Economic data included a slight upgrade to U.S. GDP for Q4, and positive news for durable goods orders and a variety of real estate sales and price data. However, consumer sentiment took another dip downward, due to high uncertainty about trade policy.
Equities fell around the world, with concern about upcoming trade policy and weakening consumer sentiment. Bonds were flattish with sticky inflation offsetting a usual risk-off response. Commodities were mixed, with energy prices a bit higher.
U.S. stocks began Monday positively, up nearly 2% upon hints that the President may back off the more extreme tariff measures on April 2, now only days away. However, by Wed., potential new tariffs on non-U.S. autos and auto parts soured the mood again, as did weakened consumer confidence as the result of policy uncertainty. Last week proved to be just another example of how closely financial markets are reacting to trade news above all else at this point, with some well-known firms issuing continued revisions upward for expected net tariff rates. By sector, stocks saw gains in more defensive consumer staples as well as energy, while technology and communications saw the sharpest declines. Real estate earned a small gain for the week.
Economic data included the Federal Reserve keeping rates unchanged, with a balanced commentary about current conditions but noting uncertainty about the economic path ahead. Positive data came in from retail sales and industrial production, in addition to existing home sales and housing starts. However, several regional manufacturing indexes fell back.
Equities rebounded for the first time in a month in the U.S., while international stocks ended flattish. Bonds gained along with falling yields. Commodity prices generally rose, along with stronger energy.
U.S. stocks snapped a month-long losing streak, with gains in both large and small cap stocks, and value continuing its streak of outperforming growth. By sector, energy, financials, and health care led with gains of one to several percent; materials, consumer staples, and utilities suffered minimal declines of a fraction of a percent. Real estate also declined slightly. Markets turned around from the prior week, bouncing off of -10% correction territory for the time being, helped in mid-week by a more dovish tone about the economy struck by Fed Chair Powell. This was in contrast to some signs of pessimism elsewhere, such as consumer sentiment around the unclear upcoming tariff response. (Although by this morning, some of the administration’s rhetoric about the April 2 trade ‘Liberation Day’ has been toned down a bit.)
Economic data included consumer and producer price inflation that came in a bit cooler, and better than expected, although the trend remains above target. Jobless claims fell, despite stress about federal layoffs and carryover to the private sector. A low point was consumer sentiment, now showing bipartisan distress, along with heightened inflation expectations.
Equities fell again last week around the world, with continued tariff uncertainty. Bonds were little changed, with governments outperforming corporates. Commodities were mixed, with gains in metals and little change in crude oil.
U.S. stocks were down for the fourth straight week, having started negatively out of the gate, with the S&P 500 down nearly -3% on Monday. This was as investors absorbed the possibility for additional and sustained tariffs, in addition to signs of a slowing economy (with a major investment bank lowering their 2025 estimate again, to just below-trend GDP) and Friday representing the debt ceiling deadline for ‘extraordinary measures’ (behind-the-scenes accounting shifts) after the debt limit was hit in January. Taken as a whole, the underlying worry is that the administration’s policies are causing more harm than expected. In a media interview the prior weekend, the President referred to the current situation as “a period of transition” and refused to rule out a near-term recession, noting that the stock market isn’t something that should be watched as a gauge of policy success, which was obviously not reassuring to many investors (who tend to watch the stock market). After some back and forth on Canadian steel and aluminum imports, a cooler-than-expected CPI report helped sentiment by mid-week, although volatility about the end game for tariffs continued. To end the week, it appeared the chances of a U.S. government shutdown had fallen, removing one element of uncertainty from investors’ minds (although shutdowns have tended to be non-events for the stock market).
Economic data included a lackluster but positive ISM manufacturing report, while ISM services again improved further into expansion. The employment situation report for February came in decently, within expectations, although the unemployment rate also rose slightly.
Equities were mixed, with another week of declines in the U.S., while foreign stocks (especially Europe) rediscovering positive momentum. Bonds fell back as interest inched back upward. Commodities were mixed, with gains in metals offset by a decline in crude oil.
