Last Week
For the well-diversified investors, it was the best of times:
Advancing issues outnumbered declining issues by a factor of 1.7-1, small caps and mid caps both surged around 4%, gold and the dollar each bounced back, while the yield on the 10-year Treasury inched 3 basis points lower to 4.21%. On the economic data front, the manufacturing index and consumer confidence both showed nice improvement. Corporate earnings were terrific, with the blended earnings growth rate for the fourth quarter rising to 13.0% from 11.9% the week before. The Dow Jones cruised through the 50,000 level on Friday to close at a new record high. At North Star, we suggest considering a balanced approach to the stock market, with broader exposure to equities, including small- and mid-cap stocks, beyond the popular large-cap growth stocks. We offer an actively managed ETF model that reflects that philosophy as well as our North Star Funds. Please get in touch with us if you are interested in learning more about those strategies.
On the other hand, for the momentum traders who have been prospering in recent years, it was the winter of despair:
Most of the Magnificent Seven and other top tech companies finished deep in the red, despite positive earnings reports. The Nasdaq Composite slid 1.8%, with Friday’s 2.2% rally numbing some of the pain. It was the season of darkness for crypto enthusiasts as Bitcoin reached a new low on Thursday’s post-market hours of $60,230.14 before rising more than 14% on Friday. The cryptocurrency has suffered a 43% decline since its peak of $126,223.32.
The softness in the labor market was also apparent, as the private sector added only 22K jobs while 108K jobs were cut. There is growing concern that AI will replace an increasing number of workers, which, while leading to greater productivity and higher corporate profits, will also have a material impact on employment dynamics.
On the Chicago Sports Scene, the Bulls, having given up and gotten better, have decided to see how bad they can be and traded everyone for future 2nd-round draft picks. If anyone thinks there is any merit in this “age of foolishness,” please email us and explain it.
This Week
Earnings season will enter its latter innings, with 78 S&P 500 companies reporting fourth-quarter results.
On the economic front, retail sales figures for December will be released on Tuesday. It will be interesting to see if the bump in consumer confidence spurred extra buying during the holiday season.
The January jobs report, delayed by the partial government shutdown, arrives on Wednesday, and the delayed January CPI arrives on Friday. Those two reports could have a significant impact on monetary policy expectations.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.