Markets rose this last week, bringing hope to what has been a lack luster January thus far. Should that hope continue?
Monday
S&P 500 0.64% | NASDAQ 0.69%
Economic data was not in focus on Monday. The central story was the capture of Venezuelan President, Nicolas Maduro. The uncertainty of the future of Venezuelan Oil Markets caused Oil prices to rise.
Tuesday
S&P 500 0.62% | NASDAQ 0.65%
Markets continued their move north on Tuesday. Tech rallied on data released at the Consumer Electronics Show, lending to the rally. The major detractor was Monday’s winner. Oil retreated as concerns of an oil glut deepen with the US discussion around increasing Venezuelan production.
Wednesday
S&P 500 0.34% | NASDAQ 0.16%
Wednesday was a mixed bag of data. The oil glut concerns continued to weigh on oil prices. ADP Jobs data signaled further deterioration in the jobs market. Financials which are due to report earnings struggled as well.
Thursday
S&P 500 0.01% | NASDAQ 0.44%
Tech stocks struggled on the day, while Defense Sector stocks rose. The administration announced intentions to increase the military budget substantially in coming years. This favors government contractors and their earnings.
Friday
S&P 500 0.65% | NASDAQ 0.81%
Happy Jobs Friday! The jobs report was mixed. Weak data included less new jobs than expected, while the good was the unemployment rate retreating to 4.4% for December. Additionally, the November reported unemployment rate was reduced from 4.6% to 4.5%.
Conclusion
S&P 500 1.57% | NASDAQ 1.88%
Markets came out of the gates intent on reversing the trend of the new year. Commodity markets were aided by Oil uncertainty. The defense sector was aided by an administrational aspiration to substantially increase military spending. Most notably, however, was likely the lack luster jobs report. It signals reason for additional dovishness from the Federal Reserve Board. An expectation that could increase rate cut expectations and send markets higher in the near term. The rate cut could be a catalyst for future inflationary risks. Additionally as the expectations of a rate cut increase, so do the risks of those expectations causing volatility if not met…
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