U.S. stocks suffered a third straight negative week, with negative sentiment driven by the uncertainty around the administration’s back-and-forth tariff policy announcements—the key theme that appears to be driving market movements as of late. By sector, only health care ended the week with a small gain, while all other sectors saw negative results—declines of several percent in financials (not helped by a flatter yield curve), consumer discretionary (Tesla, but also concern in other retailers about a weakening consumer), and energy (following weaker oil prices).
Economic data included U.S. GDP for Q4-2024 coming in unchanged, but Q1 expectations were revised downward. Personal income and spending were strong, while PCE inflation continued to decelerate. Housing data was mixed with home prices continuing to rise, although at a slower pace, and new home sales fell sharply. Consumer confidence continued to show lackluster results.
Equities were mixed, with U.S. value and U.K. outperforming, and negative results elsewhere. U.S. bonds fared positively as interest rates declined along with inflation and some fears about growth. Commodities fell back across the board, along with a stronger U.S. dollar.
U.S. stocks saw a back-and-forth week, highlighted by news clips and worries about potential tariffs and mixed economic data. By the end of the week, the President’s confirmation that tariffs on Canada and Mexico are set to take effect next week, along with a vow to double tariffs on China, resulted in weaker market sentiment. By the end of Friday an apparent chaotic meeting between President Trump and Ukrainian President Zelensky, set up as a potential deal for U.S. reconstruction aid in return for natural resources, left more uncertainty about near-term European activity.
On a week shortened by President’s Day, economic data included mixed results for regional manufacturing, while leading economic indicators fell back from the prior month, as did consumer sentiment and home starts and sales.
Equities fell back in the U.S. with investors cautiously looking at future policy and consumer impact, while international stocks performed better, as recent trends have moved in their direction. Bonds ticked up slightly and commodities were mixed, with little change oil prices.
After a promising start earlier in the week, U.S. stock fell back into the negative with uncertainty about tariffs after several comments from the administration, although light on detail. Thursday and Friday were soured by weaker consumer confidence and cautious guidance from Walmart, despite above-consensus earnings results, concerning anticipated weaker results in the year ahead due to persistent inflation and tariff uncertainty.
Economic data was highlighted by consumer price inflation that came in hotter than expected, as did producer price inflation. Positive results were seen in industrial production, while retail sales fell back for the month, with perhaps weather and turn of the year seasonal effects skewing several of these measures.
Equities saw gains globally, as markets celebrated what appeared to be a less dramatic and broad tariff policy. Bonds were up slightly although yields were little changed, with foreign bonds helped by a weaker dollar. Commodities were up across the board.
U.S. stocks saw gains overall, although the week saw its share of uncertainty, mostly on the tariff front. There was a bit of a hiccup mid-week, after the especially hot CPI inflation report, which continues to push out the possibility of further Federal Reserve rate cuts in the near term. Markets turned upward with rising odds of a Ukraine-Russia peace deal, which was reportedly being discussed in Munich. As noted earlier, announcements of tariffs on steel/aluminum and ‘reciprocal’ tariffs on all countries were seen as less severe than feared, as recent tariff comments have not been reacted to as strongly as they once might have been, and the decision to not introduce full global tariffs provided some relief. Growth stocks broadly outperformed value, and large cap outgained small. By sector, technology gained nearly 4% for the week, followed by the mix of communications, materials, energy, and consumer staples. Healthcare lagged with a decline of over a percent. Real estate saw a small gain.
Economic data for the week included strength in broad manufacturing measures, while services decelerated but remained strong. Other releases were mixed, with construction spending up, while consumer sentiment declined. The January employment situation report showed slower job growth but upward revisions for prior months, while the unemployment rate fell.
Equities were mixed globally, with declines in the U.S. offset by gains overseas, as tariff news turned out more benign than feared. Bonds saw gains along with falling long-term interest rates. Commodities were mixed, with higher prices for metals and lower for crude oil.
U.S. stocks started down Monday morning with the imposition of 25% tariffs on Canada and Mexico (10% on Canadian energy and China). However, markets reversed a bit when tentative agreements (with conditions largely symbolic) were made with both countries to delay tariffs by a month or more. It’s assumed that these extensions may continue until the review of the USMCA trade agreement in 2026. The Chinese tariffs of 10% were kept, although far below the 60% advertised during the election campaign, with retaliation from China far less dramatic than feared. Now, focus has turned to potential tariffs on European goods, which are assumed to be focused on the auto industry, among a few critical goods there and elsewhere. Some economists have been reticent about assigning odds of dramatic tariffs happening, but the odds of at least some degree of broader tariff increase have risen.
