Stocks indices saw their biggest drop since the pandemic plunge in 2020 this holiday shortened week as anticipated FED tightening, concerns over earnings outlooks and eastern Europe tensions weighed on investor sentiment. First time unemployment claims increased as Omicron infections slowed economic growth.
China bucked the global efforts to fight inflation and cut its benchmark interest rates in part to deal with contraction in the property markets.
- The five-year loan prime rate was cut from 4.65% to 4.60%.
- The one-year loan prime rate was cut from 3.8% to 3.7%.
Treasury yields fell slightly with the 30-year bond yield dropping to 2.067% and the 10-Year note falling to 1.762%. Crude oil rose to $84.71 a barrel and natural gas fell to $3.748 per MMBTUs. The U.S. dollar index rose to 95.64 and gold rose to $1830.40 an ounce.
In the economic numbers:
- The National Association of Realtors reported that existing home sales fell 4.6% in December but were up 8.5% from a year earlier.
- The calendar year 2021 saw the highest level of home sales since 2006.
- Low inventory and strong demand pushed the median home price up 15.8% to $354,400.
- The Commerce Department reported, housing starts rose 1.0% in December and 2.5% from the prior December.
- Single family home starts fell 2.3% in December were down 8% from last December.
- Multi family starts soared 20% in December and 41% from a year earlier.
- Building permits, a sign of future housing starts, rose 9% in December and 6.5% from a year ago.
- The Labor Department reported :
- First time claims for unemployment were 286,000 up from the prior week’s revised 231,000.
- The 4-week moving average of claims, designed to smooth out volatility, rose to 231,000 up from the revised 211,000 in the prior week.
- Continuing claims were little changed at 1.6MM in the week ending January 8th.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil was unchanged at 11.7MM BPD.
- Natural gas storage fell 206BN cubic feet and is at the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 1 to 491. The number of active natural gas rigs was rose 4 to 113.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O.
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.