The U.S. stock market finished the week higher amid a highlighting jobs report and dovish comments from Fed Chairman Jerome Powell.  Interest rates finished the week lower due to underwhelming manufacturing data as the 10-year treasury yield dropped 8 basis points to 2.65%.  The spread between the 10-year treasury yield and the 2-year treasury yield also narrowed by 4 basis points to 0.16%.  Despite a better than expected jobs report, the price of gold was little changed and rose only 0.36% to $1,286.80 an ounce.  The U.S. dollar index (DXY), which tends to move inversely to gold, dropped from 96.37 to 96.18.  The price of crude oil jumped 6.99% to $48.24 a barrel amid a report of OPEC’s oil exports plummeting.

Index               Started Week         Ended Week         Change         Change %         YTD %
DJIA 23,062.4023,433.16370.761.61%0.45%
Nasdaq 6,584.526,738.86154.342.34%1.56%
S&P 500 2,485.742,531.9446.201.86%1.00%
Russell 2000 1,337.921,380.7542.833.20%2.39%

This Week’s Economic Highlights

  • Initial unemployment claims rose by a significant 10,000 for the week ending December 29th for a total of 231,000 initial claims.  The number of continuing unemployment claims, which lags initial claims by a week, rose by 32,000 for a total of 1.74 million and remains near its 45-year low.
  • The ISM manufacturing index fell to 54.1% in December from 59.3% the month prior, the slowest rate for manufacturers in two years.  The largest driver in the drop of the index was an 11 point drop in new orders to 51.1%.  Although any reading above 50% is considered improving manufacturing conditions, a large drop in the index could be a leading indication of weakening conditions ahead.
  • The U.S. added a considerable 312,000 new jobs in December, as compared to the 182,000 expected.  However, the unemployment rate increased from 3.7% to 3.9% as more people entered the workforce looking for jobs and increasing the labor force participation rate from 62.9% to 63.1%.  Wage growth also increased, with the average wage rising 0.4% (11 cents) to approximately $27.48 an hour.  Year-over-year wage growth has increased 3.2% from 3.1% the month prior, its highest since April of 2009.

Tidbit

According to the White House Council of Economic Advisors, the current government shutdown is reducing U.S. GDP by approximately 0.1% every two weeks but is expected to have little long-term impact assuming the deadlock is resolved quickly.

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