January 6, 2024

Weekly Market Commentary January 1st to January 5th 2024

The December ISM Manufacturing Index kicked off the New Year holiday-shortened week, increasing by 0.7 to 47.4, ahead of the median forecast of 47.2. Despite the higher than forecast increase, this marks the fourteenth consecutive monthly contraction (sub 50 reading) in the sector.

The ISM Services Index reported later in the week remained in expansionary territory for a 12th consecutive month, albeit below the prior month and consensus estimate at 50.6.

The first of the employment data for the week was received on Wednesday, with the JOLTS job openings report for November. It declined slightly to 8.8 million, which was modestly below the estimate and the lowest level since March 2021.

The ADP private payroll report for December followed, coming in well-above the 115k estimate at 164k, while the prior month was revised down by 2k to 101k.

Friday brought the most anticipated data with Nonfarm Payrolls for December increasing 216k, ahead of the estimated 175k. The Labor Force Participation Rate ticked down modestly to 62.5%, while the unemployment rate was unchanged at 3.7%. Wage growth exceeded expectations, higher by 0.4% in the month and 4.1% on a year-on-year basis.

The S&P 500 broke a nine-week winning streak, lower by 1.5% to 4,697. A pullback in the high-flying technology stock winners from last year led the Nasdaq Composite lower by 3.2%. The yield on the 10-Year U.S. Treasury index was higher by 16 basis points, back over the 4% mark at 4.04%.

Key economic releases next week include highly anticipated inflation data in the form of Consumer Price Index (CPI), Producer Price Index (PPI) and Import and Export Prices.

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