TheMoneyGeek Unplugged

The S&P 500 index closed down 1% in a volatile week. Monday’s markets opened on a down note due to bad news for artificial intelligence stocks, mostly recovered during the week, then dipped back down on Friday due to news on tariffs going into effect over the weekend. The NASDAQ 100 index lost 1.4%, while the small-capitalization stocks (small caps) lost 1.5%

For January, the S&P 500 index gained 2.7%, the NASDAQ 100 was up 2.2%, and the small caps bounced back 2.0%, a solidly positive start to the year.

Consumer Confidence from the Conference Board fell 5.4 points in January. The Present Situation Index fell sharply by nearly ten points while the Future Expectations Index fell 2.6 points to 83.9, hovering above the Conference Board’s “80” threshold for “recession ahead.” Overall, consumer confidence remains within the same range as it has bounced in for the last two years.

The Commerce Department reported that U.S. manufactured durable goods orders plunged by 2.2% in December (amid a nosedive in orders for transportation equipment) after tumbling by a revised 2.0% in November. Economists expected an increase of 0.8% in December, which was a big expectations miss.

December New Home Sales from the Census Bureau rose 3.6%. However, unsold inventory continues to increase and now represents a supply of 8.5 months at the current sales rate, which is historically elevated and is among some of its highest levels since the popping of the last housing bubble.

Pending Home Sales from the National Association of Realtors (NAR) tumbled 5.5% in December, with decreased transactions in all four regions of the country. The report further highlights the fragile housing market, a key area to watch. Pending sales have bounced around a small range over the last couple of years and remain near record lows. This marks a significant downturn in contract signings, evidence of prolonged buyer hesitation due to decades-high mortgage rates.

The 30-year fixed mortgage rate remains near 7%, contributing to affordability issues and keeping potential buyers from purchasing. Despite the Federal Reserve’s 1% rate cut since September, mortgage rates have risen over the same period.

December’s headline Personal Consumption Expenditure (PCE) Index was 2.6%, up from 2.4% the previous month, while Core PCE, the Fed’s preferred measure of inflation, remained stubbornly unchanged at 2.8%. While inflation has moderated since its highs following the pandemic, it remains elevated and could pose issues for the Federal Reserve.

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