Last week saw U.S. equity markets trade higher, with all three major indices gaining ground. Leadership was once again provided by Apple, which gained 2.7%. Google also rose 3.5% last week.
Though U.S. equity markets were closed yesterday in honor of the Martin Luther King Jr. holiday, Dow Jones futures fell fractionally in futures trading. As the economic calendar below illustrates, data will be thin this week. Earnings will, however, provide investors with much to focus on. Broadly speaking, the earnings focus will shift from financials to tech.
Netflix and Texas Instruments both report Tuesday. Intel, ASML Teradyne, STMicroelectronics, and Skyworks Solution report this week as well.
US equity markets remain in a confirmed uptrend.
Highlights from last week’s economic calendar:
Consumer Price Index (CPI) data from December M/M was in-line with consensus 0.2%. On A Y/Y basis, CPI was, 2.3%.
Producer Price Index — Final Demand (PPI-FD) for December was quite tame and in-line with consensus: M/M 0.1%, Y/Y 1.3%.
Weekly Jobless Claims for the week ending 1/11 came in lower-than-expected (204 K), and well below the previous week’s figures (214 K). The 4-week Moving Average is 224 K.
Housing starts for December were significantly stronger than Econoday consensus (1.608 M versus 1.373 M). That reading represents a 13-year high. Housing starts speak to consumer demand, family formation, consumer sentiment and confidence, and an economy that is clearly continuing to fire on all cylinders.
The Federal Reserve’s Industrial Production data for December was in-line with Econoday consensus: -0.3%. One interesting takeaway from the report came in manufacturing. On a M/M basis, manufacturing in December was 0.2%, versus Econoday consensus that was -0.2%.
This week’s economic calendar highlights:
Given that this week is a holiday-shortened trading week, and that there are no economic releases scheduled for tomorrow, this week’s economic calendar is a bit abbreviated. On Wednesday, Existing Home Sales for December are released. Econoday consensus is 5.430 M — up modestly from November’s 5.350 M. Existing Home Sales on a M/M basis last month saw a slight contraction (-1.7%). On a Y/Y basis, Existing Home Sales rose 2.7%.
Weekly Jobless Claims for the week ending 1/18 are due out Thursday morning at 8:30 AM. Last week’s reading was a stronger-than-expected 204 K, helped by a drop of 10 K new claims. Econoday consensus is 213 K. The four-week moving average stood at 216.5 K last week.
The EIA Petroleum Status Report for the week ending 1/17 is due out Thursday at 11:00 am. Last week’s report reflected modestly tighter crude inventories (-2.5 M bbl). Gasoline inventories and distillate inventories both rose 6.7 M bbl and 8.2 M bbl, respectively.
The PMI Composite Flash for January is out Friday morning. Econoday is expecting only marginal changes from December’s report.
Composite Level: Prior 52.2–Consensus 52.3
Manufacturing Level: Prior 52.5–Consensus 52.2
Services Level: Prior 52.2–Consensus 52.5
Marc Sutin’s Market Analysis Comment – Tuesday January 21, 2020:
Conclusion
The US stock market is rising in what I would characterize as a momentum rally. It is being driven by liquidity and a re-rating of valuations. The hope is that both the rally and the economy will morph into an economic acceleration phase. Our analysis shows that currently the reacceleration phase is questionable. This suggests portfolios should take a balanced approach between growth and value and cyclicals versus defensives. Although the stock market is vulnerable to a correction, with both the economy solid and the stock market’s technical underpinnings strong, the bull market should continue. Complete analysis on Intuitive-Analysis
Flickr photo: Jarrett Hendrix
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