STOCKS RISE AGAIN: Most tech companies have reported their fourth-quarter results, and most have exceeded expectations. This has been one of the fundamental drivers of the stock rally. On Friday, the tech-heavy NASDAQ Composite closed more than 20% higher than its Christmas Eve low. In addition to the tech rally, a trade deal with China is looking more likely, and that positively influenced markets last week. All major U.S. stock indices ended the week up over 2%.
RETAIL SALES WERE NOT GREAT IN DECEMBER: Retail sales in the U.S. fell 1.2% in December from the prior month (seasonally adjusted figures), the biggest monthly drop in about ten years. Data coming in to date had not indicated such an outcome for the month. The report was so far off expectations that some analysts questioned its accuracy and wondered if the partial government shutdown caused quirks in the data. Amazon reported that its fourth quarter revenue was up 20% from a year earlier. Regardless, this report seemed to be the catalyst for the only negative day on Wall Street last week.
INDUSTRIAL PRODUCTION: In January, U.S. industrial production decreased 0.6% after rising 0.1% in December. January was 3.8% higher than January of a year ago. The current level is 25.6% higher than the recession low and 3.8% above the pre-recession peak. That was one bad recession.
INFLATION STALLS, FOR NOW: According to the U.S. Bureau of Labor Statistics, there was no inflation in January. The CPI-U (Consumer Price Index for all urban consumers) was unchanged. Food rose 0.2% in January while energy fell 3.1%. Apparel rose 1.1%. Medical care rose 0.2%. If you take food and energy out of the index, the inflation measure rose by 0.2%. Inflation will likely tick up, however, now that many consumer-goods companies have announced price hikes. Proctor & Gamble, Colgate-Palmolive, Clorox, and Church & Dwight have all stated that they are raising prices due to higher prices for raw materials and transportation.
REFERENCES: INDUSTRIAL PRODUCTION: https://www.calculatedriskblog.com/2019/02/industrial-production-decreased-06-in.html
RETAIL SALES WERE NOT GREAT IN DECEMBER:https://www.wsj.com/articles/retail-sales-declined-at-fastest-pace-since-2009-in-december-11550151440
INFLATION STALLS AGAIN: https://www.bls.gov/news.release/cpi.nr0.htm; https://www.wsj.com/articles/prepare-to-pay-more-for-diapers-clorox-and-cat-litter-11549805401