The markets celebrated another week of gains following another relative decline in U.S. inflation – from a high of 9.1% in June 2022, U.S. inflation was 6.5% YoY to the end of December. Last week, the S&P 500 index gained 2.71%, while the Bloomberg Long-Term U.S. Treasury index gained 1.43% in anticipation that the Federal Reserve will be less aggressive in raising interest rates and stabilizing prices. Major banks, including JP Morgan, Bank of America, and Wells Fargo, posted strong earnings by not only beating consensus earnings expectations but also affirming the economy’s current strength.
This week, short from Martin Luther King Jr’s Day, brings several closely watched economic reports as investors seek confidence in the economy. Wednesday’s report on Retail Sales and Industrial Production, followed by the Housing Starts and Existing Home Sales report, will hopefully reveal that the economy could be on its way to a “soft landing,” or at least cooling inflation without a significant recession. 4Q earnings sneak peek will be led by Charles Schwab, Morgan Stanley, Proctor & Gamble, and State Street before heading into peak earnings week starting the week of Jan. 22nd.