Blog Post

Stocks Rise on a Strong Start to Q4 Earnings

Major stock indices had substantial gains this week as Q4 earnings started on a strong note.  Also supporting stock gains was a better-than-expected core consumer price index.  Although, inflation remains above the FED’s target and expectations still are for a pause on rate cuts until fall.

Treasury bond yields fell with the 30-year bond yield at 4.827% and the 10-Year note at 4.601%.  Freddie Mac reported that the average 30-year mortgage rate rose to 7.04%.  Crude oil rose to $78.32 a barrel and natural gas rose to $3.518 per MMBTUs.  The U.S. dollar index fell to 109.37 and gold rose to $2438.70 an ounce.

In economic reports last week:

  • The Federal Reserve reported that seasonally adjusted industrial production rose 0.9% in December following a 0.2% increase in November.  The surge was likely due to the end of the Boeing strike.
    • From a year ago, industrial production rose 0.5%.
    • Manufacturing rose 0.6% but was unchanged from last December.
    • Mining, including oil and gas production, rose 1.8% and was up 0.3% year over year.
    • Utilities rose 2.1% and were up 4.3% from a year ago.
  • The Treasury Department reported that the deficit for December was $87BN.

                                Source:  U.S. Treasury

 

  • The Commerce Department reported:
    • Retail sales rose 0.8% in December and were up 3.9% from last December.
      • Motor vehicles and parts led the way with an 8.4% increase from a year ago.
    • Housing starts surged a seasonally adjusted 15.8% in December.
      • Single family starts rose 3.3% while multi-family starts (3 or more units) rose 58.9% for the month.
      • From last December, housing starts were down 4.4% and for the year 2024, housing starts were down 3.9% from 2023.
      • Permits, an indicator of future housing starts, fell 0.7% in December and were down 3.1% from a year ago.
  • The Labor department reported:
    • The producer price index for final demand rose 0.2% in December and was up 3.3% for 2024.
      • The PPI for goods rose 0.6%
      • The PPI for services was unchanged.

                Source Department of Labor Statistics.

 

    • The consumer price index rose 0.4% in December and was up 2.9% from a year ago.
      • Excluding volatile food and energy, prices rose 0.2% and were up 3.2% from a year ago.
        • Energy prices rose 2.6% in December and were down 0.5% year over year.
        • Food prices rose 0.3% and were up 2.5% from last year.
        • The biggest increases in December were in gasoline and fuel oil at 4.4% but were down 3.4% and 13.1% respectively from a year ago.
        • Medical care costs were unchanged in December.
    • The import price index rose 0.1% in December and was up 2.2% from a year ago.
    • Seasonally adjusted first-time claims for unemployment were 217,000, an increase of 17,000 from the previous week’s revised level.  
      • The 4-week moving average of claims, designed to smooth out volatility, was 212,750 a decrease of 750 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/wps91wpsrsummary.pdf .  Also, the EIA reported in the prior week:
    • Field production of crude oil fell from 13.563MM BPD to 13.481MM BPD.
    • Natural gas storage fell 258BN cubic feet and was above its average level during the past five years at this time of year.
  • Baker Hughes reported the number of oil rigs fell 2 to 478 and the number of natural gas rigs fell 2 to 98.
  • Factcheck reported with 9% of S&P 500 companies reporting, the blended earnings increase from a year ago is 12.5%.

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.bls.gov/ppi/

https://www.bls.gov/news.release/cpi.nr0.htm

https://www.federalreserve.gov/releases/g17/current/default.htm

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