February 6th – Weekly Update

  • During another politically focused period, U.S. equity markets experienced a flat week while both gold and oil finished higher. The 10-year U.S. Treasury yield closed at approximately 2.47%.
  • With 55% of S&P 500 companies having reported fourth quarter results, 65% have beaten earnings expectations while 52% have beaten sales expectations. According to FactSet, the fourth quarter blended earnings growth rate for the S&P 500 is 4.6%. If the index reports earnings growth for the quarter, it will mark the first time the index has recorded year-over-year earnings growth for two consecutive quarters since Q4 2014 and Q1 2015. Rent-A-Center, Momenta Pharmaceuticals and Mead Johnson Nutrition impressed this week; Rite Aid, Pitney Bowes and Under Armour were among the disappointments.
  • Following the end of its two-day meeting, the Federal Open Market Committee (FOMC) announced that it will maintain current interest rates. The Fed further stated that it “expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace.”
  • The U.S. jobs report cited the addition of 227,000 new jobs in January, beating the estimate of 175,000 and significantly above December’s addition of 156,000.
  • December personal income rose 0.3% month-to-month, slightly worse than the 0.4% gain expected but above November’s 0.1% gain. Wages and salaries rose 0.4% after falling 0.1% in November.
  • The January ISM manufacturing index came in at 56.0, beating the 55.0 consensus estimate and up from December’s 54.5 level. It was the highest reading since November 2014. New orders remained strong coming in at 60.4 in December compared to November’s 60.3 reading.
  • Personal consumption expenditure (PCE) rose 0.2% month-to-month in December, and was up 1.6% year-over- year. This was the highest year-over-year reading since matching that mark in September 2014. December spending rose 0.5%, in line with consensus and better than November’s 0.2% rise.
  • Consumer confidence eased in January, coming in at 111.8 versus the December level of 113.3 and below the 112.9 consensus estimate.
  • Pending home sales rose 1.6% in December month-to-month, better than the 0.6% increase expected and a bounce back from November’s 2.5% decline. Sales were up 0.3% year-over-year.

CPWM Weekly Market Monitor (2017.02.06)