Weekly Market Insights

January 27, 2023 Volume 10 Issue 4

Signs that inflation continues to moderate combined with better-than-expected economic data pushed equity markets solidly higher for the week with the tech heavy NASDAQ again outperforming the broader markets, as investors look ahead to the FOMC’s first meeting of the year. 

Weekly Highlights: 

  • The Commerce Department’s initial reading of Q4’s Gross Domestic Product indicated that the US economy expanded at an annualized rate of 2.9%, slightly above the gain of 2.8% expected by economists. Growth in the second half of the year more than offset declines in the first half of the year, resulting in a gain of 2.1% for 2022, but down from 5.9% in 2021. 
  • The PCE Price Index, the Fed’s preferred inflation gauge, rose a modest 0.1% in December. Last month’s increase was led by a 0.2% gain in food prices, while energy prices slid 5.1%. Excluding the cost of food and energy, PCE rose 0.3%. On a y/y basis, the PCE Price Index eased to 5% from 5.5% in November, while core PCE eased to a 14-month low of 4.4%. 
  • The S&P Global Flash US Composite PMI increased 1.6 points to 46.6, a three-month high, although still in contraction territory since July 2022. The increase was led by the Services PMI which rose 1.9 points to 46.6, while the Manufacturing PMI edged up 0.6 points to 46.8, as business activity continued to shrink at the start of 2023, albeit at a slower pace. 
  • The Conference Board’s Leading Economic Index (LEI) fell 1.0% in December, its tenth consecutive decline, and well below expectations. Seven of the ten LEI components made negative contributions at yearend, while the six-month annualized rate of change slid 4.2%, signaling an elevated risk of recession in the coming months. 
  • Initial claims for unemployment insurance fell by 6,000 last week to 186,000, the lowest level since April 2020, and well below expectations. Continuing claims edged up to 1.675 million but remain historically low, suggesting that laid off employees are able to find new jobs relatively quickly, indicating continued strength in labor demand. 

The Week Ahead:

  • Economic releases will include final readings on services and manufacturing activity for the month of January, consumer confidence, factory orders and the all-important employment situation report. 
  • The FOMC is widely expected to raise the federal funds rate by 0.25% to a range of 4.50% to 4.75%. 

Have a great weekend. 

The data and commentary provided herein is for informational purposes only. No warranty is made with respect to any information provided. It is offered with the understanding that Hilltop Holdings Inc., PlainsCapital Corporation, Hilltop Securities and PlainsCapital Bank (collectively “PCB”) are not, hereby, rendering financial and/or investment advice, and use of the same does not create any relationship with PCB. This is neither an offer to sell nor a solicitation of an offer to buy any securities that may be described or referred to herein. PCB does not provide tax or legal advice. Please consult your own tax or legal advisor regarding your specific situation.  Whether any of the information contained herein applies to a specific situation depends on the facts of that particular situation. Investment and estate planning and management decisions may have significant financial consequences and should be made only after consulting with professionals qualified to offer legal, accounting and taxation advice. Neither this document nor any portion of its content’s supplements, amends or modifies any account agreement with PCB. Unless otherwise noted:

*All economic release data referenced from public sources believed to be accurate. *The source of data for all charts/graphs included in this presentation is Bloomberg LP. *Figures quoted represent monthly changes (m/m) and are seasonally adjusted.

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