Equity markets were mixed. The S&P 500 briefly moved above 7,000, but finished the week slightly higher. Large-cap stocks with cheaper prices relative to earnings outperformed high-growth shares. Small and mid-cap stocks lagged and ended lower. Communication services and energy led gains, while health care was the weakest sector. The economic backdrop softened. Conference Board consumer confidence fell to 84.5 in January from 94.2, the lowest level since May 2014. Initial jobless claims were 209,000 for the week ended January 24, close to the prior week’s 210,000. Continuing claims fell to about 1.83 million in the week ended January 17.
The Federal Reserve kept the federal funds rate unchanged at 3.50% to 3.75% after three consecutive cuts. The decision passed 10 to 2, with two officials preferring a 0.25 percentage point cut. Chair Jerome Powell said growth remains solid and inflation remains somewhat elevated, so policy will be decided meeting by meeting. Donald Trump nominated former governor Kevin Warsh to succeed Powell when his term ends in May, pending Senate approval.
The STOXX Europe 600 rose 0.44%. Germany and France declined, while Italy and the UK advanced, as earnings optimism offset trade and geopolitical concerns.
