Weekly Update – January 29, 2024
The Week on Wall Street
Stocks continued their upward climb last week as excitement around big tech continued; positive economic reports stoked investors’ belief that the Federal Reserve has pulled off a soft landing.
Stocks Power Ahead
Big tech was back last week, pushing the Dow and the S&P 500 to new highs early in the week as markets resumed the late Q4 rally.
The so-called “Magnificent Seven” stocks—comprising 28% of the S&P 500 Index—resumed their pole position at the head of the pack as investors maintained their artificial intelligence (AI)-related bullishness and rewarded widespread cost-cutting at many tech giants. While the rally fizzled on Friday, the week’s gains were slow but steady.1,2,3
The big economic news last week was better-than-expected economic growth and inflation news. Real Gross Domestic Product grew at a 3.3% annualized clip in Q4 2023, ahead of Wall Street consensus expectations of 2%.
The Personal Consumption Expenditures (PCE) Index, one of the Fed’s most favored inflation gauges, showed core inflation (excluding food and energy) cooled in December, with an annualized rate of 2.9%, beating consensus expectations. Core inflation was 3.2% on an annualized basis —its lowest level since March 2021. While the inflation update didn’t move markets much, it helped validate investors’ optimism that Fed policy has maintained economic growth while bringing inflation down.4
Earnings Season Feeds FOMO
The market digested Q4 earnings news from some of the largest companies, with enthusiasm feeling like FOMO. The “fear of missing out” drove much investor sentiment and seemed to build market momentum.
While the enthusiasm for AI continues to be one driver of technology stock prices, the spotlight last week was on layoffs. Over 23,000 workers at 85 tech companies have lost their jobs this month. The market appears to be rewarding the cost-cutting measures, with many tech giants repositioning themselves with AI in mind, and some analysts inferring that this emphasis on efficiency may encourage investors.5,6
THIS WEEK: KEY ECONOMIC DATA
Tuesday: FOMC Meeting. Consumer Confidence. Home Price Index.
Wednesday: FOMC Announcement/Fed Chair Press Conference.
Thursday: Jobless Claims. ISM Manufacturing Index. Fed Balance Sheet.
Friday: Employment Situation.
THIS WEEK: COMPANIES REPORTING EARNINGS
Tuesday: Microsoft Corporation (MSFT), Alphabet Inc. (GOOG, GOOGL), United Parcel Service, Inc. (UPS), Starbucks Corporation (SBUX)
Wednesday: Mastercard Incorporated (MA), The Boeing Company (BA), Automatic Data Processing, Inc. (ADP)
Thursday: Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), Meta Platforms, Inc. (META), Merck & Co., Inc. (MRK)
Friday: Exxon Mobil Corporation (XOM), Bristol Myers Squibb Company (BMY)
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1. The Wall Street Journal, January 22, 2024
2. CNBC.com, January 22, 2024
3. The Wall Street Journal, January 25, 2024
4. CNBC.com, January 25, 2024
5. Slickcharts.com, January 26, 2024
6. CNBC.com, January 26, 2024