Trump's Active First Day in Office & Stocks Move Higher Last Week After Welcoming Inflation Data

US stocks saw solid gains last week with the S&P 500 rising 2.9%, coming after two consecutive weekly declines to start the year. But it was the average stock that did well with the equally-weighted S&P 500 index up 3.9%. The top sectors were cyclicals like financials due to solid earnings results from the nation’s top banks and energy due to the recent rise in oil. Fixed income was mostly higher as Treasury yields fell across the curve over welcoming inflation data. The other big story was the inauguration and Trump’s anticipated policies.

Before we dig into the politics, we recap the inflation report for December that was mostly in line to slightly better than expectations. The consumer price index increased 0.4% in December, a higher rate than recent months mostly due to a 2.6% jump in energy prices. In fact, it was the largest monthly increase since August 2023. The core index, that strips out energy and food prices, increased 0.2% with the core index up 3.2% over the past year, decelerating from the 3.3% annual pace the month prior.

While the report was welcoming, the fact is inflation is still too high and there are worries Trump’s anticipated tariff plan will put upward pressure on inflation. The other fact is service inflation remains the most elevated, rising another 0.4% in December and still up 4.0% over the past year. Market reaction was positive though, with stocks moving higher and bond yields moving lower as it was viewed as a lower increase than estimates had shown.

The beginning of fourth quarter earnings season also caught some attention, mostly Wednesday, after big banks reported their quarterly results. The financials and forecast for 2025 were mostly positive. Several banks gave forecasts for net interest income that was higher than analysts’ estimates, while trading revenue was strong. There is also renewed optimism in merger and acquisition activity for 2025, something that will support growth for those like Goldman Sachs, JP Morgan, and Bank of America, among others. All in all, it was a solid start for earnings season that markets were hoping for.

But the biggest headline over the past several days has been the incoming Trump Administration and the series of executive orders President Trump signed after the inauguration. Trump was sworn in as the 47^th president on Monday, declaring “the golden age of America begins right now,” where he committed to address border security, US energy independence, government efficiency, promote merit-based society, and tariffs.

Heading into the new administration, the biggest worry for markets was the threat of substantial tariffs. Trump repeatedly said on day one he would impose a 25% tariff on all goods/services coming into the US from Mexico and Canada, in our mind using it as a negotiating tactic to address the border issue and more favorable trade terms, among other issues. He also said he would impose a 10% tariff from China. Instead of implementing new tariffs on his first day, Trump issued an “America First Trade Policy” memorandum that directs personnel to assess trade relationships and said during his executive signings potential tariffs would come February 1.

This likely lays the groundwork for future tariffs. The main concern on the street is the tariffs would result in additional inflationary pressures at a time when inflation is already high. Many Fed members have been asked what impact this would have on Fed policy and most have said it is too early to speculate or assume, but said significant tariffs would hinder progress on bringing inflation lower which could possibly be another reason to hold interest rates higher for longer.

Other key initiatives from Trump including keeping his promise on lessening regulations and cutting taxes. One of the first items on the Trump agenda include extending the tax cuts from the 2017 Tax Cuts and Jobs Act, which expire at the end of this year. He also said during a NYSE visit he would cut corporate tax rates even further, from the current 21% to 15% and cut levies on capital gains and dividends. There were several reports that Republicans are increasingly likely to try to combine all its top legislative priorities into one very large bill.

The last Congressional session, the 118^th, was the least productive Congress in history, passing 150 laws over the two year period. This Congress has many items on the table, but passing legislation may still prove difficult – while the Senate has a 53-47 majority for Republicans, the House has a more narrow lead, with Republicans having just a four seat lead 220 to 215.

