Markets Up Slightly on Strong Economic Data

The Dow (+0.0%), NASDAQ (+0.7%), and S&P 500 (+0.2%) each gained slightly for the week.  Taxable bonds were up about 0.2%, while tax free municipal bonds continued their rally, rising about 0.5%.  The 10-year Treasury yield rose 0.01% to finish the week at 4.23%.

In economic news last week, most of it was positive.  The Services sector of the US economy grew in November, and the labor report showed that more jobs were added than expected.  However, job openings have fallen, but there are still 1.3 jobs available for every person seeking a job.  The markets responded favorably to most of the news, but investors also became less optimistic that the Fed would cut rates next March.  Quite frankly, it makes no sense that the Fed would cut rates, except if the economy was struggling, which it is not right now.

In the coming week, the most common measure of inflation – the Consumer Price Index (CPI) – will be reported for November, as well as retail sales.  Barring any major surprises with those two economic reports, most investors will be focused on the Fed, who announces on Wednesday whether they will raise, lower, or keep interest rates the same.  Nearly everyone is expecting no change, but all eyes will be on the Fed comments after the meeting has concluded, so they can get a sense of the Fed’s intentions.  Once again, unless there is a significant change, we don’t see these reports as being big drivers for market movements this week.

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