Market Perspective for January 14, 2024

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.

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