Stocks Finish Mixed in Volatile Week; Bonds Gain
Good morning,
The Dow (+2.5%), NASDAQ (-1.8%), and S&P 500 (-0.1%) finished mixed in an extremely volatile week. Meanwhile, taxable bonds and tax-free municipal bonds gained about 0.3%. The 10-year Treasury yield fell 0.06% to finish the week at 4.20%.
Wow, what a week! Sharp gains on Friday helped alleviate steep losses during the week, as the main indices finished the week mixed. See the chart below. Technology shares, especially in software, fell sharply earlier in the week due to worries about the amount of capital spending and rising concerns that AI developments could make industries such as software and legal services much less important with AI taking over production of both. These concerns came as a result of several of the big tech companies reporting their earnings and outlook over the past two weeks.
As for economic data, the Institute of Supply Managers (ISM) manufacturing moved into expansion territory with new orders rising sharply to their highest reading since November 2022. The ISM Services sector also remained in expansion territory, but both sectors felt pressure of rising prices. Other government data was delayed due to the brief gov’t shutdown and will be reported this week, such as the December retail sales report and the January jobs report. This Friday will also release the headline inflation numbers for January. Last week, the ADP jobs data received extra attention due to the gov’t shutdown, and that data showed a lower number of new jobs in January than expected. The weaker jobs data can support an interest rate cut, but not in the face of rising inflation.
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.
