Stocks ended the week marginally higher as U.S. economic data continued to generate positive headlines. Though regional manufacturing surveys around the U.S. are showing improving growth, retail earnings this week were mixed as some companies cited that delays in tax returns were effecting spending. As tax refunds are running $60 billion below average thus far this year.
For the week, the equity markets were higher by about 1.15 percent as investors absorbed Janet Yellen's testimony to Congress and the stronger-than-expected economic data that was posted. Interest rates were higher with the 10-year U.S. Treasury climbing in yield from 2.39 percent to 2.41 percent.
It was another solid week in the markets. The S&P 500 was up almost 1 percent to record highs. Interest rates were relatively quiet with the 10-year Treasury finishing the week yielding 2.40 percent. Oil rallied modestly and is now up to $54.00 per barrel.
Friday’s jobs numbers propelled stocks to roughly break even on the week. While the gain of 227,000 jobs in January was meaningfully above the estimate of 175,000, the unemployment rate ticked up and wage growth ticked down. The increase from 4.7 percent to 4.8 percent in the unemployment rate was due to more people entering the labor force, thus not much of a negative.
The equity markets were higher by about 1.3 percent compared to last week as investors absorbed fourth quarter earnings and reacted to the changes in Washington. Interest rates were higher, with the 10-year Treasury climbing in yield from 2.39 percent to 2.49 percent. The Dow Jones Industrial Average crossed 20,000 this week but the real story is how long it took to get here.
What has become known as the Trump Trade has delivered strong equity returns since election day last fall, with the benchmark S&P 500 rising by 6.5 percent over this period. More remarkable is the fact that the blue chip index hasn’t experienced a 1 percent or greater loss since October 11, 2016.
After rallying into the end of the year, both interest rates and the market took a little breather this week. The S&P 500 finished the week basically flat, while the yield on the U.S. 10-year Treasury finished at 2.40 percent. A quiet week as we head into earnings season.
The Friday job report was slightly on the light side with December payrolls coming in at 156,000, 19,000 below economist’s estimates. Positively, the previous two months showed 19,000 in upward revisions. However, wages grew at their highest rate since June 2009, coming in at 2.9 percent year-over-year growth.
Eight years into a bull market, and U.S. stocks have pulled off a command performance in 2016. Brexit and a Republican sweep of the fall elections were outcomes that few anticipated, and ones that failed to produce the investment outcomes that many predicted. As the political landscape changed,