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Weekly Economic Update - 1-22-2024

1/22/2024 brad

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Economic Update 1-22-2024

  • For the holiday-shortened week, economic data included gains in retail sales, consumer sentiment, and homebuilder sentiment, while industrial production was little changed, and several housing metrics weakened. 
  • Equities gained in the U.S. as earnings reports have started, while foreign stocks fell back. Bonds lost ground globally upon higher interest rates and a stronger dollar. Commodities were mixed, with little change in crude oil prices last week. 

U.S. stocks fell back early in the week as Fed governor Waller’s comments and strong retail sales pointed to a path of interest rates remaining higher for longer than the dovish sentiment of late 2023; however, they recovered by week’s end to a new record high for the S&P 500. By sector, technology led with a 4% gain, along with strong semiconductor sentiment related to artificial intelligence projects (including Taiwan Semiconductor—granted an emerging markets stock), while energy and utilities each fell back by over -3%. Real estate declined -2% with interest rates rising a bit on the week. 

Insofar as earnings for Q4 are concerned, per FactSet, only 10% of firms have reported results so far. At the same time, over 60% have experienced a positive earnings surprise, with a similar number showing a revenue surprise, likely related to very tempered analyst expectations at the moment. The blended earnings growth rate (already reported plus estimates) has deteriorated a bit from an expected near-2% at year-end to now -1.7%. Of course, this remains a moving target being so early in the cycle. Leaders continue to be communications, utilities, and consumer discretionary, with expected earnings growth in the double-digits. Energy and materials bring up the rear, with expectations of -30% and -20%, respectively, on the back of weaker commodities prices, which make their way into company profits with a lag. For the entire S&P, profit margins have been falling from average levels during the past three years, but remain above 10%, which is still an impressive result from a multi-decade perspective. 

Foreign stocks, by contrast, fell back with the most modest declines in Europe and Japan offset by over -2% drops in the U.K. and emerging markets. Here, too, it appeared central bank resistance to ‘too early’ rate cuts damped sentiment (with ‘summer’ noted by the ECB as more probable than ‘spring’), as did higher-than-expected inflation in the U.K. In emerging markets, Chinese stocks suffered the most, down just under -5% in U.S.-dollar terms, due to weaker retail sales and new home prices as the government injects targeted stimulus to boost growth results. Chinese valuations remain among the cheapest in the world, reflecting current negative sentiment. 

Bonds fell back last week, with yields rising after expectations for central bank policy rates falling quickly were dashed. Senior loans fared best, with little change for the week. A rise in the value of the U.S. dollar index by nearly a percent punished foreign debt. 

Commodities were mixed for the week, with gains in agriculture and declines in industrial and precious metals, while energy was little changed. Crude oil prices rose a fraction of a percent last week to $73/barrel, with little to move the needle other than the International Energy Agency raising expectations for demand growth this year. Natural gas prices dropped nearly -15% (and by a third over the past three months) as recent freezing weather looks to be improving; as one of the most volatile commodities, gas is dramatically affected by such seasonal effects and forecasts this time of year. 

Period ending 1/19/2024 

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S&P 500  






Russell 2000 









Bloomberg U.S. Aggregate 



U.S. Treasury Yields 

3 Mo. 

2 Yr. 

5 Yr. 

10 Yr. 

30 Yr. 




















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.