Economic news for the week included the FOMC keeping short-term interest rates unchanged, while U.S. GDP for Q4 came in above-trend but below the prior quarter, and personal income/spending positive. Gains in new home sales accompanied continued positivity for home prices. Durable goods and consumer sentiment fell back.
Equities were mixed globally last week, with most regions down, although a few countries bucked the trend. Bonds were up slightly, as interest rates ticked down. Commodities were also mixed, related to uncertainty over upcoming tariff policy and a strong U.S. dollar.
U.S. stocks started off poorly on Monday along with the news from DeepSeek, noted earlier, although some of the surprise faded later in the week as markets absorbed the news as being perhaps less earth-shattering as it first appeared. By Friday, concerns over North American tariffs, also noted earlier, pulled down sentiment. Sectors were mixed for the unusual week, with gains in communications, health care, consumer staples, and financials; energy and technology each fell by 3-5%, due to different drivers. Real estate was down slightly, with little change in interest rates. Earnings reports from several technology firms appeared to offer mixed results, with much of the corporate discussion focused on the promise of AI as opposed to current earnings trends. In one of the bigger weeks for U.S. company earnings, per FactSet, just over a third of S&P 500 companies have now reported for Q4. Over three-quarters of these have noted a positive earnings surprise, and over 60% a positive revenue surprise, with the blended earnings growth rate having improved to 13.2% (which would be the best quarter since 2021 if it holds out).
In a shortened quiet week for economic releases, data included gains in existing home sales, while the leading index of economic indicators declined, as did consumer sentiment.
Equities gained, especially abroad along with a weaker U.S. dollar as fears of tariffs were dampened a bit after the inauguration. Bonds were little changed domestically, but some foreign bonds fared well with a weaker dollar. Commodities were mixed, with declines in oil.
U.S. stocks fared positively, to more record highs for the S&P 500, on a market week shortened by the MLK holiday and also included the U.S. Presidential inauguration. By sector, leaders included gains of 4% for communications services and 3% for health care, followed by technology and industrials, while energy ended up as the only down sector, with a decline around -3%. Real estate gained over a percent, despite slightly higher interest rates. Per FactSet, 16% of S&P 500 companies have reported earnings, with blended (actual plus expected) 4th quarter year-over-year earnings growth at 12.7%, about a percent higher than it was at year-end and a few tenths higher than the prior week. There is much more to come on the earnings front over the next few weeks.
Economic data included the positive news of consumer and producer price inflation coming in softer than expected, while industrial production and housing starts also saw strong gains for the month. Also, retail sales increased, albeit to a lesser degree than hoped.
Equities gained around the world, as markets celebrated tempered inflation results, causing a drop in long-term yields. Bonds fared well for the same reason of lower rates. Commodities gained, with hopes for stronger demand and some supply concerns.
U.S. stocks reversed back upward last week, as markets celebrated the Wed. CPI report, which was still sticky, but a bit cooler than expected, which drove down long-term yields. Sentiment also appeared to be helped by the Israel-Gaza ceasefire agreement, which lowers the temperature in the Middle East.
Economic data for the week included ISM services continuing to improve into solid expansion and an employment situation report for December that came in far stronger than expected.
Equities fell back, along with the positive economic news pointing to less Fed policy easing action. Bonds accordingly fell as long-term interest rates rose ever higher. Commodities fared positively, with gains in all major groups.
U.S. stocks fell back as higher interest rates continued to weigh on sentiment, with small caps now having reached -10% correction territory since late November, while large caps have held on significantly better. The week was shortened by the Thur. market closure to commemorate former President Carter. From over the weekend into Monday, reports surfaced that incoming President Trump had plans to ‘pare back’ tariff levels relative to what had been announced during the campaign (causing a drop in the value of the U.S. dollar), although he refuted these same claims, resulting in further volatility. As ISM services, JOLTs, and non-farm payrolls came in stronger than expected, it ended up being a ‘good news is bad news’ dynamic yet again, as that points to a path of the Fed moving at a slower easing path that was earlier hoped. This is especially true, as continued sticky inflation remains a wildcard. As seen by recent consumer sentiment results, plenty of speculation is swirling around possible worst case scenarios surrounding foreign trade policy this year, such as maximum tariff levels across the board, as opposed to a political likelihood of more tempered actual policy. How closely draft political policy morphs into reality will be unveiled over the next several months.
