Rover's Weekly Market Brief - 03/01/2024

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Economy

The U.S. Census Bureau reported that new orders for manufactured durable goods fell (-6.1%) to a seasonally adjusted $276.7 billion in January, the lowest reading since April 2020. This followed a (-0.3%) reading in December. A primary contributor to the decrease was transportation equipment, down three of the last four months, dropping (-16.2%) to $89.8B. New orders for nondefense aircraft and parts plunged (-58.9%), and orders for motor vehicles declined (-0.4%). On a year over year basis, new orders for manufactured durable goods shrank (-0.8%). Excluding transportation, new orders were down (-0.3%) month over month. Ex-defense orders declined (-7.3%) month over month. Core capital goods orders, which exclude the volatile aircraft and defense orders increased (+0.1%), this followed a downwardly revised (-0.6%) reading for December. Shipments of manufactured durable goods declined (-0.9%) to a seasonally adjusted $279.0 billion in January, down from a (-0.6%) decline the previous month, and up (+1.6%) year over year. Core durable goods shipments increased (+0.8%) in January up from a (+0.1%) reading in December, and up (+2.4%) year over year.

The Commerce Department’s second estimate on the fourth-quarter gross domestic product (GDP) growth reported the economy expanded at an annual rate of (+3.2%), down slightly from the advanced estimate of (+3.3%). The slight drop was attributed to a downward revision to private inventory investment that was partly offset by upward revisions to state and local government spending and consumer spending. Private inventories instead of adding .07 percentage points (pp) to the GDP subtracted (0.27 pp). State and local government spending was revised up from adding (0.40 pp) to adding (0.58 pp) to the GDP. Consumer spending which accounts for over two-thirds of the U.S. economy was revised from adding (1.91 pp) to adding (2.00 pp) to the GDP. Real disposable personal income was revised down (0.3 pp) to show a (+2.2%) increase. Other notable revisions include upward adjustments to key measures of inflation. The PCE price index was revised from (+1.7%) to (+1.8%). Core PCE a preferred measure of inflation by the Fed, was revised from (+2.0%) to (+2.1%). Personal consumption expenditures were revised from (+2.8%) to (+3.0%).

The Bureau of Economic Analysis reported that personal income jumped 1.0% to $233.7 billion in January. This follows readings of (+0,3%), (+0.3%), and (+0.2%) over the previous months. Much of the increase in personal income came from government payments up (+2.6%). This follows readings of (+0.1%), (-0.2%), and (-0.2%) over the previous months. A (+3.5%) boost in social security was a contributing factor. Consumer spending slowed down as spending rose (+0.2%), down from (+0.7%) in December. When taking inflation into account, consumer spending showed a decline (-0.1%) for the month. Goods spending decreased (-1.1%) while services spending increased (+0.4%). PCE inflation continued its downward trend as the PCE price index reported at a (+2.4%) annual rate, up (+0.3%) for the month. This follows annual readings of (+2.6%), (+2.7%), and (+3.0%). The core PCE price index, which excludes food and energy and is a favorite gauge of inflation of the Fed, reported at an annual rate of (+2.8%), up (+0.4%) for the month. This follows annual readings of (+2.9%), (+3.2%), and (+3.4%). The report shows that food and energy have been stubbornly holding inflation higher.

Upcoming Economic Reports:

Tuesday March 5 – Factory Orders (MoM) (January)

Friday March 8 – Unemployment Rate (February)

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
GitLab (GTLB)	Nordstrom (JWN)	Campbell Soup (CPB)	Broadcom (AVGO)	AltaGas (ALA.TO)
Ocular Therapeutix (OCUL)	Target (TGT)	Foot Locker (FL)	Costco Wholesale (COST)	Algonquin Power (AQN)