Stocks indices rose sharply this week as last week’s fears over GameStop’s market volatility subsided. The markets focused on better than expected earnings, improving PMI data and the anticipation of further stimulus. The small company Russell 2000 index posted the largest gains.
One notable piece of negative economic news is that automakers globally are temporarily reducing production due to chip shortages caused by high demand for stay at home electronics, computing services and data centers.
Treasury yields rose with the 30-year bond yield closing at 1.974% and the 10-Year note closing at 1.169%. Crude oil rose to $57.03 a barrel while natural gas rose to $2.877 per MMBTUs. The U.S. dollar index rose to 91.0 and gold prices fell to $1814.60 an ounce.
In the economic numbers this week:
- IHS Markit released their January purchasing manager’s indices. Keep in mind that anything over 50 represents expansion and below 50 represents contraction.
- U.S. manufacturing PMI rose from 57.1 in December to 59.2 in January.
- U.S. services PMI rose from 54.8 in December to 58.3 in January.
- Canada manufacturing PMI fell from 57.9 in December to 54.4 in January.
- Eurozone manufacturing PMI fell from 55.2 in December to 54.8 in January.
- Eurozone composite PMI fell from 49.1 in December to 47.8 in January.
- China manufacturing PMI fell from 53.0 in December to 51.5 in January.
- China services PMI fell from 56.3 in December to 52.0 in January.
- Japan manufacturing PMI fell from 50.0 in December to 49.8 in January.
- Japan services PMI fell from 47.7 in December to 46.1 in January.
- The Commerce Department reported that the U.S. trade deficit with China fell 10% last year to $310.8BN following an 18% drop in 2019.
- The Labor Department reported:
- A seasonally adjusted 779,000 workers filed initial claims for unemployment in the week ending January 30th. This was an decrease of 33,000 from a revised 812,000 the week before.
- The 4-week moving average, designed to smooth out volatility, was 848,000, an decrease of 1,250 from the previous week’s revised average.
- Continuing claims fell from a revised 4.8MM to 4.6MM in the week ending January 23rd.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 18.3MM to 17.8MM the week ending January 16th.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The U.S. added a net 49,000 jobs in January, following a decline in December. Still we are 9.9MM below where we were before the pandemic.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the past week:
- Field production of crude oil was unchanged at 10.9MM barrels per day.
- Natural gas storage fell 192BN cubic feet and is above the average level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 4 to 299. The number of active natural gas rigs rose 4 to 92.
- Factset reported with 59% of S&P500 companies reporting that the blended earnings increase from Q4 2019 was 1.7% up from a 2.4% decline last week.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
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.