What We Are Watching This Week
- ISM Services
- Job Openings
- ADP Employment
- Consumer Credit
Highlights From Last Week
- S&P Case-Shiller home price index (20 cities)
- ISM manufacturing
Major stock indexes showed mixed performance during the holiday-shortened week, with broad Friday gains helping mitigate earlier losses. Early-week underperformance stemmed partly from year-end profit-taking, as the S&P 500 Index logged its fourth consecutive decline on Tuesday. Despite December’s slump, where roughly 70% of trading sessions saw more U.S. stocks declining than advancing, 2024 marked a standout year. The S&P 500 Index posted its second consecutive annual gain exceeding 20%, capping the best two-year stretch in 25 years. Similarly, the Nasdaq Composite ended the year up over 20%, achieving this milestone for the sixth time in the past eight years.
Canada’s largest stock market rallied strongly after the Christmas and New Year holidays, posting significant daily and weekly gains. The TSX climbed 175.51 points on Friday, closing at 25,073.54. Over the shortened trading week, the index advanced by 277 points, or 1.12%. Meanwhile, the Canadian dollar edged down, losing 0.20 cents to settle at 69.22 cents U.S.
In Europe, the pan-European STOXX Europe 600 Index rose modestly by 0.20% in local currency terms amid light trading and sparse news. However, individual markets were mixed: Germany’s DAX fell 0.39%, France’s CAC 40 dropped 0.99%, and Italy’s FTSE MIB declined slightly. The UK’s FTSE 100 Index bucked the trend, rising 0.91%, supported by a weaker British pound that benefited the index’s multinational constituents with overseas revenue.
The Chicago Business Barometer fell by 3.3 points in December, reaching 36.9. This marks the third consecutive monthly decline, placing the index at its lowest level since May 2024 and below the annual average for 2024. The downturn was largely attributed to a significant drop in New Orders and a decrease in Production. However, gains in Employment, Supplier Deliveries, and Order Backlogs helped limit the decline. In December, respondents were asked: “With potential tariff increases in the coming months, is your business taking any of the following precautions/considerations?” (Participants could select multiple options.) The top responses were “Increasing Inventories” (chosen by over 50%) and “Looking into On-shoring” (selected by over 40%).1
Existing-home sales rose 4.8% in November to a seasonally adjusted annual rate of 4.15 million, marking a 6.1% year-over-year increase. Sales improved in three major U.S. regions and held steady in the West, with all regions seeing year-over-year growth.
Key Highlights:
- Inventory: Total housing inventory fell 2.9% from October to 1.33 million units but was up 17.7% year-over-year. Unsold inventory equated to a 3.8-month supply.
- Prices: The median existing home price rose 4.7% year-over-year to $406,100, with price gains in all regions.
- Buyer Trends: First-time buyers accounted for 30% of November sales, up from October but slightly below last year’s. Cash sales comprised 25% of transactions, while investor and second-home purchases declined.
- Regional Performance:
- Northeast: Sales jumped 8.5% from October and 6.3% year-over-year, with a median price of $475,500 (+9.9% YoY).
- Midwest: Sales rose 5.3% monthly and annually, with a median price of $302,000 (+7.3% YoY).
- South: Sales increased 5.6% month-over-month and 3.3% annually, with a median price of $361,300 (+2.8% YoY).
- West: Sales were flat monthly but surged 14.9% year-over-year, with a median price of $628,200 (+4.0% YoY).
Market Insights: NAR Chief Economist Lawrence Yun highlighted growing home sales momentum due to job growth, higher inventory, and consumer adjustment to mortgage rates between 6-7%. Single-family homes led the growth with a 5.0% monthly rise, while condos/co-ops saw a 2.6% increase. Mortgage rates averaged 6.6% in mid-December, slightly lower than the previous month and year.2
In October 2024, the S&P CoreLogic Case-Shiller Indices revealed a 3.6% annual gain in US home prices, reflecting a slight deceleration from the 3.9% increase observed in September. The National Index recorded a 3.6% annual return, signaling a cooling pace of growth compared to the previous month. Similarly, the 10-City Composite reported an annual increase of 4.8%, down from 5.2%, while the 20-City Composite posted a 4.2% growth rate, a decline from 4.6% in September. Among individual cities, New York stood out with the highest annual price gain of 7.3%, followed by Chicago (6.2%) and Las Vegas (5.9%). On the other end of the spectrum, Tampa recorded the smallest growth at just 0.4%, underscoring the diverse trends across regional housing markets.3
On Thursday, the US Department of Labor reported that for the week ending December 28, seasonally adjusted initial jobless claims totaled 211,000, a decrease of 9,000 from the prior week’s revised figure. The previous week’s level was adjusted upward by 1,000, from 219,000 to 220,000. The 4-week moving average fell to 223,250, down 3,500 from last week’s revised average, which was increased by 250, from 226,500 to 226,750. Meanwhile, the total number of continued unemployment benefit claims across all programs for the week ending December 14 reached 1,974,581, an increase of 81,926 from the prior week. For comparison, 1,864,515 claims were filed in the same week in 2023.4
American manufacturers closed 2024 in a mild slump, consistent with much of the year, as the sector struggled with high interest rates and changing consumer spending patterns. The Institute for Supply Management’s manufacturing index rose slightly in December to 49.3%, a nine-month high, but remained below the 50% threshold indicating contraction. The index has signaled contraction in nearly every month since November 2022.
Key metrics showed mixed signals:
- New orders rose to 52.5%, the highest in years, suggesting improving demand.
- Production increased to 50.3%, barely reaching expansion territory.
- Employment dropped to 45.3%, signaling weakness in hiring.
- Prices rose modestly to 52.5%, nearing prepandemic levels.
Manufacturers remain hopeful that President-elect Donald Trump’s administration will introduce policies to boost the sector. However, proposals like high tariffs and stricter immigration controls could have mixed effects. High interest rates and subdued consumer demand for big-ticket items are expected to persist until rates fall and Trump’s economic policies take shape.5
| WK | Year To Date December 31, 2024 | |
| Dow | 1.39% | 19.16% |
| S&P500 | -0.50% | 26.47% |
| Nasdaq | 1.13% | 28.02% |
| S&P400 Mid-cap | 0.01% | 21.02% |
| Russell | 1.17% | 20.11% |
| TSX | 1.10% | 1.40%* |
| Oil | 4.80% | 3.20%* |
* Year to Date January 3, 2025
- https://chicago.ismworld.org/news-publications/reports/research-survey/
- https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
- https://www.spglobal.com/spdji/en/index-announcements/article/sp-corelogic-case-shiller-index-records-36-annual-gain-in-october-2024/
- https://www.dol.gov/ui/data.pdf
- https://www.ismworld.org/supply-management-news-and-reports/news-publications/inside-supply-management-magazine/blog/2024/2024-12/report-on-business-roundup-december-2024-manufacturing-pmi/
Important Information:
Warren Gerow is an independent investment wealth consultant to Sightline Wealth Management.
Sightline Wealth Management LP (“Sightline”) is an investment dealer and is a member of the Canadian Industry Regulation Organization (CIRO) and the Canadian Investor Protection Fund (CIPF).
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