Weekly Market Commentary

Stay up-to-date on markets and the economy with our latest weekly commentary report.

Read Time: 5 Min

January 10, 2025

Worldwide Headlines

  1. Stocks are stuck. It’s not a lack of earnings growth or positive economic momentum that is holding stocks back since mid-December, it is bond yields, the U.S. Dollar Index and the price of crude oil. These three items are all moving higher at the same time and that has stopped stocks in their tracks. The current closing high for the S&P 500 was back on December 6th, and stocks may stay stuck until these three items start to pull back.
  2. Labor market stays robust. The December employment report showed a much more robust 256,000 net new jobs and the unemployment rate falling to 4.1%. This is good news for the economy, but bad news for those that want further Federal Reserve rate cuts. It is however, taking bond yields higher, which is where investors may now want to focus their efforts.
  3. International travel is booming. During the month of November, spending by visitors to the U.S. rose to a record $18.6 billion, while spending by Americans abroad also rose to a fresh record of $15.4 billion. This was a strong trend in all of 2024 and one we suspect continues into 2025.

Economic Reports

  1. Factory Orders from November were down -0.4% from a month ago, a tick worse than expected. However, the prior month was upgraded from +0.2% to +0.5%. Ex-transportation, Factory Orders were +0.2% in November as the aircraft dearth continues to weigh on U.S. factory output.
  2. Trade Balance in November widened to -$78.2 billion as companies accelerated import shipments ahead of a possible east coast dockworkers strike and the potential for higher tariffs from the Trump Administration. Hence, Imports rose near a record $351.5 billion in the month, though Exports did rise to a new monthly record of $273.3.
  3. JOLTS Job Openings in November rose to 8.098 million, the highest since May. This was unexpected as the number had been trending lower. However, this was a mixed report as the number of hires, layoffs and quits all steadied. American companies seem to be holding on to current workers, but not hiring new ones.
  4. ISM Services Index for December showed a reading of 54.1, which was above expectation and the average monthly reading of 52.3 over the past year. Inside the report, the New Orders component rose to a level of 54.2, slightly above the monthly average one year reading of 54.0, while the Prices Paid gained sharply to 64.4, the highest since early 2023 and not good for inflation expectations.
  5. Weekly Initial Jobless Claims fell noticeably to 201,000, near the lowest level in a year and back to 1960’s levels. However, Continuing Claims rose to 1.867 million, above the 1.759 million level a year ago. The overall take from the report is that there were fewer than expected post-holiday layoffs.
  6. Monthly Employment Report from December showed a much higher than expected 256,000 net new jobs created in the month, with 223,000 of those in the private sector. Additionally, the Unemployment Rate moved lower by a tick to 4.1% and Average Hourly Earnings rose +3.9% from a year ago. A good report for the economy.
  7. University of Michigan Consumer Sentiment Index for January came in slightly below expectation at 73.2, but this is still above the 12-month average reading of 72.6. Inside the report, the 1-Year Inflation expectation rose from +2.8% to +3.3%. This caught the attention of the bond market with yields moving higher today.

Markets this Week (mid-day Friday)

  1. U.S. Dollar Index – higher…DXY at 109.701 – at a 52-week high and +0.68% so far this week (1 yr. range = 100.381 to 109.701).
  2. Bond yields – higher…2-year Treasury yield up to 4.37%; 10-year gains to 4.75%.
  3. Stocks – lower…all five of the major global benchmarks we track are lower in the 1-3% range so far this week. 4. Commodities – mixed…4 of 6 sectors are higher in BCOM Index so far this week > grains, base metals, precious metals, energy

Next Week

  1. Economic Reports
    • NFIB Small Business Optimism Index, PPI, CPI, Retail Sales, NAHB Homebuilder Index, Housing Starts, Industrial Production
      • U.S. consensus QoQ real GDP est.: Q4 = +2.3%, Q1 = +1.9%, Q2 = +2.0%, Q3 = +2.0%, Q4 = +2.0%
      • U.S. consensus YoY inflation est.: Q4 = +2.7%, Q1 = +2.5%, Q2 = +2.4%, Q3 = +2.7%, Q4 = +2.5%
  2. Earnings Reports (Q4 earnings season begins 1/15/25)
    • Q4-2024 S&P 500 EPS estimate at the beginning of the period = +7.5%
    • Q4-2024 S&P 500 summary to date: 19 reported; 78% beat estimate; YoY EPS = +7.5%
    • S&P 500 YoY EPS estimates: Q4-2024 = +7.5%, Q1-2025 = 11.4%, Q2-2025 = 9.4%, Q3-2025 = +12.7%, Q4-2025 = +16.3%
  3. Events
    • Central bank meetings in Indonesia, Poland, South Korea
    • Fourth quarter earnings season officially starts.

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