Last Week:

  • U.S. equities finished positive for the week: The market continued to advance with the major indexes hitting new all-time highs. The Standard & Poor’s (S&P500) index gained 70 points, or rose 2.6%, to 2,743. The Dow Jones Industrial Average (DJIA) closed 577 points higher, or rose 2.3% to 25,296, crossing the 25,000 mark for the first time. The Nasdaq closed 3.4% higher at 7,137, also crossing the 7,000 mark for the first time.
  • U.S. employment remains robust: Last week, the Bureau of Labor Statistics reported total nonfarm payroll employment rose by 148,000 in December (significantly below expectations of 189,000 jobs), with major gains in healthcare, construction and manufacturing. The unemployment rate remained unchanged at 4.1%, while the U-6 (a broad measure of underemployment) increased to 8.1% from 8.0% for the month. Average hourly earnings increased 2.5% year over year, continuing to befuddle economists’ expectations of wage growth. The lack of sustained wage growth will likely be a major factor in the pace of Fed’s expected tightening in 2018.

Nonfarm Payroll Employment, seasonally adjusted

Source: FactSet Research Systems (December 2017)

Look Ahead:

  • The week will start relatively slow on the corporate front but expect to see some fourth quarter news come out of the numerous conferences scheduled throughout the week – most notably the ICR conference that takes place on Monday and Tuesday.
  • Earnings releases will pick up in the back half of the week with Q4 reporting season kicking off on Friday as BlackRock, JP Morgan Chase, PNC Bank, and Wells Fargo report that morning.
  • On the economic front, we will see U.S. CPI and retail sales out at the end of the week, while in China we will see PPI / CPI on Wednesday morning and Import exports on Friday.