The Weekly Wrap: January 23, 2023

Week in Review

Stocks were mixed last week, as last year’s leaders have begun to falter, and last year’s losers continue to rally. The Dow Jones Industrial Average, an index more heavily exposed to value-oriented sectors like industrials and financials, dropped 2.7%. The growth-oriented NASDAQ Composite, however, still managed to rise 0.5%. The NASDAQ is up more than 6% to start the year. The US Dollar index has now fallen for 10 of the last 14 weeks after dropping another 0.2% last week. That provided a further catalyst to commodities and cryptocurrencies, which are off to strong starts this year. Crude oil jumped 1.8%, gold rose 0.3%, and Bitcoin rose double-digits for the second straight week.

Relatively Speaking

Risk-on sectors are outpacing risk-off areas of the market over the past month. Communication Services has risen 12%, while Real Estate, Consumer Discretionary and Energy are all up nearly 7%. Consumer Staples, Utilities, and Health Care, meanwhile, all posted negative returns.

Year-to-date performances are largely the same. Growth-focused sectors like Communications, Consumer Discretionary, and Technology are outperforming the broader index, while safety and value-oriented sectors are lagging. It’s the inverse experience of 2022, when growth stocks led the market selloff.

What’s Ahead

Nearly 20% of the S&P 500 index will report financial results for the fourth quarter this week, with large industrial companies in focus. There isn’t much economic data in the early going. The Chicago Fed National Activity index is released on Monday, and the Richmond Fed’s Manufacturing survey comes out on Tuesday. We’ll also preliminary results from S&P Global’s January PMI survey that morning. The schedule fills up after Wednesday, though. On Thursday, we’ll get our first look at Q4 GDP, along with durable goods orders, new home sales, and the KC Fed’s Manufacturing index. On Friday, we’ll see updates on personal income and spending, including PCE, the Fed’s preferred measure of inflation. We’ll also have pending home sales and the University of Michigan Consumer Sentiment survey.

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