Market Commentaries

  • Last Week’s Markets in Review: Chairman Powell’s Christmas Gifts


    Global equity markets finished higher for the week. In the U.S., the S&P 500 Index closed the week at a level of 4,755, representing an increase of 0.77%, while the Russell Midcap Index moved 0.75% last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned 2.47% over the week. As developed international equity performance and emerging markets were mixed, returning 0.84% and -0.39%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the week at 3.90%.

    We hope all our readers are enjoying the Holiday Season with friends and family!

    It would appear that Federal Reserve Chairman Powell also enjoyed the week before Christmas, given the gifts they received through favorable releases of certain economic data. The favorable economic data consisted of Consumer Confidence, the final report on 3rd Quarter GDP, weekly Jobless claims, and Personal Income and Outlays for November. However, the ultimate present for the Fed may come in the form of “A Soft Landing” for the economy in 2024. The favorable economic data consist of Consumer Confidence, the final report on 3rd Quarter Gross Domestic Product (GDP), Weekly Jobless Claims, and Personal Income and Outlays for November.

    Last Wednesday, the Conference Board reported the December Consumer Confidence Index. The Index rose to a level of 110.7, a 5-month high. The December reading exceeded both the prior month and the consensus estimate by a great deal. The jump in confidence occurred across all age groups and household income levels. Consumer Sentiment is always an important driver for the economy.

    On Thursday, the presents for the Fed were a resilient Jobs market and a GDP that is still growing but not at an inflationary pace. Initial Jobless Claims for the week ending December 16 were 205,000, in line with the ongoing trend, and not showing the anticipated and feared increase in claims caused by the aggressive Monetary Policy of the past several quarters. The third and final estimate of 3rd Quarter GDP fell to 4.9% on a quarterly basis. The prior estimate had been 5.2%. These results suggest the potential for a “Soft Landing” for the U.S. economy. However, it should be noted that an economic slowdown appears to be on the horizon as the current GDP Now estimate from the Federal Reserve Bank of Atlanta for the 4th Quarter of 2023 is just 2.3%, and the Federal Reserve is forecasting real GDP growth of 1.4% in 2024.

    The best present for the Fed came on Friday when its favorite inflation gauge was less than anticipated. The Core Personal Consumption Expenditures (PCE) Price Index rose just 0.1% in November and was up 3.2% from a year ago. Both results were lower than the consensus estimates.
    All this good economic news positively affected the markets as stocks rose for their eighth consecutive week, adding further fuel to an extended Santa Claus rally.

    We would also note that our Chief Investment Officer, Kevin Mahn, has published his “Top Ten Investment Themes for 2024,” which can be found on our website. Best wishes for a happy and healthy new year, everyone!

    Consumer Confidence data is sourced from The Conference Board. GDP data is sourced from the Bureau of Economic Analysis. The Core Personal Consumption Expenditures data is sourced from the Commerce Department. Economic Calendar Data from Econoday as of 12/26/23. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.

    Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.

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