Blog Post

Stocks Gain This Week As Inflation Slows but Employment and Growth Remain Positive

Major stock indices gained this week with the Nasdaq 100 posting substantial gains.  Despite the FED’s tightening, U.S. economic growth was still strong in the 4th quarter as the gross domestic product grew at an annual rate of 2.9%.  Durable goods orders surged in December, mainly on transportation orders and layoffs so far are declining.  However, consumer spending fell in both November and December as savings rose in anticipation of a possible recession and 4th quarter corporate earnings reported so far have fallen about 5 percent.

The Bank of Canada raised its benchmark short term interest rate by 0.25% to 4.5% and indicated it is likely to hold rates there to assess the impact of higher rates.  However, it “is prepared to increase the policy rate further if needed to return inflation to the 2% target.”

Treasury bond yields were mixed with the 30-year bond at 3.634% and the 10-Year note at 3.519%.  30-year mortgage rates fell to 6.13%.  Crude oil fell to $79.41 a barrel and natural gas fell to $2.87 per MMBTUs.  The U.S. dollar index fell to 101.94 and gold fell to $1928.50 an ounce.

  • The Commerce Department reported:
    • U.S. Gross Domestic Product rose at a 2.9% annual rate in the 4th quarter, down from 3.2% in the third quarter.
    • Durable goods orders rose 5.6% in the month of December, the sharpest gain since July 2020.
      • Transportation equipment orders surged 16.7%.
      • Excluding transportation, durable goods orders fell 0.1%.
      • Excluding defense, durable goods orders rose 6.3%.
      • Non-defense capital goods, excluding aircraft, a proxy for business investment, fell 0.2%.
    • The personal consumption expenditures index fell 0.2% in December and November consumer spending was revised down to a 0.1% decline.
      • The PCE spending index is not adjusted for inflation.
    • The PCE price index rose 0.1% in December and 5% from a year earlier, down from 5.5% year over year in November.
      • Core PCE prices, the FED’s preferred measure of inflation, rose 0.3% in December, up from 0.2% in November.
      • From a year earlier, core PCE has risen 4.4% down from 4.7% year over year in November.
    • The personal savings rate rose from 2.9% in November to 3.4% in December.
  • The Labor Department reported:
    • Seasonally adjusted first-time claims for unemployment were 186,000, down from a revised 192,000 in the prior week.
      • The 4-week moving average of claims, designed to smooth out volatility, was 197,500 down from a revised 206,750 in the prior week.
      • For the full unemployment report go here: .
  • The EIA weekly oil report is here: .  Also, the EIA reported in the prior week:
    • Field production of crude oil rose was unchanged at 12.2MM BPD.
    • Natural gas storage fell 91BN cubic feet and is above the 5-year average at this time of year.
  • Baker Hughes reported the number of active oil rigs fell 4 to 609.  The number of active natural gas rigs rose 4 to 160.
  • Factset reported, with 29% of S&P500 companies reporting, that the blended earnings decline was 5.0%.

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Thank you,

Loren C. Rex, CFP®, MA                                                                     Erik A Smith, AIF®

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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.


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