Weekly Market Brief: February 12, 2024

The S&P 500 has risen for 14 of the last 15 weeks, closing at record weekly highs for each of the last 5. The index is already up 5.4% for the year, splitting the performance of the growth-focused NASDAQ Composite (+6.5%) and the value-oriented Dow Jones Industrial Average (+2.6%). A further testament to the risk-on attitude that’s driving markets, Bitcoin last week rose 14%, closing at its highest level since December 2021. That’s all happened in spite of rising interest rates and a stronger US Dollar index, which were major headwinds to stocks in 2022 and 2023.

Macro Dashboard

The US economy proved to be more resilient than most economic forecasters thought possible in 2023, ending the year with GDP running at a healthy 3.3% annualized rate. A strong US consumer is to thank. Retail sales in December rose 5.6% year-over-year, even as excess savings from the pandemic dry up and student loan payments were resumed. This week, we’ll see how strong much appetite there was for spending in the final month of the holiday season, when December retail sales are reported. Spending has the backing of a strong labor market: unemployment fell back to 3.7% to end the year.

Recession in 2024 is possible as the effects of Federal Reserve policy actions come into full force, but looser policy is likely later this year with inflation well off of last year’s peak. The year-over-year change in core PCE fell below 3% for the time since March 2021. Despite all the heat they’ve taken along the way, Jerome Powell & Co. are closer than ever to threading the needle on this soft landing.

What’s Ahead

Here are the key data releases to keep an eye in the upcoming week: