Last week’s economic calendar provided investors with a mixed bag of sorts. Yes, the monthly unemployment report did provide a psychological lift to investors given that job gains in January were well above consensus at 227k but wage gains were a disappointing 0.1%. Personal Income and outlays were in line with the only notable miss being in the income vertical. For the month of December it came in at 0.3% versus expectations calling for 0.4%. Pending home Sales for December were 1.6% versus consensus of 0.6%. The Employment Cost Index (ECI) for Q4 was 0.5% versus consensus at 0.6%. Chicago PMI was weaker at 50.3 in January versus December’s 54.6 and consensus of 55.3. However the ISM Mfg. Index was 56.0 versus December’s 54.7. Even the EIA Petroleum Status Report reflected an inventory build of crude and distillates. In short, it was a mixed bag.
From an equity market perspective, last week’s price action speaks to a high degree of certainty that our post-election rally still has legs, even if those legs provide only modest opportunity for additional price gains in the near term.
Several themes that stand out in support of that of that thesis include recent leadership by small caps, broad sponsorship and participation by components companies of all three majors, S&P 500, Dow Industrials and the NASDAQ Composite, and continued stability in energy prices.