Presented by The PensionmarkMeridien Team, January 17, 2024
THE WEEK ON WALL STREET
Major U.S. equity indexes traded higher last week as investors interpreted wholesale and consumer pricing inflation data for December.
Overall, for the week ending 01/12/24, the S&P 500 rose by 1.84%1, the Nasdaq 100 increased by 3.23%2, and the Dow Jones Industrial Average gained 0.34%3.
INFLATION DATA MIXED, WELL RECEIVED
CPI: December Consumer Price Index (CPI) data came in hotter than expected last Thursday, showing a 0.3% monthly increase in December and a 3.4% increase4 versus one year ago. Estimates were for gains of 0.2% monthly in December and a 3.2% gain year-over-year.
Shelter prices were the main culprit for higher prices, with prices showing a 0.5% increase for the month. Service pricing also remained sticky.
After an initial downside reaction to the data release, markets shook it off and slowly traded upwards5 from the news release lows throughout the day and the following day, showing a different reaction to a hotter-than-expected CPI than we are used to. Treasury yields also traded slowly lower throughout the day after an initial spike on the news release.
PPI: After the warm-to-hot CPI print on Thursday, Friday gave us a Producer Price Index (PPI) data release that was below expectations, showing mixed signals on the inflation front.
The report showed wholesale prices falling by 0.1% in December month-over-month, below the Dow Jones economist estimate6 of a gain of 0.1%.
Core PPI, which excludes volatile food and energy, was flat versus the estimate for a 0.2% increase.
The PPI data release was received in a rather muted fashion by the markets, as the major stock market averages closed higher for the week.
TREASURY YIELDS FALL
One surprise last week was the 10-year note yield’s reaction to the warm/hot CPI data last Thursday. In the past, yields would have risen and kept rising on CPI data like this. This time, they quickly rose on the data release and subsequently fell throughout the day7 as major equity indexes rose.
This price action further illustrates the market’s expectations for lower rates to come in the future. Market expectations for six rate cuts8 are real. Could the market be wrong?
BITCOIN ETFS LAUNCHED
In a historic move for cryptocurrency, 11 spot Bitcoin ETFs were launched last Friday, ending a lengthy debate about the likelihood of this type of ETF.
On the day before the ETFs were approved and trading started, there was some confusion and drama. The SEC’s Twitter account was reportedly hacked, and a tweet was released claiming that the approval had been granted, even though it had not yet been approved.
The price of spot Bitcoin was lower by approximately 2.48%9 for the week as of Saturday. Spot Bitcoin trades 24/7, but the ETFs trade during normal market hours.
PENSIONMARKMERIDIEN JANUARY EVENT(S)
We would love to have you join us for the event below. To get more information or to register click the topic. Unable to join us for the planned event, or have questions? Register and we can send you the replay when it is available.
| DATE | TIME | IN PERSON OR WEBINAR? | TOPIC |
| Wednesday, January 31 | 12 – 12:45 PM EST | Webinar | Understanding Medicare |
THE TAKEAWAY
2024 is young, and markets are feeling out the market direction, clarity, and narrative. Stock bulls seem to have the upper hand so far this year, as hopes for rate cuts are the prevailing narrative.
The digestion of the most recent inflation data was constructive, and market participants now look to next week’s retail sales data and consumer sentiment data. We, the consumer, are responsible for 70%10 of the nation’s gross domestic product (GDP), so everyone will be watching this data for indications of consumer health.
Treasury yields reacting to the downside on warm/hot CPI data is encouraging, which could help to spur lending activity.
If there is anything on your mind regarding stocks, interest rates, energy, or anything else, please feel free to reach out to us. We can connect to discuss your thoughts.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)
Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Citations:
1. Trading View, November 12, 2023
2. Trading View, November 12, 2023
3 Trading View, September 10, 2023
4. Federal Reserve, November 9, 2023
5. CNBC, November 10, 2023
6. NBC News, October 11, 2023
7. Yahoo Finance, November 5, 2023
Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).