Economy
The economy grew at a slower-than-expected pace in the fourth quarter, expanding by just 1.4%. The government shutdown which ran from October 1 through November 12 was blamed by the Bureau of Economic Analysis at least in part for the slow growth, which attributed about a 1% reduction to growth. While the BEA's report is detailing events from the end of last year, S&P Global's Flash report this week showed a slowdown in overall business activity. They cited weakening demand, higher prices, and adverse weather leading to the slowest pace of business growth in 10 months. While business and economic growth may be cooling, inflation heated up in December by way of the latest personal consumption expenditures (PCE) data. Core PCE (excluding food and energy prices) came in at the highest reading since April 2024. These latest reports paint a picture of an economy with moderating growth and inflation lingering above where the Fed would like to see it.
Also worth noting - mortgage rates fell to a 4-year low this week as we head into the Spring season where homebuying activity is expected to pick up.
Markets
The S&P 500 regained some ground this week in a 4-day trading session, rising 1.07% to within 1% from the previous all-time high. With Q4 earnings season largely in the rear view mirror, corporate revenues grew by 9%, the highest rate in 3 years. FactSet reported that the expected Q4 revenue growth on September 30 was 6.5% before being raised to 7.8% on December 31. Despite beating the top line number, the S&P 500 has risen just 0.93% in 2026. Next week we'll get Nvidia's Q4 earnings report, and with companies coming under pressure for the immense capital expenditures commitments on AI, it will be very interesting to hear from one of the largest benefactors of that spending.
What We're Reading
- When Did Chicken Become the Most Expensive Thing on the Menu?- NY Times
- Still Working in Retirement?- Morningstar
Have a great weekend.
Dogwood Wealth Management