Regarding the executive actions taken by Trump on day one, here is a list of several that were signed (does not include all):

• America First Trade Policy
• Declaring a National Emergency at the Southern Border
• Protecting The Meaning and Value Of American Citizenship – Ends birthright citizenship.
• Establishing And Implementing the President's "Department of Government Efficiency"
• Establishing the External Revenue Service – responsible for collecting tariffs and duties in aligning with Trump’s trade policies.
• Declaration of a National Energy Emergency - This executive order aimed to expedite the development of fossil fuel infrastructure and withdrawal from the Paris Climate Agreement.
• Return to In-Person Work (for government workers)
• Initial Recissions of Harmful Executive Orders and Actions – Revokes several executive actions from the prior administration, including those related to climate change and DEI (diversity, equity, and inclusion) programs, instead replacing it with a merit-based system.
• Ending Radical and Wasteful Government DEI Programs and Preferencing
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government – Making it a federal policy defining sex strictly as male and female, based on biological characteristics.
• Regulatory Freeze Pending Review
• Hiring Freeze – No vacant federal position may be filled and no new position may be created (excluding military).
• Granting Pardons and Commutation of Sentences for Certain Offenses Relating to the Events of the United States Capital on January 6, 2021

Week in Review:

It was a positive week for stocks and fixed income with yields moving lower across the Treasury curve after welcoming inflation data. The stock market saw an outperformance of the average stock with the S&P 500 equal-weight index up 3.9%, with energy and financials the best performing sectors over higher oil prices and solid earnings results from the big banks. The four major stock indexes finished as follows: Russell 2000 +3.96%, Dow +3.69%, S&P 500 +2.91%, and Nasdaq +2.45%. The 2-year Treasury yield fell 10 basis points to 4.29% while the 10-year yield fell 14 basis points to 4.63%. Bitcoin had a strong week in anticipation of the incoming Trump Administration with a 10.3% increase on the week. The dollar index fell slightly while gold rose another 1.2%. Oil continued its rise over the anticipation of sanctions on Russia as well as better than expected economic growth from China with a 1.1% weekly gain. 

Recent Economic Data

• Consumer Price Index: Consumer inflation was in line to slightly lower than expectations with the consumer price index rising 0.4% in the month of December for the highest monthly increase since August 2023. Energy prices saw a bounce as oil and natural gas rose in the month with energy prices up 2.6% while food prices rose 0.3%. The annual inflation rate was 2.9%, up from the 2.7% annual rate from November. Holding this down has been energy prices when have declined 0.5% over the past year. Excluding these two categories, the core index increased 0.2% in the month, lower than the 0.3% expected and the 0.3% increase from last month. Core prices are up 3.2% over the past year, dropping from the 3.3% annual rate from November. Within core prices, vehicle prices have seen three straight months of large increases, up 1.2% in December. Shelter prices, the largest weight in the index and something that has seen consistently high inflation, rose 0.3%, a slowdown from prior months but still up 4.6% over the past year. Finally, the key index of services excluding shelter increased a still elevated 0.4% and up 4.0% over the past year, still double the Fed’s target.

• Producer Price Index: Inflation at the producers’ level was lower than expected with the producer price index rising 0.2 in December, less than the 0.4% increase from November. Food prices fell 0.1% while energy rose 3.5%. Producer inflation over the past year was 3.3%, slowing from 3.5% last month. The index for final demand services was unchanged in the month as inflation in trade and other categories saw a decline while transportation was up 2.2%.

• Retail Sales: Retail sales for the last month of the holiday shopping period, December, increased 0.4% which was slightly lower than the 0.5% expected and was a big slowdown from the 0.8% increase in November. Ten of the 13 major categories saw an increase in sales in the month. Vehicle sales increased 0.7% while gasoline sales increased 1.5%. Excluding these two volatile categories retail sales were up 0.3%. The only categories seeing a decline in sales was building materials/garden equipment, health/personal care, and restaurants and bars. Retail sales have increased 3.9% over the past year, and after accounting for inflation, are up 1.0%.

• Jobless Claims: The number of jobless claims filed the week ended January 11 was 217,000, an increase of 14k from the prior week, which was a nearly one year low. The four-week average was relatively unchanged at 212,750. The number of continuing claims was down 18k to 1.859 million with the four-week average relatively unchanged at 1.867 million.

• Empire State Manufacturing Index: The Empire State manufacturing index was -12.6 for January, a drop from positive 2.1 in December and well below the expectations of 1.0, indicating manufacturing activity fell in the last several weeks. The report said new orders dropped modestly, shipments were little changed, delivery times were slightly longer and inventories increased. On the labor market, the workweek shortened somewhat while employment was unchanged, and input and selling price increases picked up, a trend we have seen returned.