By sector, energy, health care, and materials were the only positive sectors for the week, while the downside was led by technology, financials, and consumer discretionary. Real estate also fell by -4% along with the higher interest rates. New export rules from President Biden weighed on popular chip stocks. Earnings season began in earnest Fri., with reports for Q4 rolling in over the next several weeks, which could also add to market volatility, although forecasts overall are quite good (estimate for the S&P 500 of nearly 12% year-over-year earnings growth, per FactSet).
Foreign developed market stocks ended positively in local terms, but a stronger U.S. dollar turned these negative for the week. Gains in Europe were offset by sharp declines in Japan and emerging markets. Concerns in Japan continue to be centered on the timing and magnitude of the BOJ’s expected monetary tightening policy. In Canada, Prime Minister Trudeau resigned, after a nine-year run, after a bout of recent growing unpopularity, which appears to be increasingly common with incumbent administrations around the globe, particularly as fiscal stresses are rising to the surface. In EM, Chinese stocks fell by over -4% as year-over-year inflation came in at 0.1%. While such a result might have been briefly cheered in the U.S. and Europe, levels this low border on deflation, as a byproduct of very slow consumer activity there that’s been difficult to kickstart.
Bonds fared poorly last week, with the 10-year U.S. Treasury closing at nearly 4.8%, after having reached a high for the past year during the week, and the 30-year at a rounded 5.0%. The curve has solidly un-inverted from both the 10y-3m and 10y-2y measures, with the spike in long rates having outdone the sticky short rates. Floating rate bank loans fared best with flattish results, while Treasuries and investment-grade corporate indexes each fell just shy of a percent. Foreign bonds were held down by the stronger dollar and rising rates of their own.
U.K. 30-year gilt yields reached their highest levels in over 25 years (to over 5.3%), with higher-than-expected inflation readings, weaker economic growth (concerns over stagflation), fiscal policy, and potential foreign trade effects (with the U.S.) looking ahead. This type of rising rate scenario is what some have worried about for the U.S., although having the world’s reserve currency (resulting in a strong U.S. dollar), ability to issue higher levels of debt that’s readily absorbed by global markets, and a more diversified economy generally has kept these concerns at bay domestically so far. Smaller and moderately-sized economies have fewer tools at their disposal to offset internal and external effects, not to mention a more limited market for their debt, hence the added ‘credit spread’ that higher yields imply.
Commodities rose across the board last week, with energy and metals sharing leadership, with each group up a few percent each. Crude oil rose nearly 3% last week to $77/barrel, with a conflux of seasonal demand and tighter supplies, but mostly due to the Biden administration announcement Friday of broader sanctions on Russia’s energy complex, that targeted producers, shippers, traders, and insurers, which will likely also weigh on global supplies. Natural gas spot prices rose by 8% last week, with added cold temperature forecasts across the U.S. in a peak usage period. Earlier in the week, the U.S. administration also permanently banned offshore drilling for over 600 mil. acres of the Pacific and Atlantic Oceans, which could require Congressional action to undo, and reducing potential long-term supply.
Period ending 1/10/2025
1 Week %
YTD %
DJIA
-1.83
-1.38
S&P 500
-1.91
-0.89
NASDAQ
-2.34
-0.76
Russell 2000
-3.49
-1.82
MSCI-EAFE
-0.43
-0.73
MSCI-EM
-1.50
-1.63
Bloomberg U.S. Aggregate
-0.87
-1.00
U.S. Treasury Yields
3 Mo.
2 Yr.
5 Yr.
10 Yr.
30 Yr.
12/31/2024
4.37
4.25
4.38
4.58
4.78
1/3/2025
4.34
4.28
4.41
4.60
4.82
1/10/2025
4.36
4.40
4.59
4.77
4.96
Sources: LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.
Posted inEconomic News|Comments Off on Weekly Economic Update -01-14-2025
LSA Connect 