TheMoneyGeek Unplugged

Compared to the prior week, all seemed to be forgiven in the markets, as the S&P 500 index leaped 2.9% thanks to better-than-feared inflation data. The NASDAQ also sprinted up 2.9%, while the Small-Capitalization stocks led the way, vaulting almost 4.0%. January continues to live up to its reputation for increasing chop and volatility, while some signs of institutional selling continued.

The Consumer Price Index (CPI) for December came in at 2.9%, up from 2.7% in November. Core CPI (which excludes the more volatile categories of food and energy) was down from 3.3% to 3.2%, signaling that the rate of inflation is stubbornly stable and consumers are still feeling the pinch. Wall Street cheered this better than expected news as it continues to expect (hope?) at least two rate cuts in 2025.

The Producer Price Index (PPI), which tracks prices paid by businesses, was also up 3.3% year over year in December but lower than forecast. The vast majority of producer price increases resulted from energy costs.

The National Federation of Independent Businesses (NFIB) released its Small Business Optimism Index for December, which increased to its highest reading since July 2019. Small business owners are feeling more hopeful about the future, anticipating that potential favorable regulatory changes from the incoming administration will help Main Street.

Builder Confidence from the National Association of Home Builders (NAHB) edged up in December, as did Traffic of Prospective Buyers. However, sales expectations in the next six months fell six points. Price cuts and sales incentives continue to be offered as the cost of construction and high mortgage rates rise.

Housing Starts were up a surprising 15.8% in December, much of this due to an almost 60% increase in multi-family unit starts. This is an extremely volatile monthly number, and it’s worth noting that Housing Starts were still down 4.4% year-over-year. Additionally, Building Permits, which are generally more forward-looking and feed into future housing starts, were down 0.7% from November and down 3.1% compared to 2023.

YDream Financial Services is an investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client and your financial plan and investment objectives are different.

Source: InvesTech Research