Yahoo Finance Happy New Year — What to know in the week ahead
It was an extremely volatile week for the stock market with wild swings and historic records. All three of the major indices closed the week higher. The S&P 500 (^GSPC) climbed 2.86%, and the Dow (^DJI) jumped 617.03 points, or 2.75%, while the Nasdaq (^IXIC) gained 3.97% to close out the week. It was the best weekly performance in a month for all three of the major indices.
As the federal government continues its partial shutdown at least until next week, the following departments will remain open: Defense, Veterans Affairs, Energy, Health and Human Services and Education. Additionally, the Securities and Exchange commission announced that the agency will also remain open with reduced staffing.
While the government shutdown affects 800,000 employees, if history is any indication, investors have little to worry about. Looking back at all the government shutdowns since 1976, the S&P managed to eke out gains for half of them, according to LPL Financial data.
Also, markets will be closed on Tuesday, January 1 for the New Year’s Day holiday.
Economic calendar
It’s a bit unclear when the economic data that has been postponed due to the government shutdown will be released.
Despite the partial government shutdown, the scheduled jobs report for December will still be released on Friday. Economists polled by Bloomberg are expecting the unemployment rate to have remain unchanged from November. The U.S. is expected to have added 180,000 jobs in December.
“We expect job gains to pick up in December and rise above their 3-month runrate, to 190k. We expect the unemployment rate to remain unchanged at 3.7%,” Credit Suisse wrote in a note to clients.
While Morgan Stanley agreed that the unemployment rate will remain steady for December, “our payrolls model along with a bottom-up look at industry trends in employment suggest a moderate.”
The bolded items below will be delayed due to the partial federal government shutdown.
Monday: Dallas Fed Manufacturing Activity, December (15.0 expected, 17.6 prior)
Tuesday: New Year’s Day holiday
Wednesday: Manufacturing PMI, December (53.9 expected, 55.3 priod)
Thursday: MBA Mortgage Applications, week ending December 28; ADP Employment Change, December (180,000 expected, 179,000 prior); Initial Jobless Claims, week ending December 29 (220,000 expected, 216,000 prior); Continuing Claims, week ending December 22 (1.701 million prior); Bloomberg Consumer Comfort, week ending December 30 (59.4 prior); Construction Spending month-on-month, November (+0.3% expected, -0.1% prior); ISM Manufacturing, December (57.8 expected, 59.3 prior); ISM Prices Paid, December (57.8 expected, 60.7 prior)
Friday: Change in Nonfarm Payrolls, December (180,000 expected, 155,000 prior); Change in Manufacturing Payrolls, December (21,000 expected, 27,000 prior); Unemployment Rate, December (3.7% expected, 3.7% prior); Average Hourly Earnings month-on-month, December (+0.3% expected, +0.2% prior); Markit U.S. Composite PMI, December (53.6 prior); Markit U.S. Services PMI, December (53.5 expected, 53.4 prior)
There are no major corporate earnings reports scheduled for next week.
The good news for investors in the new year is that Wall Street strategists’ agree that despite the market turbulence this year, a recession isn’t likely in 2019. However, consensus is that there will be a global economic slowdown.
“After two years of above-trend growth, the global economy is likely to slow back to trend over the course of 2019 due to a less friendly policy environment,” Bank of America Merrill Lynch wrote in a note to clients. Nevertheless, “[while] the global backdrop has weakened, but we think it is too early to focus on recession risks.”
Barclays offered up some advice in a note to investors for 2019. “Investors need to lower their expectations and be nimble ... This is by no means a call for the start of a bear market.”
So while the market has suffered quite a bit in the past couple of months, strategists don’t appear too worried about a recession any time soon.
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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