The US stock market closed lower for the week, with all major stock indices except S&P 500 declining more than 1%. Small-cap stocks outperformed. However, the major stock indices are close to record highs. Profit-taking is a high-probability event amid negative economic data. The earnings season is about to start in full force, and that can be a catalyst to move stocks. But as an announced $1.9 trillion fiscal-stimulus plan by President-elect Joe Biden failed at least for now to move the stock market, and the vaccine rollout delays, I expect for the 1st quarter of 2021 some consolidation at these price levels, without excluding any increased volatility as earnings start to be released.

Economic News

The economic data reported for the week were negative for the US economy. The Consumer Price Index (CPI) Ex Food & Energy released came in at 1.6%, same as per forecast. The most negative report in the economic calendar was the big miss on retail sales. The retail sales released came in at -0.7%, compared to a forecast of 0%. The Michigan Consumer Sentiment Index was also a miss with a figure of 79.2, while the consensus was a figure of 80.0.

The weekly initial jobless claims and continuing jobless claims reported were both worse than expected. The Initial Jobless Claims increased to 965 K, much higher than the consensus of 795 K. The Continuing Jobless Claims rose to 5.271 M, higher than the consensus of 5.061 M.

Less spending and a lower consumer sentiment index amid a vaccine rollout, even with delays mean that economic growth is very fragile.

For the week of January 11- January 16, 2021, the major US stock market indexes closed as follows on Friday, January 15, 2021:

• Dow Jones Industrial Average: Close 30814.26, -0.91% for the week, +0.68% Year-to-date

• S&P 500 Index: Close 3768.25, -1.48% for the week, +0.32% Year-to-date

• Nasdaq Composite: Close 12998.50, -1.54% for the week, +0.86%, Year-to-date

• Russell 2000: Close 2123.20, +1.51% for the week, +7.51% Year-to-date

Economic events for the week January 18- January 22, 2021:

Important economic data for the next week will be the weekly Initial and Continuing Jobless Claims, the US Building Permits and Housing Starts, the Markit Manufacturing PMI (preliminary), the Markit Services PMI ( preliminary), and the Markit PMI Composite (preliminary).

Sources:

https://www.wsj.com/market-data/stocks/us/indexes

https://www.barchart.com

https://www.fxstreet.com/economic-calendar