• Philly Fed Manufacturing Index: The Philly Fed manufacturing index was 44.3 for January, a surprisingly high number, up from -10.9 last month and very much ahead of the -7.0 expected, indicating a large bounce in activity in January after a decline in December. In fact, it was the highest reading since April 2021. About half of the firms responding reported increase in activity, far exceeding the 7% that reported a decrease, while about 40% reported no change in activity. New orders and current shipments ended up being strong while employment and prices continue to increase.

• Industrial Production: Industrial production was up 0.9% in December, much better than the expectations of 0.3% increase, for the best monthly increase in almost a year. Capacity utilization saw a solid increased at 77.6%, up from 76.8% last month which was the weakest level since early 2021.

• Housing Market Index: The housing market index, an index on homebuilder sentiment, improved one point to 47 in January. For a point of reference, anything below 50 is considered negative and the index has remained below 50 for quite some time. The index on present sales went positive with a 51 reading, up 3 points from last month, the index on sales expectations over the next six months fell 6 points to 60 but importantly remains positive, while traffic of prospective buyers rose 2 points to 33, still a relatively depressed level. there was optimism over less regulation, but concerns from builders on additional tariffs and how higher government debt would affect rates.

• Housing Starts & Permits: The number of housing units that had construction started was at a seasonally adjusted annualized rate of 1.499 million in December, a big jump from November with a 15.8% monthly increase. However, home builders have focused on completing homes with 1.626 million home completions in 2024, the highest since 20016, while the number of starts still 4.4% below the pace from 12 months earlier. Housing starts have been at the lowest level since the depths of the pandemic so the increase is welcome given the housing shortages. The number of permits was an annualized rate of 1.483 million, slightly below November’s level and 3% below the rate from a year ago. The number of housing units under construction has steadily declined though, down 15% over the past year.

• Mortgage Rates: The Freddie Mac weekly mortgage survey showed the average prime 30-year mortgage rate moved above 7% for the first time since May. The average rate was 7.04% over the past week, rising 11 basis points from the prior week and up a full percent from the year’s low in September. The increase is due to the strength of the US economy and the recent rise in Treasury yields as the Fed is expected to cut rates less this year. 

Company News



• Cleveland Cliff's & US Steel: CNBC reported that Cleveland Cliff’s is partnering with Nucor (Steel) in a potential bid for US Steel. The potential bid would value US Steel stock in the high $30s range with Cliff’s having the funding for a potential acquisition. The deal would involve Cliffs purchasing all of US Steel and selling its Big River Steel assets to Nucor.

• Intel: Intel said it will spin off its in-house investment arm into a separate organization with a new name, the latest step in its new strategy to cut spending and overhaul its business. It said the spinoff will allow it to refocus on its main business. The investment arm manages $5 billion in assets with a portfolio of about 170 companies concentrated in businesses that are focused on cloud computing, electronics, and new semiconductor technology.

• Meta: Meta, parent company of Facebook, said it is planning to cut 5% of its workforce who are low-performers at the company, according to Bloomberg citing an internal memo sent to employees. It said the employees will receive generous severance and comes after the company’s desire to “raise the bar on performance management and move out low-performers faster.” It added that Zuckerberg plans to backfill the roles of those employees later this year.

• Nvidia: Nvidia shares were lower to start the week after Reuters said customers are delaying orders of Nvidia’s Blackwell advanced chips over overheating and glitches in how the chips connect with each other. Separately, the company said its annual GTC (GPU Technology Conference) will incorporate its first ever Quantum Day, highlighting the advancements in quantum computing.

• Joann Fabrics: Fabric and craft retailer JoAnn has filed for bankruptcy for the second time this past year and said that it is seeking a sale due to continued slowing sales and “acute and unexpected” inventory issues.

• Taiwan Semiconductor: Bloomberg said the US is planning to bring more regulations to prevent advanced chips from making their way to China by companies like Taiwan Semiconductor, Intel, Samsung, and others. The plan would ask these companies to more carefully scrutinize and increase due diligence, something that comes after an incident where chips manufactured by Taiwan Semi secretly made their way to China’s Huawei when they were blacklisted.

• Honeywell: After facing pressure from activist investor Elliott Management, Honeywell is expected to make an announcement to break up the company when it reports its Q4 earnings results on February 6, according to CNBC. Honeywell previously said in December it was exploring a separation of its aerospace business.

