Weekly Market Commentary January 21st to January 24th 2024
Last week’s headlines were dominated by the inauguration of the 47th President Donald Trump as there was very little economic data. The data we received included Existing Home Sales and the S&P Global Purchasing Managers’ Index (PMI) for both services and manufacturing.
The Purchasing Managers’ Index measures the economic health of a country’s manufacturing and service sectors. The U.S. economy is dominated by the services sector which has been in expansionary territory for two years. Conversely, manufacturing has been struggling to reach expansionary territory and has been contracting for the last five months. January’s data continued the trend for services as the S&P Global U.S. Services PMI remained in expansion territory. However, the trend for manufacturing was snapped as S&P Global U.S. Manufacturing PMI recorded an expansionary reading with the help of a rise in New Orders. Economists will be looking to see if manufacturing can remain expansionary or if it will fall back into contraction.
Existing Home Sales in the U.S. rose for the third straight month in December, entering 2025 with some momentum after the worst year in nearly three decades. Closings increased 2.2% to an annualized pace of 4.24 million. The median sale price climbed 6% over the past 12 months to $404,400, reflecting more sales activity at the upper end of the market. High mortgage rates and home prices with low supply are expected to continue affecting the market in 2025.
The equity markets continued their bounce back from the minor pullback we saw to end the year. The S&P 500 finished the week 1.7% higher at 6,101, the Nasdaq 1.7% higher at 19,954, and the Dow Jones 2.2% higher at 44,424. Treasury yields ended the week unchanged from the prior week, with the 2-year U.S. Treasury yield ending at 4.27% and the 10-year at 4.62%.
The upcoming week will be very important for the markets as four of the ‘Magnificent 7’ companies will report earnings, the FOMC will meet to decide on interest rates, and the Fed’s preferred inflation gauge, PCE, will be released.
