Markets fell this week. Markets were closed on Monday in observance of Martin Luther King Jr. Day. Stocks recovered some suffered earlier in the week losses on Friday but wasn’t enough as the S&P 500 dropped just under 0.7% for the week.
Updated inflation data and housing data highlighted economic reports over the week while earnings season continued w1ith some heavy hitters such as Goldman Sachs (GS), Morgan Stanley (MS), United Airlines (UAL), and Netflix (NFLX).
Meanwhile, Alphabet (GOOG) carried on the trend of big tech cutting down its workforce with Google announcing plans to lay off 12,000 employees or roughly 6% of its total workforce. Moderna (MRNA) on the other hand got some positive news with its experimental RSV vaccine showing to be 84% effective against respiratory symptoms in older adults.
Producer Prices Fall
New producer price data from the December Producer Price Index (PPI) showed overall producer prices falling 0.5% last month. Analysts had expected a drop in prices of only 0.1% but a large drop in energy prices of 7.9% pushed that overall number way down. In fact, core prices (excluding food and energy) actually met expectations with a 0.1% increase in December.
Both numbers were still down from their 0.2% rise in November as price pressures look to finally be getting under control. It only took unprecedented interest rate hikes and overall tighter policy to get it this far.
Housing Data
Outside of the PPI report, new housing data highlighted economic reports with housing starts, building permits, and existing home sales for December all releasing towards the end of the week. The data was mixed but overall positive as housing starts and existing sales surpassed estimates with 1.382 million starts and 4.02 million sales.
Alternatively, building permits underperformed with 1.33 million permits compared to the expected 1.37 million. Lastly, all the housing data was down from November which had 1.401 million housing starts, 1.351 million permits, and 4.08 existing sales.
Meanwhile, initial unemployment claims came in far below estimates with 190,000 claims versus 212,000 expected after reporting 205,000 new claims the week prior.
Earnings
Goldman Sachs and Morgan Stanley got earnings season off to a rough start, both missing on earnings estimates with Goldman missing on revenue as well with it seeing steep declines in investment banking and asset management revenues. Morgan Stanley meanwhile at beat revenue estimates with record wealth management revenue.
United Airlines managed to continue the momentum for airlines after Delta (DAL) surpassed estimates last week. United topped estimates and said it will still achieve its 2023 pre-tax margin rate of 9%.
Lastly, Netflix ended the week on a good note despite missing earnings estimates as its impressive subscriber growth led to its stock price rising more than 8% after the report.
All in all, the S&P 500 fell 0.68%, the Dow Jones Industrial Average dropped 2.7%, and the NASDAQ gained 0.55%.
