The stock market kicked off the New Year by surging to new all-time highs last week. In fact, in the past week, the S&P 500 and Dow are both up about 1.7%. Here’s what that could mean for you…
I expect the stock market to continue to climb higher in January. Analysts appear particularly upbeat right now, as they are already revising their earnings estimates higher. So, I’m expecting fourth-quarter earnings to be the strongest in at least six years.
In the meantime, economic data has been pouring in. The biggest headline from last week was the Labor Department’s payroll report on Friday. Only 148,000 jobs were created during December, well below economists’ forecasts for 198,000 jobs. This number feels a little off to me, given all the seasonal jobs and temporary workers at Amazon and UPS during the holidays.
In fact, ADP reported earlier last week that 250,000 private payroll jobs were created last month, which was well above the consensus estimate for 188,000. So I wouldn’t be surprised if the Labor Department revises December payrolls higher in the upcoming months, since the ADP report more accurately reflects actual payroll jobs. I should add that the unemployment rate stayed at a 17-year low of 4.1%.
The Institute of Supply Management (ISM) also announced last week that its manufacturing index rose to 59.7 in December, up from 58.2 in November. That topped economists’ consensus estimate for 58. This is the second-highest ISM manufacturing reading last year and 16 of the 18 industries surveyed reported expansion. It was especially promising to see the ISM new orders component surge to 69.4 in December, up from 64 in November, as it bodes well for GDP growth.
Interestingly, though, the Commerce Department’s trade deficit report last week signaled a potential slowdown in GDP growth. The U.S. trade deficit surged 3.2% in November to $50.5 billion, which represents the highest level in six years. Breaking it down, imports surged 2.5% to $250.7 billion in November, while exports rose 2.3% to $200.2 billion. For the first 11 months of 2017, the trade deficit soared 11.6%, despite a weaker U.S. dollar that normally helps to boost U.S. exports. A bigger trade deficit can be drag on GDP growth, and as a result, some economists are expected to trim their fourth-quarter GDP estimates.
Currently, the Atlanta Fed is expecting fourth-quarter GDP growth to remain steady at 3.2%. If this number comes to fruition, the U.S. will have posted 3% or more GDP growth for three-straight quarters. Plus, with U.S. consumers expected to have more cash in their pockets in 2018 due to the new tax bill, consumer spending should remain robust and continue to support GDP growth this year. So, overall, the U.S. economy remains on a firm footing heading into 2018.
This is good news considering that Chinese and technology stocks led the markets higher last week, which brought tremendous benefits to at least one of my services. Our Ultimate Growth Buy List was up an average 2.7% last week alone.
Ultimate Growth stocks are currently characterized by 36% annual forecasted sales growth and a massive 170.3% annual forecasted earnings growth. Plus, they have a strong earnings surprise history of 33.3%. So, I’m looking for wave-after-wave of positive earnings surprises to drive our shares higher in the upcoming weeks.
But if you aren’t ready to join Ultimate Growth today, I urge you to stay tuned into this blog where I’ll continue revealing the economic news you need to profit.