Break on Through to the Other Side?
January Movements:
We entered last weekend with the S&P500 up +3.47% for the year and the Nasdaq up +6 .21%. Year to date, opposite 2022, the Dow Jones Industrial average is lagging the growth indexes. During a holiday-shortened week, Friday saw another intense breadth thrust day with the NYSE showing an advance-to-decline ratio of 4-to-1 on options expiration day for January.
The S&P 500 finished the week down -0.7%, with industrials, utilities, and consumer staples lagging. The energy and technology sectors led the best groups higher. Semiconductors continue to reverse their horrible 2022 performance.
On the economics, fixed income, and bond side last week, the Producer Price Index (PPI) declined by more than expected, triggering a Treasury rally. Retail spending was soft. U.S. retail sales fell -1.1% in December. Core retail sales excluding autos, gas, and building materials were down -0.7%.
Higher interest rates combined with higher prices have zapped unit demand in many areas. Other data such as U.S. industrial production fell -0.7% in December. Manufacturing is down year over year for the first time since the height of the pandemic. The 10-year Treasury yield hit its lowest level since September of 2022.
Earnings season continues to ramp up with Goldman Sachs (GS) laying an egg, but Morgan Stanley (MS) and Blackrock (BLK) are delivering great numbers. Netflix’s (NFLX) strong subscriber numbers provided the biggest positive surprise as the stock continues to fight back from its abysmal 1h22.
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