WEEKLY MARKET RECAP – JANUARY 19, 2024

Major U.S. stock indexes extended their gains from the previous week, and a Friday rally propelled the S&P 500 to a level surpassing its prior all-time closing high established on January 3, 2022. The Dow achieved a new high, surpassing one set just 17 days earlier. These latest advances marked the 11th positive week out of the past 12.

A survey tracking U.S. consumer sentiment revealed a robust rebound for the second consecutive month, resulting in the most substantial two-month gain since 1991. The University of Michigan’s sentiment reading for January surged to 78.8, up from December’s 69.7 and November’s 61.3. Consumers expressed increased optimism regarding the ongoing easing of inflation.

Initial negative expectations for the earnings season were revised as the second week of quarterly results rolled in. As of Friday, the anticipated decline in fourth-quarter net income was 1.7% compared to the same quarter the previous year, based on reported results from S&P 500 companies and projections for those yet to report. In the preceding week, analysts had predicted a 0.1% decline, according to FactSet.

A significant drop in weekly unemployment claims, among other factors, shifted the outlook for interest-rate cuts, driving the yield of the 10-year U.S. Treasury bond to its highest level in over five weeks. By Friday’s close, the yield stood at around 4.14%, up from a recent low of 3.79% on December 27.

Heightened interest rates exerted pressure on the U.S. residential real estate market in 2023, with the National Association of Realtors reporting on Friday that existing home sales reached the lowest annual level since 1995. Last year’s total of 4.09 million home sales reflected a 19% decrease from 2022’s 5.03 million.

Both small-cap stocks and large-cap value stocks underperformed many other segments of the U.S. stock market in 2023, and their lag persisted in the opening weeks of 2024. As of Friday’s close, a small-cap benchmark was down approximately 4% year-to-date, while a large-cap value benchmark was down nearly 1%.

The world’s second-largest economy expanded at an annual rate of 5.2% in the fourth quarter, slightly below the expectations of most economists but an improvement from the third quarter’s 4.9%. China’s full-year 2023 growth rate reached 5.2%, compared to a 3.0% increase in 2022.

The U.S. government’s initial estimate of fourth-quarter GDP, scheduled for release on Thursday, is anticipated to indicate continued solid growth but at a slower pace than the third quarter, which saw GDP grow at a robust 4.9% annual rate. A preliminary estimate released on Friday by U.S. Federal Reserve economists projected a fourth-quarter growth rate of 2.4%.

Major U.S. Economic Reports

Closing Prices for the Week

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