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U.S. Markets End the Week Down Amid AI Disruption Concerns
It was another mixed week for equity markets, as ongoing concerns about the disruptive potential of artificial intelligence pressured U.S. stocks, while international markets finished in positive territory. Global equities, as measured by the MSCI ACWI, were essentially flat for the week, up 0.02%, while domestic large-cap stocks, measured by the S&P 500, declined 1.35%. International developed and emerging markets outperformed, with the MSCI EAFE gaining just under 2% and the MSCI Emerging Markets Index rising more than 3% for the week.
U.S. Labor Market
U.S. hiring surprised to the upside in January, as the U.S. Bureau of Labor Statistics reported that employers added 130,000 jobs, well above expectations and marking the strongest monthly gain in over a year, while the unemployment rate edged down to 4.3% from 4.4% in December, with job growth concentrated in health care, social assistance, and construction, offset by declines in federal government and financial activities employment.
Core Inflation Rises
On Friday, the U.S. Bureau of Labor Statistics reported that consumer prices rose 0.2% month over month and 2.4% year over year in January, both below December’s readings and generally under consensus estimates, with lower energy prices contributing to the moderation. Core inflation, which excludes food and energy, increased 0.3% for the month, up from 0.2% in December and in line with expectations.
Earnings Season Update
With earnings season nearly three-quarters complete, overall results continued to come in well ahead of expectations, as S&P 500 earnings are now projected to grow 13.2% year over year, significantly above the 8.3% growth forecast at the start of the reporting period, reflecting stronger-than-anticipated corporate profitability.
Looking Ahead
For the week ahead, key economic data will include housing indicators, GDP, inflation readings, and Purchasing Managers’ Index reports for both the manufacturing and services sectors.
As Always
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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