Week in Review January 13, 2017
Stocks closed mixed as Donald Trump prepared to become the 45th president of the United States.
In the U.S., both the Dow and the S&P 500 had fractional losses on the week while NASDAQ gained 1%. Small-cap stocks were slightly higher. Both the Dow and the S&P have largely treaded water, albeit near record levels, for the past month following a big rally after Trump’s election. NASDAQ, which lagged the two blue-chip indexes in 2016 returns, has done better more recently. Bond yields were little changed on the week.
Foreign stocks were also mixed. European stocks were up on the order of 1% on Friday but only modestly higher on the week. The Stoxx Europe 600 gained 0.1% while Germany’s DAX index rose 0.3%. Italian stocks ran into some profit-taking, falling about 1% following a big December rally. In Asia, Japan’s Nikkei 225 lost about 1% while the Shanghai composite fell 1.3%. Chinese export figures for December disappointed, falling a worse than expected 6.1% in dollar terms. But Hong Kong and Indian stocks rose nearly 2% on the week.
Most of the week’s economic reports dealt with consumer spending. The headline number for December retail sales, which showed a 0.6% increase, was strong, but was skewed by a 2.4% rise in auto sales and a 2% rise in gasoline sales, which was largely due to an increase in energy prices. Taking those two items out, however, left retail sales unchanged for the month, the weakest reading since last July. But consumer credit rose by a better than expected $24.5 billion in November, indicating that holiday shoppers charged a lot of their Christmas purchases, as revolving credit rose by $11 billion. Non-revolving credit, which includes auto and student loans, rose by $13.5 billion. Rising oil prices showed up in the 0.3% gain in December producer prices, as energy prices rose 2.6%, including a 7.8% jump in gasoline prices. The first reading of the University of Michigan’s consumer sentiment index for January was largely unchanged from the end of December, when it hit a 13-year high.
Reports/dates/facts/links worth paying attention to over the next week:
1. January 16: U.S. markets closed for Martin Luther King Day.
2. January 17: Empire State manufacturing survey for January.
3. January 18: Consumer price index for December; industrial production for December; National Association of Home Builders housing market index for January; Federal Reserve Beige Book.
4. January 19: Weekly unemployment claims; housing starts for December; Philadelphia Fed business outlook survey for January.