WEEKLY MARKET RECAP – JANUARY 5, 2024

The positive momentum from the nine consecutive weekly gains in late 2023 did not carry over into 2024, as the major U.S. indexes experienced their first weekly declines since late October. The NASDAQ saw a decline of over 3% for the week, with the S&P 500 and Dow recording smaller declines.

Last month, the U.S. economy added 216,000 new jobs, surpassing the expectations of most economists and marking the largest monthly gain in three months. The unemployment rate remained unchanged at 3.7%. In total, the economy generated 2.7 million jobs in 2023, with an average monthly gain of 225,000.

The yield of the 10-year U.S. Treasury bond rose back above 4.00%, ending a streak of three weekly declines. Positive economic data raised concerns that the Fed might delay interest-rate cuts. The 10-year Treasury’s closing yield on Friday was 4.04%, up from 3.88% at the end of the previous week.

As major banks gear up for the quarterly earnings season this week, analysts have been revising down their expectations. Over the past three months, analysts reduced their fourth-quarter earnings-per-share estimates for S&P 500 companies by an average of 6.8%, surpassing the 3.8% average reduction seen before earnings seasons over the past 20 years.

A U.S. small-cap benchmark experienced a nearly 4% decline for the week, trailing its large-cap counterparts following the late 2023 surge in small caps, where the Russell 2000 Index surged by 22% over the final two months of the previous year.

In 2023, companies in the S&P 500 distributed a record $588 billion in dividend payments, marking an increase of more than 4% from the previous year, as reported by S&P Dow Jones Indices. For the fourth quarter, payments were up 5% compared to the same quarter a year earlier, reaching a record $154 billion.

Historically, the stock market performance in January has been a robust indicator of the year’s outlook. Since 1929, the S&P 500 has posted a positive return for the year 70.5% of the time after gaining ground in January, or it has gone on to post an annual loss when the market has declined in the first month, according to S&P Dow Jones Indices.

A Consumer Price Index report scheduled for release on Thursday will reveal whether the favorable trends in inflation observed recently extended into December. In November, inflation rose at an annual rate of 3.1%, a decrease from 3.2% the previous month. Excluding volatile food and energy prices, core inflation rose by 4.0% in November.

Major U.S. Economic Reports

Closing Prices for the Week

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