Market Update – December 16th, 2024

Financial Markets

Stocks were mixed last week, as CPI and PPI came in warmer for the month of November. As of Friday, December 13th, the Nasdaq Composite rose 0.96%, while the S&P 500 dropped slightly by -0.03% in the week. The Dow Jones fell by -1.11%, and the Barclays Aggregate Bond Index fell by -1.29%.

Source: Zacks

Market News

November CPI

November’s Consumer Price Index (CPI) rose 2.7% year-over-year, as expected, with core CPI slightly higher at 3.3%. Monthly, headline and core prices both increased by 0.3%, marking a rise in inflationary pressures. Energy prices were a key contributor, with a 0.2% monthly increase, partially reversing recent declines.

Groceries saw a modest 1.6% increase year-over-year, but eggs stood out with a staggering 37.5% price jump at the grocery store, driven largely by an avian flu outbreak that has disrupted supply. Dining out costs also rose, climbing 3.6% over the past year. Meanwhile, new vehicle prices decreased by -0.7%, and used vehicles fell by -3.4%. Shelter prices climbed 4.7%, and transportation services continued to surge by 7.1%.

Source: BLS

Looking ahead, expectations are still set for a Federal Reserve rate cut this week. However, this warmer inflation print may introduce some uncertainty into the Fed’s decision-making process.

November PPI

Following last week’s CPI report, the Producer Price Index (PPI), which measures inflation facing businesses, came in hotter than expected. Annually, producer prices rose 3%, with core PPI up 3.5%. On a monthly basis, headline PPI increased by 0.4%, while core PPI saw a more modest 0.1% rise.

Goods prices led much of the November increase, rising 0.7% for the month. The primary driver was a 3.1% jump in food prices, which accounted for 80% of the overall advance in headline PPI. Among these, chicken egg prices surged an extraordinary 54.6%, making up a quarter of the total increase in goods prices.

Other notable price increases in goods included fresh and dry vegetables, fresh fruits and melons, processed poultry, non-electronic cigarettes, and residential electric power. In contrast, services prices rose a cooler 0.2%, marking a shift from previous months when service inflation had been running hotter than goods inflation.

November’s hotter-than-expected PPI suggests that rising wholesale prices could signal a tougher path for disinflation and further Federal Reserve rate cuts in the months ahead.

Source: BLS

Employment Trends Index

The Conference Board Employment Trends Index (ETI) rose to 109.55 in November, up from an upwardly revised 108.25 in October. This marks the first time in 2024 that the ETI has posted consecutive monthly gains, reflecting rising optimism among both jobseekers and businesses.

The share of consumers reporting that “jobs are hard to get” fell for the second month, dropping to 15.2% in November from 17.6% in October. Similarly, the share of firms stating, “jobs not able to fill right now”, has increased for two straight months, aligning with a rebound in job openings since September’s post-pandemic low.

Additional signs of labor market strength include a four-month decline in the share of involuntary part-time workers and a reduction in initial unemployment claims in November, following temporary disruptions caused by hurricanes. Although the labor market has cooled from its post-pandemic highs, these trends indicate it remains healthy and resilient.

Recession Indicators

As 2024 draws to a close, economic indicators continue to paint a mixed picture. Our recession indicator dashboard highlights four bearish indicators, three bullish, and one neutral, reflecting uncertainty about the economic outlook based on these data points.

Looking ahead, the Federal Reserve’s December FOMC meeting this week could play a pivotal role. Markets are closely watching for an expected rate cut and the release of the quarterly Summary of Economic Projections, which will provide insights into the Fed’s outlook for future rate cuts, GDP growth, and unemployment trends.

Summary

Markets were mixed this week as November inflation data came in hotter, raising concerns about the slowing pace of disinflation. Headline CPI rose 2.7% year-over-year, with core CPI at 3.3%, while rising food and energy costs drove both consumer and producer price indices higher, adding uncertainty to the Federal Reserve’s upcoming rate decision this week. Labor market indicators remained strong, with improving job optimism and declining unemployment claims, as reflected in the Employment Trends Index, highlighting a relatively resilient economy amid uncertainty.

We appreciate your continued trust.

Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

The information contained herein is general in nature. It does not take into account your particular investment objectives, financial situation, or needs. It is provided for illustrative or informational purposes only, and should not be construed as advice. Our advisors can meet with you to discuss your retirement plan.

Content is used with the permission of Synergy Asset Management. This information is being provided to you as it has been determined by SPG Advisors LLC to be suitable in relation to your portfolio, needs, objectives, and other considerations. SPG Advisors, LLC and Synergy Asset Management are affiliated. All such information is provided solely for convenience, educational, and informational purposes only. Past performance does not guarantee future results. All investing comes with risk, including risk of loss. No investment strategy can guarantee a profit or protect against loss in periods of declining values. All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form without the prior written permission of the publisher.

More Market Updates