Telemus Weekly Market Review

January 1 – January 5, 2018

The stock market welcomed the New Year with a bang, advancing to new record highs in each of this week’s four trading sessions – markets were closed on Monday in observance of New Year’s Day. The Nasdaq Composite led the way jumping 3.38% to 7136.56, the S&P 500 climbed 2.60% to 2743.15, and the Dow Jones Industrial Average rose 2.33% to 25295.87.

This week’s rally followed an impressive 2017 campaign for Wall Street, during which the S&P 500 surged nearly 20%, and defused the belief that the new lower tax rates, which took effect on Monday, would invite some profit taking at the start of the New Year.

Cyclical sectors, which typically do well when the outlook for the economy is favorable, set the pace this week with the technology, materials, and energy groups being the top performers.

Energy shares benefited from an increase in the price of crude oil, which touched a three-year high amid anti-government protests in Iran–although the protests weren’t expected to have an impact on the country’s oil production. Oil prices were also supported by the Department of Energy’s weekly inventory report, which showed that U.S. crude stockpiles declined by 7.4 million barrels last week. West Texas Intermediate crude futures gave back some gains on Friday but still ended with a weekly gain of 1.7% at a price of $61.47 per barrel.

Meanwhile, in the top-weighted technology sector, chipmakers had a solid week, bouncing back from some profit taking at the end of 2017; the Philadelphia Semiconductor Index ended the week higher by 5.8%. Intel struggled, however, following reports that its chips contain security flaws, its shares finished the week lower by 3.1%.

The minutes from the December FOMC meeting were released on Wednesday, showing that most FOMC members backed a continued path of gradual rate hikes. Some members even saw the possibility for more aggressive tightening due to the new tax code, which Fed officials expect will boost consumer and capital spending.

Investors also received the Employment Situation Report for December, which bucked the longstanding trend of above-consensus headline growth and lagging wage growth. Nonfarm payrolls increased less than expected for the month, coming in at 148,000, but the November reading was revised to 252,000 from 228,000. Average hourly earnings came in as expected, showing a month-over-month increase of 0.3%.

With the labor market believed to be approaching full employment, disappointing headline readings could become more commonplace. This would be indicative of employers struggling to find workers with the right skillset, which in turn should translate into upward pressure on wages.

The market dialed up its rate-hike expectations following this week’s economic data. The CME FedWatch Tool points to the March FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 68.1%, up from 51.7% last week. The 10 year U.S. Treasury note closed Friday at a yield of 2.477%.

January 8 – January 12 Economic Calendar

  • Monday
  • Eric Rosengren Speaks
  • TD Ameritrade IMX
    12:30 AM ET
  • Raphael Bostic Speaks
    12:40 PM ET
  • John Williams Speaks
    1:35 PM ET
  • Consumer Credit
    3:00 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • James Bullard Speaks
    1:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET
  • Redbook
    8:55 AM ET
  • Neel Kashkari Speaks
    10:00 AM ET
  • JOLTS
    10:00 AM ET
  • Consumer Credit
    3:00 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • James Bullard Speaks
    1:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Import and Export Prices
    8:30 AM ET
  • Charles Evans Speaks
    9:00 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • James Bullard Speaks
    1:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • PPI-FD
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury Budget
    2:00 PM ET
  • William Dudley Speaks
    3:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Consumer Price Index
    8:30 AM ET

  • Retail Sales
    8:30 AM ET
  • Business Inventories
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Eric Rosengren Speaks
    4:15 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • James Bullard Speaks
    1:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.