The mood on Wall Street stayed positive during the second week of the new year, which ended with all three major stock indexes again reaching record highs. The Dow, S&P 500 and the Nasdaq have now scored between 4.2% and 5.2% gains, just over the last two weeks. That pace can’t last, but it looks like investor optimism about the economy will. Fourth quarter earnings season unofficially began Friday, and although analysts expect mixed performances from financials, earnings overall should be strong.
Although the Producer Price Index (PPI) showed wholesale prices dipped a smidge in December (first time in more than a year), they’re up 2.6% from a year ago. That’s visibly above the Fed’s 2% inflation target. The Consumer Price Index (CPI) put consumer prices up 2.1% for the year, with Core CPI, excluding volatile food and energy numbers, 1.8% ahead for the year. The Fed may also get more comfortable about raising rates after seeing that December’s Retail Sales report showed 5.4% growth for the year, a decent sign of an economy picking up.
The week ended with the Dow UP 2.0%, to 25803; the S&P 500 UP 1.6%, to 2786; and the Nasdaq UP 1.7%, to 7261.
Bonds hate inflation, so this week’s reads in that department spelled price dips in the credit market. The 30YR FNMA 4.0% bond we watch finished the week down .44, at $104.09. For the week ending January 11, Freddie Mac’s Primary Mortgage Market Survey showed national average 30-year fixed mortgage rates rose a few basis points, but remain below where they were a year ago. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?…The National Association of Realtors reports 88% of all buyers financed their homes the past year, but 98% of younger buyers financed, showing finding financing is especially key for young homebuyers.