As we move further into the second week of February, the financial markets have been busy digesting economic data and shifting investor sentiment. Let’s break down what we learned last week.
Job Market: A Mixed Bag
Hiring slowed in January, with 143,000 jobs added—falling short of expectations. Despite this, the unemployment rate actually ticked down to 4%. What’s happening here? A combination of factors, including previous months’ revisions and shifts in workforce participation, may be at play.
Market Movers: International Stocks Lead
If you’ve been following international markets, you may have noticed that they’ve outperformed U.S. stocks lately. A weaker U.S. dollar helped boost international equities, even as concerns about tariffs persisted. Emerging markets, in particular, had a strong showing.
Interest Rates and Inflation: What’s the Outlook?
The Treasury yield curve continued to flatten, signaling some economic uncertainty. At the same time, inflation expectations jumped, with the one-year forecast rising from 3.3% in January to 4.3% in February. This could play a role in shaping the Federal Reserve’s next moves on interest rates.
Sector Highlights: Manufacturing vs. Services
- Manufacturing confidence improved more than expected, marking its first expansion in over two years. That’s a promising sign for the industrial sector.
- Services, on the other hand, saw a dip as new order growth slowed. This suggests that while parts of the economy are picking up, others may be cooling down.
What to Watch This Week
Several key economic reports are on deck:
- Small Business Confidence (Tuesday, February 11): Optimism is expected to dip slightly after a strong fourth quarter.
- Consumer Price Index (Wednesday, February 12): Inflation is forecasted to hold steady at 2.9% year-over-year.
- Producer Price Index (Thursday, February 13): Expectations are for a slight decline in producer-level inflation.
- Retail Sales (Friday, February 14): Headline retail sales are projected to remain flat, but core sales (excluding volatile items like gas and autos) could show some growth.
Final Thoughts
Markets are constantly shifting, and while some sectors show strength, others present challenges. Whether you’re investing for the long term or simply keeping an eye on economic trends, understanding these movements can help you stay informed and prepared.
Tom Hine is a CERTIFIED FINANCIAL PLANNER® professional and owner of Capital Wealth Management. He works with individuals and families on financial planning, retirement strategies, and investment management. With offices in Glastonbury and Wilton, CT, Tom serves clients across Connecticut and throughout the U.S. Connect with Tom
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