January 30, 2023
Weekly Market Snapshot - Week ended January 27, 2023
Global equities rose 2.1% last week. U.S. stocks gained 2.5% while developed international and emerging market equities each gained 1.4%. Year-to-date, global equities are up 7.4% with domestics (+6.3%), developed international (+8.6%) and emerging markets (+10.0%). Bonds were unchanged for the week, up 2.2% year-to-date. The U.S. 10-yr Treasury yield rose 2 bps to 3.50%.
The S&P 500 rose 2.5% last week, rebounding from a modest decline in the week prior. U.S. economic growth remained in solidly positive territory in the fourth quarter, marking a second positive result after slightly negative outcomes in the first half. Thursday’s report showed GDP expanded at an annual rate of 2.9%, compared to expectations of +2.6%, following growth of 3.2% in the third quarter. Consumer spending rose 2.1% for the period, down slightly from 2.3% in the third quarter, but still positive contributing 1.4% to the overall GDP reading. Meanwhile, a 27% contraction in residential fixed investment (housing market) detracted 1.3% from the overall reading. The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures Price Index (PCE), showed further deceleration of price increases in December. Friday’s report showed that PCE rose at an annual rate of 5.0%, down from 5.5% in November. Excluding food and energy, prices rose 4.4% – the lowest in 14 months. With 29% of S&P 500 constituents reported, fourth quarter earnings are expected to decline 5% relative to a year ago and compared to expectations of -3.2% at year end.
In addition to another round or earnings reports, the week ahead brings an FOMC rate decision on Wednesday (2/1) and the January jobs report on Friday (2/3). Markets are pricing for a 0.25% rate increase, with risk to the upside, while economists expect the economy added 185K new jobs last month.