Friday’s drop – the worst since mid-December – wiped out year-to-date gains, sending indexes into negative territory for 2025. The S&P 500 (SPX) was down by 0.71% for the shortened week, while the Dow Jones Industrial Average (DJIA) dropped by 1.07%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) declined by 0.61% and 0.62%, respectively.
Stay Ahead of the Market:
- Discover outperforming stocks and invest smarter with Top Smart Score Stocks
- Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
Stocks registered losses for the second straight week following the latest economic data, most of which strongly surprised on the upside. The job market report showed a significant increase in non-farm payrolls and a decline in the unemployment rate to 4.1% from 4.2%. Meanwhile, the UoM Consumer Sentiment index reflected a rise in inflation expectations, consistent with the price trends within the ISM Services PMI report, which also came in stronger than expected.
The apparent economic resilience, coupled with hints at possible reacceleration in inflation, led investors and analysts to voice concerns that the Federal Reserve may pause rate reductions in the first half of the year. Fed Governor Michelle Bowman said that inflation has risen “uncomfortably above” the Fed’s long-term target, while still presenting stubborn upside risks. Moreover, minutes from the latest central bank meeting echoed this sentiment, indicating an almost unanimous inclination among policymakers to hold the rates steady in January.
The labor data reflected continued wage gains notably higher than the inflation rate, which is a strong positive for consumer sentiment and overall economic growth. At the same time, robust economic activity is supportive of the corporate earnings. However, interest rate concerns outweighed these considerations, and a surge in the benchmark 10-year Treasury yields weighed on stocks.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» December’s Producer Price Index (PPI) and PPI ex. Food and Energy – Tuesday, 01/14 – This report reflects input prices for producers and manufacturers. Since PPI measures the costs of producing consumer goods – directly affecting retail pricing – PPI is seen as a telling signal of inflationary pressures. This makes it a leading indicator for the following month’s CPI. Thus, the PPI directly impacts the overall inflation outlook among policymakers.
» December’s CPI and CPI ex. Food and Energy (Core CPI) – Wednesday, 01/15 – The CPI report is one of the two key indicators used to measure inflation (the second one is the Personal Consumption Expenditures, or PCE). Policymakers, businesses, and consumers closely watch the CPI report, as it reflects the price trends in the economy, shapes consumer spending and business outlook, and directly affects the Federal Reserve’s policy rate decisions.
» December’s Retail Sales – Thursday, 01/16 – This report provides information on the amount of money consumers are spending on both durable and non-durable goods. Retail Sales is a leading indicator of the economy’s health, providing an outlook into the current quarter’s economic growth as well as into the inflationary factors on the demand side.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
