Weekly Market Recap – January 20, 2023

On Thursday, the US debt ceiling ($31.4 trillion) was hit without being addressed by any relevant actions by the House of Representatives. Treasury Secretary Janet Yellin warned of a global financial calamity if a debt limit agreement is not reached. Microsoft announced it would lay off 10,000 workers, joining the ranks of other high-profile companies ordering layoffs, thus far in January. These include Goldman Sachs (3,200), Amazon (18,000), and Google’s parent, Alphabet (12,000).

Monthly economic statistics released during the week, compared with the prior month, were as follows: retail sales -1.1% vs. -1.0%, retail sales excluding automobiles -1.1% vs. -0.6%, producer price index (final demand) -0.5% vs. +0.2%, industrial production 78.8% vs. 79.4%, business inventories (revision) unchanged at +0.4%, building permits 1.33 million vs. 1.35 million, housing starts 1.38 million vs. 1.40 million and existing home sales 4.02 million vs. 4.08 million. There were no significant quarterly reports. Weeklies showed initial jobless claims fell to 190,000 from 205,000 and continuing unemployment claims rose to 1.65 million from 1.63 million.

The buoyant up move in stocks for the first half of January 2023 came to a grinding halt on Wednesday. Recession fears returned to haunt investors, as monthly statistics implied a weakening economy. The three indices we track here displayed lukewarm movement, as investor confidence seeped out of markets. The DJIA ended the week at 33,375.49 (-0.7%), the S&P 500 finished at 3,972.61 (-0.7%), and the NASDAQ Composite closed at 11,140.43 (+0.6%). CBOE’s VIX exhibited the fear factor flowing back in, surging 8.2%, marked 19.85 at settlement. In currencies, the USD Index futures eased 0.2% ending at 101.781 on Friday. Commodities in the S&P GSCI futures portfolio stabilized a bit, lifting the index up 1.7% to 616.16 at the week’s end.

In the metals contracts covered in our recap, the group showed mixed performances. Friday closing prices and weekly movements were: gold at $1,928.20 (+0.3%), silver at $23.935 (-1.8%), platinum at $1,047.80 (-2.3%), palladium at $1,723.20 (-3.6%), copper at $4.2515 (+0.8%) and aluminum at $2,610.50 (+2.4%).

On the energy charts, the futures contracts on our watch list made gains for the week, except for one, the NYMEX natural gas. That market remained under pressure from warmer-than-average temperature forecasts in the US gas-consuming regions, a slowdown in LNG exports to Europe, and expectations that the coming summer will see the return of hydropower in the US West, thus reducing the demand for gas-fired generation in coming months. February natural gas dropped 7.2% during the week, going out at $3.174 per mmBtu.
Settlement prices and percentage increases for the rest of the energy sector we follow were: WTI crude at $81.31 per barrel (+1.8%), Brent crude at $87.63 (+2.8%), heating oil at $3.4668 per gallon (+ 6.5%), RBOB gasoline at $2.6454 (+4.4%) and ICE Dutch gas, going out at €66.898 per MWh. (+3.2%).

Of the nine agricultural futures that we monitor, three increased and six decreased. The gainers were: corn at $6.76¼ (+0.2%), coffee at $1.5480 (+2.0%), and cotton at 86.70¢ (+5.4%). Dipping into the red, were: soybeans at $15.06½ (-1.4%), wheat at $7.41½ (-0.3%), sugar at 19.72¢ (-0.1%), cocoa at $2,569 (-3.1%), live cattle at 156.625 (-0.7%) and lean hogs at 77.825 (-1.0%).

Futures Referenced in Market Recap

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