Stock indices mostly declined last week with the tech heavy NASDAQ index experiencing substantial declines as traders rotate from growth stocks to value stocks. Emerging markets managed to post a very slight increase.
The Federal Reserve released their minutes from the December meeting on Wednesday and spooked the markets with a possible rate increase in March and indicated that it would start shrinking the balance sheet soon afterwards. Stocks sank on the news with technology issues posting the largest declines.
IHS Markit purchasing managers indices from around the world indicated economic growth in December but somewhat slower than November as the world copes with Omicron.
Treasury yields rose substantially with the 30-year bond rising to 2.12% and the 10-Year note rising to 1.767%. Crude oil rose to $78.94 a barrel and natural gas rose to $3.74 per MMBTUs. The U.S. dollar index rose to 95.74 and gold fell to $1796.50 an ounce.
In the economic numbers:
- IHS Markit released the following December purchasing manager’s indices. Keep in mind that anything over 50 represents expansion and under 50 represents contraction.
- U.S. manufacturing PMI fell from 58.3 to 57.7.
- U.S. services PMI fell from 58.0 to 57.5.
- Mexico manufacturing PMI was unchanged at 49.4, a slight contraction.
- Eurozone manufacturing PMI was unchanged at 57.4.
- Eurozone services PMI fell from 55.9 to 53.1.
- Canada manufacturing PMI fell from 57.2 to 56.5.
- China manufacturing PMI rose from 49.9 to 50.9.
- China services rose from 52.1 to 53.1
- Japan manufacturing PMI fell from 54.5 to 54.3.
- Japan services PMI fell from 53.0 to 52.1.
- The Commerce Department reported:
- The U.S. trade deficit rose to a record in November as strong consumer demand for holiday shopping and easing supply chains helped imports rise 4.6%.
- Durable goods orders rose 2.6% in November following a revised 0.1% in October.
- The Labor Department reported :
- A record 4.5MM people quit their jobs in November. Over 1MM quits were in leisure and hospitality sector. Job openings fell from 11.1MM to 10.6MM.
- The US created a net 199,000 non-farm jobs in December, below expectations.
- First time claims for unemployment were 207,000 up from the prior week’s revised 200,000 but still near 40 year lows.
- The 4-week moving average of claims, designed to smooth out volatility, rose to 204,500 up from the revised 199,750 I the prior week.
- Continuing claims rose from 1.7MM to 1.8MM in the week ending December 25th.
- 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 11.8MM BPD.
- Natural gas storage fell 31BN cubic feet and is above the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose 1 to 481. The number of active natural gas rigs was rose 1 to 107.
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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.