Last Week:

  • U.S. equities finished positive for the week: The market continued to advance setting new records. The Standard & Poor’s (S&P500) index gained 24 points, or rose 0.86%, to 2,810. The Dow Jones Industrial Average (DJIA) closed 269 points higher, or rose 1.04% to 26,072, marking a thousand-point gain in only eight days. The Nasdaq closed 1.04% higher at 7,336.
  • U.S. Economic Data:
    The University of Michigan index of consumer sentiment edged lower to 94.4 from 95.9 in the preliminary estimate for January, missing consensus expectations of 97.0. A lower-than-expected reading on the current conditions index component drove the overall index marginally lower. Importantly, personal finances and buying plans for the American consumer remain very strong, however, there remains some uncertainty around the delayed impact of tax reform on consumers, especially high-income households who live in high-tax states.

    Meanwhile, U.S. nominal retail sales rose 0.4% in December compared to the previous month, confirming the solid holiday season. Compared to last year, retail sales were up 5.4%. These strong numbers align with the strong consumer confidence in the U.S., sentiments around positive effects of the tax bill, and expectations for wage increases.

    On the inflation front, U.S. headline CPI (Consumer Price Index) inflation rose 0.1% compared to the previous month in December, while the core measure (ex food and energy) rose 0.3% with increases in shelter and medical care services. Core CPI is now at 1.8% year over year.

Look Ahead:

  • Earnings release volume will pick up this week, with earnings releases expected from Johnson & Johnson, Procter & Gamble, Verizon, United Technologies, Comcast, Intel, Honeywell and Starbucks among others.
  • On the economic front, the week will kick off with the Bank of Japan rate decision on Monday night/Tuesday morning. On Wednesday, we will get U.S. Federal Housing Finance Agency (FHFA) home prices and Flash PMIs (Purchasing Managers Index) in the U.S. On Thursday, the European Central Bank will issue their rate decision and in the U.S. advanced goods trade balance will be released. Finally, on Friday we will get the China industrial profits data, U.S. capital/durable goods orders and U.S. preliminary GDP (Gross Domestic Product) for Q4.