The shortened holiday trading week saw markets react positively to the presidential inauguration and a slew of policy decisions, lifting the S&P 500 Index by 1.7% to a new all-time closing high. The NASDAQ index closed up almost 1.6%, and the small-capitalization Russell 2000 index followed suit and closed up almost 1.4%.
While market technical data failed to make significant positive headway going into this coming week’s Federal Open Market Committee meeting, institutional selling (distribution) eased for the first time in several weeks.
Economic data was somewhat light this week.
Existing Home Sales from the National Association of Realtors for December rose 2.2% month over month and 9.3% year over year. Despite these seeming improvements, total sales for 2024 settled at the lowest level in almost 30 years. Existing Home Sales have bounced around a historically low range since late 2022 and continue to expose significant fissures in the housing market. Housing sector stocks remained buoyant for the week.
The Consumer Sentiment final reading for January surprised to the downside, dropping 4% from December’s reading. All components saw declines except for consumers’ assessments of personal finances. This broad-based pullback reflects concerns surrounding the current and future economy and inflation. Year-ahead inflation expectations soared to 3.3% this month, which does not bode well for the Fed’s battle to their 2% target.
The Conference Board’s Leading Economic Index (LEI) fell back in December. Despite strong contributions from financial inputs, the LEI failed to gain positive traction, as half of the ten components, including new orders and consumer expectations, were negative for the month. Thus, the leading economic data indicates that the path forward remains somewhat uncertain.
Sam H. Fawaz is the President of YDream Financial Services, Inc., a fee-only 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 tax or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. 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 their financial plan and investment objectives are different.
Source: InvesTech Research
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