Economic Update 01/25/16

OIL REBOUND DRIVES STOCKS HIGHER

Thanks to frosty weather hitting the Northeast and a round of short covering, WTI crude settled at $32.19 on the NYMEX Friday – up 9% for the day and 9.4% for the week. Oil’s surge (and hopes of quantitative easing overseas) bolstered stocks: across four days, the Dow gained 0.66% to 16,093.51, the S&P 500 1.41% to 1,906.90, and the Nasdaq 2.29% to 4,591.18.

EXISTING HOME SALES PACE IMPROVES 14.7%

This December jump in resales was partly due to November transactions being delayed by new closing rules. Regardless, 2015 was a good year for homebuying – existing home sales rose 7.7%, according to the National Association of Realtors.

WEAK ENERGY PRICES HELP TO CURB INFLATION

Falling oil prices, rents, and food costs factored into the 0.1% December retreat of the Consumer Price Index (the core CPI rose 0.1%). The headline CPI advanced 0.7% in 2015 – the smallest annual increase in the past 50 years.

BUILDER ACTIVITY TAILS OFF IN DECEMBER

The Census Bureau reported a 3.9% dip in building permits in December. Housing starts also declined 2.5% last month, but they were up 10.3% year-over-year.

THIS WEEK: Monday, investors review earnings from Amgen, D.R. Horton, Halliburton, Kimberly-Clark, and McDonald’s. On Tuesday, a new Conference Board consumer confidence index arrives, plus the November S&P/Case-Shiller home price index and earnings from 3M, Apple, AT&T, Capital One, Chubb, Coach, Corning, Freeport-McMoRan, Grainger, Parker-Hannifin, Procter & Gamble, and U.S. Steel. December new home sales numbers and a Federal Reserve policy statement appear Wednesday, along with earnings from Ameriprise Financial, Anthem, Biogen, Boeing, Broadcom, Citrix, Dolby Labs, Discover, eBay, Facebook, General Dynamics, Hanesbrands, Norfolk Southern, PayPal, Qualcomm, SanDisk, Texas Instruments, and United Rentals. Thursday brings data on pending home sales and hard goods orders, initial claims numbers, and earnings from Abbott Labs, Airgas, Alibaba, Altria, Amazon, Bristol-Myers Squibb, Caterpillar, Celgene, Electronic Arts, Eli Lilly, Ford Motor Co., Harley-Davidson, JetBlue, Microsoft, Northrup Grumman, PulteGroup, Raytheon, Sherwin-Williams, Time Warner Cable, Under Armour, Stanley Black & Decker, Valero Energy, VISA, and Western Digital. The first estimate of Q4 GDP appears Friday, plus the University of Michigan’s final January consumer sentiment index and earnings from American Airlines, Chevron, Colgate-Palmolive, Honeywell International, MasterCard, Phillips 66, Praxair, Whirlpool, and Xerox.