Market Perspective for January 7, 2024

The first full week of 2024 offered some interesting news for investors. Although the main event for the week was the Bureau of Labor Statistics (BLS) nonfarm payroll report on Friday, the first consequential news of the year was released on Wednesday.

That morning, the Job Openings and Labor Turnover Survey (JOLTS) report was released and revealed that there were 8.79 million positions available in the United States. This was slightly below the 8.84 million figure forecast before the release and slightly below the 8.85 million figure from last month.

Also on Wednesday, the ISM Manufacturing PMI was released and came in at 47.4 percent, which was slightly higher than the 47.2 percent expected by analysts prior to Wednesday. This shows that the manufacturing sector is showing a slight contraction that has stabilized over the past couple of months.

Finally, on Wednesday afternoon, the FOMC meeting minutes were released. Although the Fed is still likely on track to cut interest rates, there is still some discussion as to how many cuts will occur and when they will happen. At a minimum, there is a broad consensus that interest rates are either at their peak or very close to them.

On Thursday, the ADP version of the nonfarm employment change report was released. Over the past month, the economy added 164,000 jobs compared to an expected 120,000. The December jobs figure was also significantly higher than the 101,000 added in November. This is likely to be seen as more evidence that a recession won’t happen during the first half of 2024. Unemployment claims were also released on Thursday morning and came in lower than expected as well as lower than the previous week. During the past seven days, 202,000 claims were filed compared to 217,000 the week prior.

On Friday, the BLS reported that 216,000 jobs were created in December compared to an expected 168,000. Furthermore, average hourly earnings for the month were up .4 percent compared to an expected .3 percent. Finally, the unemployment rate dipped to 3.7 percent from 3.8 percent in November.

To close out the week, the ISM Services PMI was released and came in at 50.6 percent. This was lower than the expected 52.5 percent, but it does still show that the service industry is expanding even if demand may be starting to wane just a bit.

The S&P 500 finished the first week of the 2024 trading year down 1.89 percent to finish at 4,697. On Tuesday, the market made its high for the week of 4,750 before spending most of the rest of the week losing ground.

The Dow would start the year by losing .71 percent to close the week at 37,466. It would also make a high of the week on Tuesday of 37,781 before sliding all the way to 37,331 on Friday afternoon.

Finally, the Nasdaq would also give back some of its December gains closing the week at 14,524. That was a loss of 3.83 percent during the first four trading days of the new year, and like the other major indexes, the Nasdaq would make its high of the week on Tuesday before retreating the next several days. The high for the week was 14,821 while the low was 14,514 set on Thursday afternoon.

Oil would briefly dip below $70 a barrel on Wednesday before rebounding and finishing at $74.26 for the week. The commodity spent most of December stuck in a trading range between $68 and $76 per barrel after reaching a 2023 high of $94.18 in October.

The upcoming week will feature several important news releases, including December’s inflation numbers on Wednesday. It’s expected that inflation ticked up slightly on an annual basis to 3.2 percent and to .2 percent on a monthly basis. Price data will be released on Friday with the expectation that the cost of all goods were up .1 percent in December. Central banks in Australia, China and Japan will also be releasing inflation data, which could have an influence on what the Fed might be thinking in terms of interest rate cuts. In addition, Switzerland will be releasing its inflation data early Monday New York time.

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