Stocks and Bonds Gain on Economic Data; Supreme Court Ruling on Tariffs Pending
Good morning,
The Dow (+2.3%), NASDAQ (+1.9%) and S&P 500 (+1.6%) exhibited modestly strong gains for the week. Meanwhile, taxable bonds gained 0.4% and tax-free municipal bonds gained 0.7%. The 10-year Treasury fell 0.02% to finish the week at 4.17%.
The first round of “real” economic data is beginning to pour in since September, as the government shutdown caused either a pause in data delivery, or data that was incomplete. Topping the headlines was the monthly labor report, which showed that 50,000 jobs were gained in December, below the expectation of 73,000 jobs. However, the unemployment rate fell from 4.6% to 4.4%, and was lower than the expectation of 4.5%. While it can be difficult to conclude anything after just one data point, it appears that employers are firing less (as evidenced by new unemployment claims), but also not hiring as much, either. The Institute of Supply Management (ISM) reports for manufacturing and services were mixed, with the larger services component showing strength, but the manufacturing still showing signs of weakness.
Aside from the economic data, there is a slew of geopolitical tensions going on in the world, and the US seems to be in the middle of it. We talked about Venezuela last week, but that doesn’t appear to be moving the markets either way. Now, there’s talk of potential threats to Iran if their government continues to take lethal action against its citizen protestors. However, the biggest item lurking out there is the forthcoming Supreme Court decision regarding the legality of the tariffs, and if deemed illegal, then what happens to the money that has already been collected? Will we have to pay it back? If so, that could be hundreds of billions of dollars, which can’t be good for the US. One shall see, but that decision is expected to be reported any day now.
Please note that we will be releasing the video podcast interviews with Brad Sorensen, CFA, each of the next three Wednesdays. The first episode looks back at 2025, the 2nd episode looks at the current economic situation, and the 3rd episode is looking ahead to 2026. These videos will be released on social media platforms such as Facebook, LinkedIn, and Spotify, as well as YouTube and our website. We hope you enjoy them.
Have a great day and terrific week!
Source: Yahoo Finance
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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.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
