Weekly Market Recap – February 3, 2023

Friday’s job data grabbed the headlines with the lowest US unemployment rate since 1969. Major central banks continue their efforts to combat inflation: the Bank of England increased rates half a percentage point to 4%, and the Fed raised its benchmark rate by a quarter point to a target range of 4.50% to 4.75%. As the business week was ending, reports of China’s southeast bound surveillance balloon over Montana were constantly updated in the news feed. On Saturday, a US military jet fighter downed the balloon over US waters near South Carolina. At our press time, any serious international geopolitical ramifications are yet to be seen.

As mentioned above, Friday’s financial news flow got off with a bang as the January unemployment rate hit a 53½ year low of 3.4%, and the nonfarm payrolls number came in with the unexpected positive 517,000 vs. 260,000 for December. Other monthly economic statistics reported during the week were: S&P Case-Shiller national home price index -3.1% vs. -2.8%, job openings 11.0 million vs. 10.4 million, job quits unchanged at 4.1 million, construction spending -0.4% vs. +0.5%, consumer confidence index 107.1 vs. 109.0, factory orders +1.8% vs. -1.9%, motor vehicle sales 15.7 million vs. 13.4 million. The weekly job numbers showed that initial jobless claims decreased to 183,000 from the previous 186,000, and continuing claims fell to 1.66 million from 1.67 million. Quarterly stats for Q4 compared with Q3 showed that productivity rose 3.0% vs. +1.4%, unit labor costs were +1.1% vs. +2.0% and the employment cost index +1.0% vs. +1.2%.

The positive implications of the economic stats helped send the S&P 500 and the NASDAQ Composite to four-month highs. The former ended the week at 4,136.48 (+1.6%); while the latter rallied to 12,006.95 (+3.3%). It was the NASDAQ’s strongest January since 2001. Blue chips didn’t fare as well, as the DJIA hardly budged, going out on Friday at 33,926.01 (-0.2%). Equities option volatility eased as the CBOE VIX settled at 18.33 (-1.0%). In reaction to the Fed rate hike (0.5%), USD Index futures popped on Friday to 102.755 (+1.0%). Commodities imbedded in the S&P GSCI dropped, taking the index down to 574.50 (-5.6%).

Metals futures were mostly lower. In the contracts we monitor, closing prices and percentage movements were: gold at $1,876.60 per ounce (+3.5%), silver at $22.405 (-5.2%), platinum at $980.30 (-3.6%), palladium at $1,618.40 (+1.2%), copper at $4.0565 per pound (-3.9%) and aluminum at $2,569.50 per metric ton (-2.2%).

In the energy markets we follow, all but one of the products tumbled during the week. In the black was ICE Dutch TTF gas, rising 4.4% to €57.889 per MWh. The closing levels and percentage decreases of the five that dropped were: WTI crude oil at $73.39 per barrel (-7.9%), Brent crude at $79.94 (-7.5%), heating oil at $2.7753 per gallon (-12.9%), RBOB gasoline at $2.3210 (-10.5%), and NYMEX natural gas plunged down to $2.410 per MmBtu (-15.4%).

The futures on our list of nine agricultural products ended the week with a score of six up and three down. The gainers were: soybeans at $15.32 per bushel (+1.5%), wheat at $7.56¾ (+0.9%), coffee at $1.7280 per pound (+1.7%), sugar at 21.24¢ per pound (+1.3%), live cattle at 164.125 (+2.1%), and lean hogs at 86.475 (+0.03%). Those in the red were: corn at $6.77½ (-0.8%), cocoa at $2,569 per metric ton (-2.2%) and cotton at 85.43¢ (-1.7%).

Futures Referenced in Market Recap

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