The U.S. stock market finished the week higher amid the Fed’s decision to leave interest rates unchanged and reports of overall positive corporate earnings.  Interest rates dropped as the 10-year treasury yield fell from 2.75% last week to 2.69% this week.  However, the spread between the 10-year treasury yield and the 2-year treasury yield widened by 2 basis points to 0.18%.  The price of gold jumped 1.5% to $1,322 an ounce while the U.S. dollar index decreased from 95.81 to 95.61 amid the Fed’s decision to hold interest rates steady.  The price of crude oil jumped 3.40% to $55.37 a barrel and is up 18% for the month of January as global outages and OPEC production cuts begins to alleviate concerns on oversupply.  

Index               Started Week         Ended Week         Change         Change %         YTD %
DJIA 26,719.1326,599.96-119.17-0.45%14.03%
Nasdaq 8,031.71 8,006.24-25.47-0.32%20.66%
S&P 500 2,950.46 2,941.76-8.70-0.29%17.35%
Russell 2000 1,549.63 1566.5716.941.09%16.17%

This Week’s Economic Highlights

  • GDP for the fourth quarter of 2018 has been delayed due to the government shutdown.  However, forecasters are expecting its annualized rate to drop from 3.4% to 2.7%.
  • The Federal Reserve Open Market Committee unanimously voted to leave the federal funds rate range of 2.25% to 2.50% unchanged.  Fed Chairman Jerome Powell stated that the case for further rate hikes has “weakened” because of a moderate slowdown in U.S. economic growth.
  • After reaching a 49-year low the prior week, initial unemployment claims jumped a significant 53,000 for the week ending January 26th, reaching a 16-month high of 253,000.  Continuing unemployment claims, which lag initial claims by a week, rose by 69,000 to a total of 1.78 million.
  • Personal income and consumer spending data for the month of December has been delayed due to the government shutdown.  However, forecasters expect personal income and consumer spending to rise 0.5% and 0.3%, respectively.
  • New home sales for November of 2018, which were previously delayed by the government shutdown, rose a significant 17%.  However, new home sales are still down 7.7% from a year ago.  The median sales price of newly constructed homes is down 12% from where it was a year ago, settling at $302,400.
  • The U.S. added 304,000 jobs in January of 2019, its largest increase in nearly a year.  Meanwhile the unemployment rate increased from 3.9% to its 7-month high of 4.0% as the government shutdown left government employees without a paycheck.

Quote

“As I have earlier noted, the most important things in life and in business can’t be measured.”

– John C. Bogle, Enough: True Measures of Money, Business, and Life.

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