Stocks ended the week with modest gains in most indices as traders wait to see progress on additional stimulus. Helping the markets were Q4 earnings continuing to come in with year over year growth. Also, reductions in infections and limited re-openings in parts of the country helped support the markets.
The global semiconductor shortage continues to constrain automotive output. The Biden administration has gotten involved to see what actions government can do to help alleviate the shortage. While Taiwan Semiconductor Manufacturing Co. has announced a new plant in Arizona, it will not be operational until 2024. Samsung is also looking to add a plant in the U.S. One possibility is the easing of some blacklisting of Chinese semiconductor companies.
Treasury yields rose with the 30-year bond yield closing at 2.011% and the 10-Year note closing at 1.206%. Crude oil rose to $59.62 a barrel while natural gas rose to $2.913 per MMBTUs. The U.S. dollar index fell to 90.46 and gold rose to $1819.70 an ounce.
In the economic numbers this week:
- China reported:
- The Consumer-price index fell 0.3% in January from a year earlier. The deflationary number was largely due to a decline in pork prices that were elevated a year ago due to African Swine Fever.
- The producer-price index rose 0.3% in January from a year earlier.
- The National Association of Realtors reported that the median price for a single-family home rose a record 14.9% to $315,000 in the fourth quarter of 2020. This rate of increase beat the previous record set in 2005.
- The United Kingdom’s Office of National Statistics reported the gross domestic product fell 9.9% in 2020, the biggest contraction in over 300 years. The 2020 contraction came despite an annualized growth rate of 4% in the fourth quarter. Compared to other countries:
- France GDP fell 8.3%
- Italy GDP fell 8.8%
- Germany GDP fell 5%
- United states GDP fell 3.5%.
- The Labor Department reported:
- A seasonally adjusted 793,000 workers filed initial claims for unemployment in the week ending February 6th. This was an decrease of 19,000 from a revised 812,000 the week before.
- The 4-week moving average, designed to smooth out volatility, was 823,000, an decrease of 33,500 from the previous week’s revised average.
- Continuing claims fell from a revised 4.7MM to 4.6MM in the week ending January 30th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs rose from 17.8MM to 20.4MM the week ending January 23rd.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The consumer-price index rose 0.3% for the month of January, up from a 0.2 increase in December. From a year earlier consumer prices have risen 1.4%. Gasoline prices rose 7.4% in January while plane tickets fell 3.2%. Over the past 12 months, excluding volatile food and energy, prices have also risen 1.4%
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the past week:
- Field production of crude oil increased from 10.9MM barrels per day to 11.0MM BPD.
- Natural gas storage fell 171BN cubic feet and is above the average level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 7 to 306. The number of active natural gas rigs fell 2 to 90.
- Factset reported with 74% of S&P500 companies reporting that the blended earnings increase from Q4 2019 was 2.9%.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.