Markets took a hit for the second week in a row as fresh economic data reignited concerns about inflation among investors. In the U.S., the S&P 500 fell 1.94%, the tech-heavy Nasdaq lost 2.34%, and the Dow Jones Industrial Average slid 1.86%. Internationally, the MSCI EAFE Index, which tracks developed overseas markets, dipped 0.49%.
Closer to home in Canada, the TSX Composite Index also saw a downturn, reflecting the global concerns affecting market sentiment. These shifts underscore the importance of staying informed and grounded in your long-term investment strategy, especially in times of market volatility.
Inflation Stymies Markets
The week started on a positive note, with stocks rallying across the board. However, by Tuesday, two key economic reports—a rise in job openings and a bump in the prices-paid index for service companies—sparked fresh concerns about inflation. Adding to the mix, rising Treasury yields added pressure on stocks, making it a bumpy ride for many investors.
Midweek brought a bit of a pause. On Wednesday, markets remained mostly flat as investors digested the Federal Reserve’s December meeting minutes. These revealed that most committee members saw rising inflation risks, leaving market participants speculating about future rate hikes.
Thursday was a moment of reflection, as U.S. stock markets were closed in observance of President Jimmy Carter’s funeral.
By Friday, the mood shifted again. A December jobs report that came in hotter than expected left many wondering if the Fed might need to adjust its rate policy in 2025. On top of that, a dip in consumer sentiment added to the uncertainty, pulling stocks lower to end the week.
These kinds of weeks are a reminder of just how dynamic markets can be. If recent headlines have left you feeling uneasy about your investments, it could be a great time to revisit your strategy and ensure it’s aligned with your financial goals. Remember, it’s not about timing the market but staying the course through the ups and downs.
Source: YCharts.com, January 11, 2025. Weekly performance is measured from Friday, January 3, to Friday, January 10. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.
When Good Becomes Bad News
In December, the economy added an impressive 256,000 jobs—100,000 more than economists had predicted—marking the second-highest monthly job gain of 2024. Unemployment also dipped to 4.1%, beating expectations and giving a positive snapshot of the labor market.
On the surface, this sounds like great news—and for workers, it absolutely is. But for the markets, it’s a bit more complicated. A stronger jobs market makes it less likely the Federal Reserve will feel pressure to adjust rates anytime soon, especially with inflation concerns still weighing heavily on investors’ minds.
This Week: Key Economic Data
Monday: Treasury Statement.
Tuesday: Producer Price Index. Fed officials Jeffrey Schmid and John Williams speak.
Wednesday: Consumer Price Index. Fed officials Thomas Barkin, Neel Kashkari, John Williams, and Austan Goolsbee speak. Fed Beige Book.
Thursday: Retail Sales. Import and Export Prices. Business Inventories. Homebuilder Confidence Index.
Friday: Housing Starts and Permits. Industrial Production.
Source: Investors Business Daily - Econoday economic calendar; January 9, 2025
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Wednesday: JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK), Citigroup Inc. (C), The Charles Schwab Corporation (SCHW)
Thursday: UnitedHealth Group Incorporated (UNH), Bank of America Corporation (BAC), Morgan Stanley (MS)
Source: Zacks, January 9, 2025. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
“The very least you can do in your life is to figure out what you hope for. And the most you can do is live inside that hope. Not admire it from a distance but live right in it, under its roof.”
– Barbara Kingsolver
Dave is at the hardware store to buy something for his house. Yesterday, he bought 1 for $1. The week before, he purchased 10 for $2, and his friend bought 100 for $3. Today, he bought 907 for $3. If the prices haven’t changed, how is this possible?
Last week’s riddle: David put on a white shirt with three large holes in it and went to the grocery store. No one gave him a funny look; no one objected to it. What kind of shirt was David wearing?
Answer: A white t-shirt (the holes were the collar and sleeves of the shirt)
Melissa's 3 pets living their best lives.
Footnotes and Sources
- The Wall Street Journal, January 10, 2025
- Investing.com, January 10, 2025
- CNBC.com, January 6, 2025
- The Wall Street Journal, January 7, 2025
- CNBC.com, January 8, 2025
- MarketWatch.com, January 8, 2025
- CNBC.com, January 10, 2025
- The Wall Street Journal, January 10, 2025
- TradingEconomics.com, January 10, 2025
- IRS.gov, September 30, 2024
- Mindbodygreen.com, October 3, 2024
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.