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Stocks Rebound
The major U.S. stock indexes posted gains, rebounding from declines the previous week that snapped a year-end 2023 streak of nine positive weeks in a row. At Friday's close, the S&P 500 was within 0.3% of the record closing high that the index set on January 3, 2022.
Two monthly price reports extended the recent trend of uneven progress to curb inflationary pressures. The Consumer Price Index posted a month-to-month rise of 0.3% in December—slightly above most economists’ expectations and the third monthly increase in a row. However, the Producer Price Index—which tracks prices that factories charge wholesalers—slipped 0.1%.
U.S. banks kicked off earnings season, with three of the biggest institutions reporting that fourth-quarter net income fell relative to the same quarter a year earlier. After Friday’s initial reports, analysts were forecasting that earnings for companies in the S&P 500 will slip by an average of 0.1%, according to FactSet. Such an outcome would mark the fourth quarter out of the past five with a negative earnings growth rate.
Mixed reports on inflation trends and shifting market views of the interest-rate outlook fueled a bumpy week in the bond market. After closing the previous week at 4.04%, the yield of the 10-year U.S. Treasury bond rose as high as 4.07% on Thursday before pulling back to 3.96% at Friday's close.
A Japanese stock index surged more than 6% for its biggest weekly gain since March 2020. The surge left the index at its highest level since February 1990, when an asset price bubble in Japan began to pop, leading to a long slump for Japan’s economy and the nation’s stock market.
The price of Bitcoin, the most widely traded cryptocurrency, faded on Friday after jumping to the highest intraday level since March 2022. Bitcoin briefly eclipsed $48,000 on Thursday, up from a recent low of around $25,000 in September 2023. On Friday, the cryptocurrency was trading below $44,000.
Heightened geopolitical tensions in the Middle East fueled a modest rally in oil prices on Friday. U.S. crude was trading around $73 per barrel—up from a recent low of around $68 on December 12 but far shy of its mid-October level of around $87.
A report scheduled to be released on Wednesday will provide an update on U.S. retail sales activity during the holiday shopping season. The data on December sales follows a November report that recorded an unexpectedly strong 0.3% sales increase compared with the previous month’s 0.2% decline.
Source: John Hancock Investment Management
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