January 18, 2021

Weekly Market Commentary January 11th to January 15th 2021

Weekly Jobless Claims spiked to 965k, a significant increase from the prior week and the highest level since the beginning of pandemic lockdowns in March. The level of Continuing Claims increased as well to 5.27mm. The labor market remains under pressure and layoffs are once again on the rise, particularly in the lower wage services sectors hardest hit by the pandemic.

Retail Sales fell by -0.7% last month, the third consecutive monthly decline. Online holiday shopping was weaker than expected, in addition to the fall off in year-end retail foot traffic in stores and restaurants due to pandemic restrictions.

Consumer Prices rose 0.4% in December, increasing the year-on-year level to 1.4%. The key driver of the marginally higher than expected rise in prices was a 4.0% for the energy sector, driven by an 8.4% rise in gasoline prices. Without the volatile food and energy components, Core CPI advanced by a lower 0.1% for the month.

Continued political strife in Washington and concerning data relating to the further spread of COVID-19 weighed on investors’ minds this week. Talk of a new round of economic stimulus may have partially mitigated the pull back in stock prices. The S&P 500 declined by -1.5% on the week to close at 3,768. The NASDAQ Composite was also lower by -1.5%. The yield on the bellwether 10-Year U.S. Treasury traded up to as high as 1.18% before finishing the final trading session back at 1.09%.

Key economic releases in the holiday-shortened trading week next week include Housing Starts, Building Permits, Existing Home Sales and Weekly Jobless Claims.