Stocks Advance on Earnings and New Administration Optimism; Bonds Up Slightly

Good morning,

The Dow (+2.2%), NASDAQ (+1.7%) and S&P 500 (+1.8%) all finished the week higher and reaching or approaching all-time highs.  Taxable bonds gained 0.1% while tax-free municipal bonds gained almost 0.3%.  These gains occurred despite the 10-year Treasury yield increasing by 0.01% to end the week at 4.62%.

There wasn’t much impactful economic news reported last week.  Leading Economic Indicators (LEIs) gained very slightly, and unemployment claims were also slightly higher.  However, the total number of Americans receiving unemployment claims has risen to 1.9 million, the highest since November 2021.  The global Purchasing Manager Index (PMI) showed manufacturing has increased, which gave a boost to international stocks.  Corporate earnings season is fully underway now and have generally been positive so far.

Lots of noise created by the new presidential administration, as President Trump has been very busy in his first week.  Most of his policies tend to favor businesses, which has been met with investor enthusiasm.  From a political perspective, the country remains very divided, but it seems that many executive orders and programs are being implemented that should be good for the US.  The big question is whether these programs will be inflationary.  The jury is still out on that, and we won’t really know for quite some time.  Overnight, there was a news report that China has developed a chip that will be less expensive than the ones produced by Nvidia, and that news is sending a shock wave through the technology sector.  On the flip side, a group of technology companies have committed to invest $500 billion in artificial intelligence in the US.  So, these are big news clips that are opposing forces but remember that it all comes down to earnings and profits.  Tune out the noise and don’t let the emotions have an impact on your long term investment plan.

Have a great day and terrific week and enjoy being relieved from the deep freeze.  Please note that we taped two video / podcast episodes with our CFA consulting team.  The first was a recap of 2024 and where we stand now, and that aired late last week on social media, YouTube, iTunes, and other podcast platforms.  The second video is an economic outlook, and that will be aired this Wednesday.  Links to these episodes can also be found on our website.

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}