Happy New Year!
The markets ended the year the same way the spent most of it, with a sputter. The Christmas bump occurred, then in light trade the week following saw modest losses.
US
The S&P 500 lost 0.82% on the week leaving it at -0.73% for the year. The Dow Jones also finished the year in the red at -2.23%[1].
Data across the US economy was mixed for the week, but not sharply negative. Trade deficits expanded less than expected. S&P/CS HPI Composite – 20 City home prices increased 5.5% year over year. CB Consumer Confidence rose to 96.5, up from 92.6 last month[2]. Retail sales grew 7.9% during the holiday season. Consumer Sentiment increased to 92.6, giving it a 2015 average of 92.9; the highest annual average since 2004[3]. A strong consumer has helped our economy in weathering the global slow-down.
Investor sentiment turned south as the week progressed however as pending home sales slumped, crude inventories mounted, and initial jobless claims increased 20K. Home sales data may be temporary in nature, not because of seasonal conditions, but rather changes in law that caused a delay in contracts.
Europe
Europe saw light trade last week as well, as little new data was reported. The UK GDP revisions estimated slower growth than originally expected. The MSCI EAFE finished the year at -0.39%, capping off a wild year[4].
China
‘Official’ Manufacturing PMI for China in December increased 0.1 to 49.7. Caixin manufacturing PMI, released Monday of this week gives a more accurate indication, 48.2 (Under 50 indicates contraction).
The Hang Seng China Enterprises Index fell 19% on the year, while the Shanghai Composite increased 9.4%, the first such divergence of the 2 indexes in over a decade[5].
Conclusion
While the “R” word has been referenced with more frequency as this expansion enters its seventh year, conditions that accompany a recession are not currently apparent. The consumer still looms strong as the driving force in this expansion. This week will be far more telling as the minutes from the last Federal Reserve meeting will be released (the first meeting with a rate increase) and the December jobs report will come out on Friday.
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[1] www.troweprice.com – weekly market wrap-ups
[2] www.investing.com – economic calendar
[3] www.mfs.com – week in review
[4] www.jpmorganfunds.com – weekly market recap