US economic activity strengthened in December, according to the Chicago Fed National Activity Index. This benchmark rose to the strongest reading last month since May, reflecting a firmer pace of growth at 2024’s close.

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Concerns about the competitive threat posed by Chinese artificial intelligence lab DeepSeek sparked a selloff in US stocks on Monday, taking an especially heavy toll on the tech sector. One of the darlings in US tech, chipmaker Nvidia, lost nearly $600 billion in market cap yesterday.

President Trump says he wants across-the-board tariffs that are “much bigger” than 2.5%. The comments are the latest sign that he’s focusing on implementing widespread levies on most if not all countries that trade with the US.

New US home sales rose more than expected in December. The stronger reading was “due in part to a resilient demand for housing – despite a recent rise in mortgage rates,” notes Zillow. “Builders saw a strong uptick in sales at the end of the year and altogether there were 683,000 new home sales in 2024, 2.6% higher than in 2023.”

The Dallas Fed Manufacturing Index posted a stronger reading in January. “Perceptions of broader business conditions continued to improve in January,” notes the Dallas Fed. “The general business activity index jumped 10 points to 14.1, its highest reading since October 2021.”

The Federal Reserve is expected to leave interest rates unchanged in tomorrow’s policy announcement, according to TMC Research’s Fed model. “Although the effective Fed funds rate (4.48% on a monthly basis for December and 4.33% in daily terms as of Jan. 24) is still modestly above our estimate of 4.06% (as of Jan. 24), the spread is the lowest level for the past year,” advises the research shop, a division of The Milwaukee Company, a wealth manager. “That implies policy is no longer conspicuously tight (as it was in previous months), which lessens the pressure to cut rates.”

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