Warning: Fraudsters are currently sending out phishing e-mails that claim to be login requests sent by TruwestCredit.


Never follow login links you receive via e-mail or SMS! Before entering a TAN code, be sure to read the entire content of the TAN message!

© Copyright TruwestCredit

Recap & Commentary

Markets ended the week higher with the S&P 500 closing at its highest level since early December. A busy week dominated by corporate earnings releases and a slew of economic data provided bulls and bears alike with plenty of fodder to support their respective views.

Fourth quarter gross domestic product (GDP) was a good example. On a headline basis, the 2.9% growth helped assuage concerns that the economy is quickly headed for recession. But a more nuanced reading of the data presented a somewhat convoluted picture. Inventories for example were a positive contributor to GDP for the first time since 1Q22. Bulls likely viewed that as further evidence of improving supply chains and that businesses still expect reasonable consumer demand. Bulls on the other hand, likely viewed slowing consumer spending as a sign of fatigue in the face of increasing costs, suggesting future growth may be more lackluster as consumers reign in spending.

The Federal Reserve System is widely expected to raise rates by just 0.25% at its meeting this week. Bulls and bears will be listening closely to Fed Chair Jay Powell’s post-meeting comments to support their respective views. In the current environment, chances are they’ll both hear exactly what they want.

Economic Commentary

US economic activity (GDP) increased at a 2.9% annualized rate in 4Q22, better than the 2.8% consensus forecast but down from the 3.2% pace in 3Q22. Growth in the second half of 2022 more than reversed the two consecutive quarterly declines in 1Q22 and 2Q22. For the full year, GDP increased 2.1%. 4Q22 growth was broad based, with all four components – consumer spending, business spending, trade, and government spending – contributing.

Durable goods orders rose 5.6% in December, the most since July 2020, driven by a surge in aircraft orders. Excluding transportation, orders fell -0.1%. A more core measure of business spending fell -0.2% suggesting slowing demand. On a year-over-year basis, durable goods orders rose 9.7%, while core orders were up 3.3%, both coming in stronger than the prepandemic level.

New home sales increased 2.3% in December, up for the third consecutive month. The median price fell 6% to $442.1K. For the year, new home sales fell 16.4%, the largest annual decline since 2009.

Similar to other recent inflation readings, the Fed’s preferred gauge of inflation, personal consumption expenditures (PCE) slowed from 5.5% in November, to 5.0% in December. Core PCE, excluding food and energy prices, slowed 0.3% to 4.4%, in line with estimates. On a month-to-month basis, headline PCE rose just 0.1%, while core PCE rose 0.3%, up from November’s 0.2%.

Personal income slowed from 0.3% in November to 0.2% in December, while consumer spending contracted 0.2%. The decline was led by a -0.9% decline in goods spending while service spending was unchanged from November. The overall slowdown suggests a growing wariness on the part of consumers.

Of Note

Through Friday, 29% of S&P 500 companies had reported 4Q22 earnings. Thus far, 69% have beaten their earnings estimates. According to industry group FactSet; consolidated earnings growth for the quarter is expected to be -5.0%.

S&P 500 2.5%
Small Caps 2.4%
Intl. Developed 1.4%
Intl. Emerging 1.4%
Commodities -0.4%
U.S. Bond Market 0.1%
10-Year Treas. Yield 3.51%
U.S. Dollar -0.1%
WTI Oil ($/bl) $80
Gold ($/oz) $1,946

The Week Ahead

  • January Employment Report
  • ISM Manufacturing
  • ISM Services
  • JOLTs
  • Consumer Confidence
  • Weekly Jobless Claims
No Comments

Post A Comment