Blog Post

Stocks Mixed as Inflation Rises in January

U.S. Inflation and retail sales surged back in January as did energy.  Major stock indices ended the week mixed on anticipation of further FED rate increases. 

The U.S. is mandated to release 28MM barrels from the Strategic Petroleum Reserve in 2023 from existing legislation to fund other government spending.  However, President Biden authorized additional releases in 2022 to lower gasoline prices and a total of 180MM barrels were released.  The House passed a bill to tie non-emergency releases from the SPR to increases in federal lands leased for oil and gas.  It passed with all Republican and one Democratic vote, but it is unlikely to advance in the Senate without 60 votes.  Will the SPR be large enough for possible future emergencies?

Treasury bond yields rose with the 30-year bond ending at 3.871% and the 10-Year note at 3.822%.  30-year mortgage rates rose to 6.32%.  Crude oil fell to $76.33 a barrel and natural gas fell to $2.263 per MMBTUs.  The U.S. dollar index rose to 103.88 and gold fell to $1851.30 an ounce.

  • Japan reported that gross domestic product rose at a 0.6% annual rate in the fourth quarter, following a decline of 1.0% in the third quarter.
  • The U.K. reported that inflation in January was 10.1% from a year ago, down from 10.5% in December.
    • Core inflation, excluding volatile food and energy, was 5.8%, down from 6.3% in December.
  • The Commerce Department reported:
    • Retail sales rose 3.0% in January, following declines in November and December.  Retail sales are seasonally adjusted but not adjusted for inflation.

  • Housing starts rose 0.1% in January and are down 27.3% from last January.
    • Single family starts were down 1.8% in January and are down 40% from a year ago.
    • Multifamily starts of 5 or more units rose 0.5% in January and are down 4.1% year over year.
  • The Labor Department reported:
    • The consumer-price index rose 0.5% in January, up from 0.1% in December.  From a year earlier, prices were up 6.4% down from 6.5% year over year in December.
      • Excluding volatile food and energy, core prices, were up 0.4% in January.
        • Core prices excluding housing rose 0.3%.
      • Food rose 0.5%.
      • Energy rose 2.0%
      • Services, excluding energy services rose 0.5%.
        • Medical care services fell a record 0.7%, likely due in part to lower Medicare Part B premiums.
        • Airfares fell 2.1%.

Source: U.S. Department of labor.

    • The producer-price index rose 0.7% in January, following a 0.2% drop in December.
      • From a year earlier producer prices were up 6.0% down from 6.5% in December.
    • Seasonally adjusted first-time claims for unemployment were 194,000, down from a revised 195,000 in the prior week.
      • The 4-week moving average of claims, designed to smooth out volatility, was 189,500 up from a revised 189,000 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 was unchanged at 12.3MM BPD.
    • Natural gas storage fell 100BN cubic feet and is above the 5-year average at this time of year.
  • Baker Hughes reported the number of active oil rigs fell 2 to 607.  The number of active natural gas rigs rose 1 to 151.
  • Factset reported, with 82% of S&P500 companies reporting, that the blended Q4 earnings decline was 4.7%.

Thank you,

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

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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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