• TikTok: Throughout the week there was reports that TikTok planned to go completely dark in the US on Sunday January 19^th if the expected and planned ban took place even though the law only mandates a ban on new TikTok downloads, the removal from app stores, and for it to stop hosting US user data. Shortly before midnight the eve of the ban, TikTok did shut down access to its app, but after less than half a day, service was restored after Trump released a statement assuring service providers they would not be liable for opening the app back up. Trump then said he would sign an executive order to suspend the ban for 75 days to give more time to find a solution, proposing the US government have 50% ownership.  

Other News



• The External Revenue Service: President Trump said he will create a new government agency, the External Revenue Service, to “collect tariffs, duties, and all revenue from foreign sources. At this time, it is unclear whether the new agency would replace collections of tariffs/duties by the U.S. Customs and Border Protection or via the IRS.  

• Cryptocurrency A Priority Under Trump Administration: Reports say Trump is planning to sign an executive order aimed at making cryptocurrency a national priority, establish a crypto advisory council to develop the industry’s legislative objectives, and grants industry leaders access to policy discussions.

• Canada's Retaliation Plans: Bloomberg said Canada is ready to implement retaliatory tariffs on $105 billion of US goods and services if Trump follows through on his tariff threat, making a list of the things that would be effected.

• Ceasefire Agreement Made: Israel and Hamas have agreed on a ceasefire and hostage release deal, mediated by Egypt and Qatar and backed by the U.S., that puts an end to the war on the Gaza Strip that has lasted 15 months. The deal would be implemented in three phases with the first phase calling for a full ceasefire and withdrawal of Israel forces from Gaza and include the release of 33 Israeli captives in return for a number of prisoners in Israel as well as a new flow of humanitarian aid to all parts of the Gaza Strip. The final phase of the deal will include a reconstruction plan for the Gaza Strip.

• Red Dye 3 Banned: U.S. regulators agreed to ban Red 3, a dye used in many food items like candies and snacks, from the nation’s food supply due to its cancer risk. Food manufacturers will have until January 2027 to remove the dye from their products with imported foods needing to meet the new requirement. It was over 30 years ago that the FDA banned the dye from cosmetics.

• China's 2024 Growth: China said its economy grew 1.6% in the fourth quarter, the best in 7 quarters, and grew 5.0% in 2025, reaching its target growth rate it set the beginning of the year and market estimates.

• Oil's Recent Rise: Oil prices have quietly increased to the highest level since summer over potential Russia sanctions that are causing worries of supply disruptions in the oil market. There have been reports the Trump team is working on a sanctions strategy aimed at helping facilitate peace talks between Russia and Ukraine while pressuring Iran and Venezuela. Energy is the best sector to start the year, already up about 9% since the beginning of the year. 

WFG News & Events

2025 Economic & Market Outlook Meeting

**Please note due to weather we have postponed the meetings scheduled for this week** See new times below

Monday January 27 - 12:00 pm - WFG Auditorium in Hudson, OH

Tuesday January 28 - 12:00 pm - Ravenna Office Downstairs Banquet Hall

Tuesday January 28 - 6:00 pm - WFG Auditorium in Hudson, OH

Wentz Financial Group will be holding its semi-annual Economic and Market Outlook Seminars on the dates above. Join us as we recap a positive 2024, explain how we got to where we are today, as well as give our expectation and forecast on the economic and market environment and how that will affect portfolios in another challenging year ahead. We will have four seminar times. Please RSVP by responding to this email or by calling the office at 330-650-2700. Seat are limited for each event and will be on a first come first served basis. A buffet style meal will be served approximately 30 minutes before each event.

Any opinions are those of Wentz Financial Group and not necessarily those of Raymond James. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature and is not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. Investing always involves risk and you may incur a profit or loss. Keep in mind that individuals cannot invest directly in any index. Past performance does not guarantee future results. There is no assurance these trends will continue, or forecasts will occur.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated. The LBMA Gold Price and LBMA Silver Price are the global benchmark prices for unallocated gold and silver delivered in London. SS&P GSCI Crude Oil is an index tracking changes in the spot price for crude oil. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.



Prior to making an investment decision, please consult with your financial advisor about your individual situation. The prominent underlying risk of using bitcoin as a medium of exchange is that it is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment.