Major stock indices ended the week with modest gains as inflation continues to moderate and economic growth remains strong.  3^rd quarter gross domestic product and December consumer spending were strong.  Still, we believe it is unlikely that the FED will cut interest rates or give an indication that rate cuts will come soon at its meeting next week.  It remains to be seen whether the shipping attacks in the Red Sea will boost inflation.

China reportedly is considering $278BN in stock purchases to shore up its stock market which is nearly at a five year low.  India’s stock market has now overtaken Hong Kong to become the world’s fourth largest.  China also is cutting banks reserve requirements to stimulate the economy.

The European Central Bank met and chose to leave it’s benchmark interest rates unchanged.

The Bank of Canada met and chose to keep its benchmark interest rate at 5.0% but signaled it is done raising interest rates.

Treasury bond yields rose with the 30-year bond yield at 4.372% and the 10-Year note at 4.143%.  Freddie Mac reported that the average 30-year mortgage rate rose to 6.69%.  Crude oil rose to $78.23 a barrel and natural gas fell to $2.180 per MMBTUs.  The U.S. dollar index rose to 103.47 and gold fell to $2018.20 an ounce.

• The Commerce Department reported:
  • New home sales rose 8.0% in December following a 9.0% drop in November.
    • The median sales price of a new home in December was $413,200.

• • U.S. gross domestic product rose at a 3.3% annual rate in the 4^th quarter following a 4.9%increase in the third quarter.
  • 
• • Personal consumption expenditures rose 0.7% in December.
    • The PCE price index rose 0.2% after falling 0.1% in November and 2.6% from a year ago.
      • Excluding volatile food and energy, core prices rose 0.2% in December and 2.9% from a year ago.
        • This is the FED’s preferred measure of inflation.
    • Incomes rose 0.3% in December.
• The Labor Department reported:
  • Seasonally adjusted first-time claims for unemployment were 214,000 an increase from the previous week’s revised level of 189,000.
    • The 4-week moving average of claims, designed to smooth out volatility, was 202,250, a decrease of 1500 from the previous week’s revised level. 
    • 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 fell from 13.3MM BPD to 12.3MM BPD.
  • Natural gas storage fell 326BN cubic feet and above the average during the past five years at this time of year.
• Baker Hughes reported the number of oil rigs rose 2 to 499 and the number of natural gas rigs fell 1 to 119.
• Factset reported with 69% of S&P 500 companies reporting 4^th quarter earnings, the blended earnings increase was 1.5%.

Please call us if you have any questions.

Loren Rex – Emeritus

Erik A Smith, AIF® – President & C.E.O.

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. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).

 Sources:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

https://ir.eia.gov/ngs/ngs.html

https://www.freddiemac.com/pmms

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.census.gov/economic-indicators

https://www.bloomberg.com/news/articles/2024-01-23/china-mulls-stock-market-rescue-package-backed-by-278-billion?sref=rkXJdUyz

https://www.bea.gov/news/2024/personal-income-and-outlays-december-2023