Must-know: Key highlights driving stocks and ETFs this week

U.S. debt

Last week, prices of high-quality U.S. debt kept rising on continued uncertainty in both domestic and international financial markets. U.S. economic indicators released this week were mixed, and the uncharacteristically colder weather impacted almost all industries.

The most positive economic report last week was the employment update, which estimated the increase in non-farm payrolls for January over December at 113,000. Despite coming in lower than the 181,000 consensus estimates, the report showed that there were job additions in several bellwether industries, including construction and manufacturing, and that the labor participation rate had increased marginally, to 63%.

Must-know: Key highlights driving stocks and ETFs this week

Two other positive indicators were construction spending for December 2013 (up 5.3% year-on-year) and weekly reduction in initial job claims (down 20,000). The first is important since it offers detail on residential, non-residential, and government spending on construction. However, the increase was led by the residential sector only. The latter gives an indication of job market health based on how many people are filing for unemployment benefits, though it’s not as important as the non-farm payrolls.

The Purchasing Managers Index gave mixed signals. It posted a 51.3 reading in January, down from December’s reading of 56.5. However, it showed manufacturing growth in 11 industries out of the 18 covered. A negative indicator for the economy was the U.S. trade deficit, which registered a 12% month-over-month increase, growing to $38.7 billion in December. Given the drop in liquidity given Fed tapering, this was expected. Auto sales also contracted, with Ford (F) and General Motors (GM) reporting 7% and 12% declines year-on-year, respectively. A large part of the decline was attributed to the unseasonably colder weather.

To read more about the employment status report issued by the Bureau of Labor Statistics, move on to Part 2 of this series. To see how last week’s reports are affecting the REIT and homebuilding sectors, see the Market Realist series Why AGNC is buying REITs as the flight to safety trade unwinds.