This Weekly Market Update reviews the top market headlines: Leading Indicators Register Tenth Straight Decline, U.S. GDP Grows in Q4, Consumers’ Outlook Improved in January.

Top Three Market Headlines

Leading Indicators Register Tenth Straight Decline: The Conference Board announced last week that its Leading Economic Index (LEI), a composite of ten U.S. economic indicators intended to signal turning points in the economy, decreased by 1.0% in December. The index has now declined for ten consecutive months, and in aggregate has fallen by nearly 6% over this period. December's report reflected worsening conditions in the labor markets, manufacturing, housing construction, and financial markets. According to the Conference Board, the ongoing decline in the LEI "continues to signal recession for the U.S. economy in the near term."

U.S. GDP Grows in Q4: The Bureau of Economic Analysis reported that real (inflation-adjusted) U.S. gross domestic product (GDP), a measure of all goods and services produced, rose at a seasonally-adjusted annual rate of 2.9% in the calendar quarter ended December 31, 2022. This was the second straight quarter of positive growth for GDP, which had compressed in each of the first two quarters of 2022. Growth in Q4 reflected increases in consumer spending, government spending, and private inventory investment across manufacturing, mining, and utilities companies. On the other hand, fixed investment activity declined materially, led by a decrease in housing construction.

Consumers' Outlook Improved in January: U.S. consumers' views of current and future economic conditions improved in January, according to the Index of Consumer Sentiment published by the University of Michigan. The January reading of 64.9 was 9% higher than in December, while remaining 3% below the level from a year ago. Consumers' inflation expectations fell in January for the fourth straight month and hit their lowest level since April 2021, but remained well above pre-pandemic levels. Despite the improved sentiment in January, two-thirds of consumers are expecting to see an economic downturn this year, according to the report.

As of January 30, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 2.14% 7.42% 7.42% -4.77%
S&P 500 2.48% 6.11% 6.11% -4.35%
Russell 2000 2.37% 8.58% 8.58% 0.40%
MSCI EAFE 1.40% 8.55% 8.55% -1.58%
MSCI Emerging Markets 1.44% 9.95% 9.95% -9.22%
FTSE NAREIT Equity 3.64% 9.93% 9.93% -7.03%
Bloomberg Commodity -0.37% -0.71% -0.71% 7.64%
Barclays U.S. Aggregate 0.09% 2.99% 2.99% -8.40%