THE MARKETS
Wait! What just happened?
Last week, investors were inundated with market-moving data and news. Stock markets gyrated as investors tried to process everything that was occurring. Here’s some of what happened:
China Surprised the Artificial Intelligence Industry
The week got off to a rough start with major United States stock indices declining sharply on concerns about competition from China in the artificial intelligence (AI) space. AI-related technology stocks sold off after a Chinese start-up released a less expensive AI model, raising concerns that current tech stock valuations may be too rich. It’s interesting to note. A few weeks later, articles are started coming out that perhaps the Chinese version was not what it was cracked up to be. In fact, they may have misrepresented the strength of the chips that they were using. I read an article just today where it was programmed to not give any negative information about China itself. So you have to really question is it truly AI or not. Once again time will tell.
Companies Performed Well
Last week, fourth-quarter earnings reports bolstered investor optimism. So far, 36 percent of the companies in the Standard & Poor’s (S&P) 500 Index have reported on fourth-quarter earnings. Seventy-seven percent of those companies have reported earnings that exceeded estimates, reported John Butters of FactSet.
Economic Growth Continued
In addition to upbeat earnings news, economic data released last week showed the U.S. economy continued to grow in the fourth quarter of 2024.
Inflation Persisted
Last week’s inflation data was less encouraging. The Personal Consumption Expenditures Index, which is one of the Federal Reserve’s favored inflation measures, showed that headline inflation moved higher in December, rising to 2.6 percent annualized from 2.4 percent annualized in the previous month. Core inflation remained steady at 2.8 percent annualized.
The Federal Reserve Paused
The Fed left rates unchanged last week. The range for the federal funds rate remained 4.25 percent to 4.50 percent.
Uncertainty Abounded
Government policy proposals arrived at a rapid pace, creating uncertainty. The White House Office of Management and Budget issued a memo temporarily pausing disbursement of government grants and loans, but no one was certain how the pause would affect the economy. “The federal government gives $1 trillion in grants to state and local governments alone, for everything from physical infrastructure and public safety to health and social services. Removing this money from the economy would represent a huge economic shock,” reported Samantha Sanders and Josh Bivens of the Economic Policy Institute. A federal judge temporarily blocked the freeze.
Tariffs Threats Loomed
Tariff talk had a more immediate effect on markets than the spending pause. U.S. stocks slipped lower on Friday after the White House indicated it will move forward with tariffs on Canada, Mexico, and China. Once again after the hot headlines. Reality set in with the negotiations in both Mexico and Canada tariffs got adjusted with negotiations.
Investors had a lot to consider last week. As the dust settled and the exchanges closed for the week, the Dow Jones Industrial Average had recovered its losses and moved slightly higher. The S&P 500 and Nasdaq Composite Indices had regained some losses but ended the week lower. All three indices had gains over the full month, reported Lisa Kailai Han of CNBC. The yield on the benchmark 10-year U.S. Treasury fell sharply on Monday and moved higher over the week.
WHAT DO YOU KNOW ABOUT THE SUPER BOWL AND GAME DAY PARTIES?
You might be surprised to learn that many of the friends and family who gather to watch the Super Bowl are more interested in the snacks than the game. A recent survey from Talker Research found that 48 percent of respondents care about who wins the game. Fifty-four percent said the food served would decide whether a Super Bowl was great. See what you know about the Super Bowl and game day gatherings by taking this brief quiz.
Test your knowledge on the holidays by taking this brief quiz:
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Which team has never played in a Super Bowl?
- A) Cleveland Browns
- B) Jacksonville Jaguars
- C) Houston Texans
- D) All of the Above
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What are the top three foods guests want to eat during the Super Bowl?
- A) Hot wings, barbecue, and seven-layer dip
- B) Chili, pigs-in-a-blanket, and chips
- C) Nachos, pizza, and brownies
- D) Buffalo chicken dip, sliders, and cowboy caviar
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Approximately, how much do Super Bowl tickets cost this year?
- A) $2,500 to $25,000
- B) $3,500 to $35,000
- C) $4,500 to $45,000
- D) $5,500 to $55,000
What’s your favorite part of the Super bowl?
Focus – Think About It
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