Goldilocks Returns as Inflation Cools and Investor Optimism Rises:
Stocks roared back last week, fueled by upbeat Q4 corporate reports and economic news that helped stall inflationary fears.
The S&P 500 Index rose 2.91%, while the Nasdaq Composite Index advanced 2.45%. The Dow Jones Industrial Average led, picking up 3.69% on the week. The MSCI EAFE Index, which tracks developed overseas stock markets, added 2.00%.1,2

Source: Bloomberg Finance, L.P.
Goldilocks is Back
The “Goldilocks” narrative—an economy that’s neither too hot nor too cold—made a comeback last week.
Tuesday’s Producer Price Index report showed that wholesale prices rose less than expected in December—one piece of evidence suggesting a cooling economy.3
Stocks jumped out of the gate Wednesday after the December Consumer Price Index (CPI) report showed core inflation (minus volatile energy and food prices) rose less than expected. Investors also cheered Q4 reports from a handful of money center banks and positive news out of the Middle East.4
Stocks took a breather Thursday before pushing higher again on Friday as the S&P and Dow closed out their best week since early November, and the Nasdaq since early December. The yield on the 10-year Treasury note fell roughly 20 basis points over the week.5,6,7


Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
Slowing Inflation
Investors welcomed the inflation reports, believing wholesale and consumer prices might trend lower in 2025.
First, producer prices came in at 0.2 percent, which was less than the 0.4 percent increase anticipated. Then consumer prices came in at 2.9 percent, slightly elevated, but the real story was core inflation. When you subtract out food and gas prices, CPI saw its smallest monthly increase since July.8
This Week: Key Economic Data

Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings

Source: EarningsWhispers
Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1The Wall Street Journal, January 17, 2024
2Investing.com, January 17, 2024
3CNBC.com, January 14, 2024
4The Wall Street Journal, January 15, 2024
5CNBC.com, January 17, 2024
6MarketWatch.com, January 17, 2025
7CNBC.com, January 17, 2025
8The Wall Street Journal, January 15, 2025
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