ended the day with a loss of 0.25 percent.

SPDR Consumer Discretionary (XLY) rose 4.79 percent thanks to Tesla (TSLA), which popped 19.16 percent on the hope the government will pass favorable policies for electric vehicles. Tesla entered the consumer discretionary sector when it was added to the S&P 500 Index. It came in around 14 percent of the index, but it is already 17.64 percent, behind Amazon’s 21.72 percent as of Thursday. Tesla gained 7.84 percent on Friday.

The most recent market valuation of Tesla is $830 billion, now officially surpassing Facebook’s (FB) market valuation, after an incredible 20-percent increase for 2021 so far, and Tesla moved up into the position of the fifth-largest company included in the S&P 500.

Gold prices experienced their worst daily loss since November on Friday with prices falling 4 percent on the day. Meanwhile, oil prices were up significantly; West Texas Intermediate crude increased 3.8 percent and the international crude oil benchmark (Brent Crude) was up 3.6 percent. SPDR Energy (XLE) climbed 7.63 percent. First Trust ISE Revere Natural Gas (FCG) jumped 10.71 percent.

Bond yields climbed this week. The 10-year Treasury yield rose to 1.11 percent, up from 0.95 percent last week. It’s the first time rates have been this high since the pandemic hit.  This boosted financials, with SPDR Financials (XLF) rising 4.92 percent. Five-year inflation expectations are rising though. This week they crossed 2 percent for the first time since the fourth quarter of 2018.

High-yield bonds benefited from falling credit risk. Invesco Senior loan (BKLN) added 0.94 percent. Long-term government bonds went the other way. iShares 20+ Year Treasury (TLT) slid 3.81 percent. Corporate bonds, which have higher interest rate risk, also fell. iShares iBoxx Investment Grade Corporate Bond (LQD) declined 1.43 percent.

Stocks were sensitive to new reports on the prospect of increases in the coronavirus stimulus package funding in terms of direct payments to individual taxpayers of $2,000. In particular, stocks suffered a slight dip on the Washington Post’s Friday report of Sen. Joe Manchin’s (D-WV) apparent position that he would break with his Democratic colleagues in the Senate and refuse to support additional stimulus funding in the form of increased direct payments to taxpayers. Upon Sen. Manchin’s public clarification of his stance later in the day, stocks likewise reacted favorably that additional direct stimulus payments were still likely.

The outcome of Tuesday’s Georgia runoff elections involving two U.S. Senate seats that have now flipped from Republican to Democrat upended the widely held view that political gridlock would be caused with Republicans controlling the Senate with the Democrats retaining a majority in the House and White House. Some were concerned earlier in the week that investors would react negatively to the changing political reality that more progressive policy initiatives have an increased likelihood of becoming law.