John Hancock: Weekly Market Recap Week Ended January 19

Consumer sentiment surge

A survey of U.S. consumers recorded a strong rebound in sentiment for the second month in a row, resulting in the biggest two-month gain since 1991. The University of Michigan’s January sentiment reading rose to 78.8, up from 69.7 in December and 61.3 in November. Consumers reported greater optimism that inflation will continue to ease.

Earnings deflation

Analysts’ slightly negative expectations for earnings season were scaled back as a second week’s batch of quarterly results came in. As of Friday, fourth-quarter net income was expected to decline 1.7% compared with the year-ago quarter, based on S&P 500 companies that have already reported plus projections for those that haven’t yet reported. In the previous week, analysts had forecast a 0.1% decline, according to FactSet.

Home sales slump

High interest rates weighed on the U.S. residential real estate market in 2023, as the National Association of Realtors on Friday reported that existing home sales fell to the lowest full-year level since 1995. Last year’s total of 4.09 million home sales was down 19% from 2022’s 5.03 million.

U.S. GDP ahead

Thursday’s scheduled release of the U.S. government’s initial estimate of fourth-quarter GDP is expected to show that the economy remained on a solid growth track but slowed relative to the third quarter when GDP grew at a strong 4.9% annual rate. A running estimate released on Friday by U.S. Federal Reserve economists projected a fourth-quarter growth rate of 2.4%.

Source: https://wmr.jhinvestments.com/