Weekly Market Commentary February 3rd to February 7th 2025
The January ISM manufacturing report was the first of several closely watched economic data releases for the week. It exceeded estimates to the upside, increasing to 50.9%, snapping a streak of 26 consecutive months of contraction. New orders, production, and employment were attributable to the strength.
ADP offered a prelude to Fridays employment report with January private payrolls that increased slightly above estimate to 183k. Service producing jobs accounted for all of the growth, while goods producers lost 6k during the month.
Later in the week was the ISM services report and much like the manufacturing report exceeded expectations, expanding at a rate of 52.8 and the seventh consecutive monthly expansion.
Wrapping up the week was the most anticipated economic data from the Bureau of Labor Statistics, and it came in lower than forecasted. Non-farm payrolls increased by 143k in January, while the prior two months were revised up by 100k. The unemployment rate decreased by 0.1% to 4.0%. Despite the slower rate in January, the three month average for payroll growth is 237k, the highest in almost 2 years.
The S&P 500 opened the week at 6,040 and was on pace for a positive week through Friday until reciprocal tariffs were announced, as well as consumer sentiment coming in at the lowest level in seven months. This resulted in a decline of 1% on the day and closed the week at 6,025, down about 0.2% for the week.
The yield on the 10-Year U.S. Treasury was marginally lower on the week by 0.05% to 4.49%. The week ended with a positive slope on the 2-10 segment of the yield curve of 0.20%. Futures markets are now pricing in only one additional cut in 2025.
Key consumer economic releases next week include the producer (PPI) and consumer (CPI) price indices and Retail Sales in addition to several Federal Reserve presidents speaking throughout the week.
