What I’m Watching This Week – 6 December 2021

The Markets (as of market close December 3, 2021)

Wall Street could not maintain its early momentum, closing the week down. Lower-than-expected employment, new reports of Omicron variant cases, and a hawkish stance from Federal Reserve Chair Jerome Powell led to uncertainty in the market. Each of the benchmark indexes ended the week lower, led by the small caps of the Russell 2000 and the tech-heavy Nasdaq. Treasury yields fell 14 basis points to 1.34%. Crude oil prices continued the longest streak of weekly losses since 2018, falling 2.9%, a skid that has run for six consecutive weeks. The dollar and gold prices changed little. Only utilities and real estate were able to eke out gains among the market sectors.

Stocks rallied last Monday, following the previous week’s Omicron-related selloff. President Biden assured Americans the response to the Omicron variant would not involve shutdowns or lockdowns. The Nasdaq (1.9%) and the S&P 500 (1.3%) led the benchmark indexes, followed by the Dow (0.7%) and the Global Dow (0.1%). The Russell 2000 (-0.2%) ended the day in the red. Sector gains were broad-based, with information technology, consumer discretionary, and utilities outperforming. Ten-year Treasury yields and crude oil prices advanced, while the dollar was mixed.

Wall Street ended the day lower last Tuesday. Chair Jerome Powell admitted that recent inflationary pressures are more than just “transitory,” the emergence of the Omicron variant could pose downside risks to employment and economic recovery, and that the Fed may accelerate the tapering of asset purchases. That was apparently enough to drive stocks lower, with each of the benchmark indexes falling by more than 1.6%. The Russell 2000 dipped 1.92%, followed by the S&P 500 and the Dow, which lost 1.9%. The Nasdaq fell 1.6%. Bond prices spiked, with the yield on 10-year Treasuries dropping over 10.9% to close at 1.44%. Crude oil prices fell to $66.80 per barrel, and the dollar declined.

Last Wednesday, stocks suffered their worst back-to-back sessions since October 2020. The first Omicron case was confirmed in California, while new cases were reported in the United Kingdom, Switzerland, and Brazil. A decline in tech shares pulled the Nasdaq down 1.8%. The Dow fell 1.3%. The S&P 500 dipped 1.2%. The Russell 2000 fell the furthest on the day, losing 2.3%. The Global Dow inched up 0.5%. Crude oil prices fell to $65.35 per barrel. Ten-year Treasury yields declined 62 basis points to 1.43%. The dollar was mixed.

Wall Street rebounded last Thursday, notching its biggest advance since October as dip buyers nabbed some of the hardest-hit shares during the two-day selloff. The Russell 2000 jumped 2.7%. The Dow gained 1.8%. The S&P 500 rose 1.4%. The Nasdaq and the Global Dow climbed 0.8%. Crude oil prices increased to $66.83 per barrel. Treasury yields and the dollar also advanced. Energy, financials, industrials, and real estate led the market sectors.

Stocks closed out a volatile week in the red last Friday. While equities rallied for most of the day, stocks ultimately closed lower on weaker-than-expected jobs data. Among the benchmark indexes, the Russell 2000 (-2.4%) and the Nasdaq (-1.9%) fell the furthest, followed by the S&P 500 (-0.8%), the Global Dow (-0.3%), and the Dow (-0.2%). Ten-year Treasury prices climbed higher, sending yields lower. Crude oil prices and the dollar declined. Consumer staples, utilities, and health care were the only sectors to close in the black.

The national average retail price for regular gasoline was $3.380 per gallon on November 29, $0.015 per gallon less than the prior week’s price but $1.260 higher than a year ago. Gasoline production decreased during the week ended November 26, averaging 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ended November 26 — 9,000 barrels per day less than the previous week’s average. Refineries operated at 88.8% of their operable capacity, up marginally from the prior week’s level of 88.6%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 12/3Weekly ChangeYTD Change
DJIA30,606.4834,899.3434,580.08-0.91%12.98%
Nasdaq12,888.2815,491.6615,085.47-2.62%17.05%
S&P 5003,756.074,594.624,538.43-1.22%20.83%
Russell 20001,974.862,245.942,159.31-3.86%9.34%
Global Dow3,487.523,962.953,944.60-0.46%13.11%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.48%1.34%-14 bps43 bps
US Dollar-DXY89.8496.0996.170.08%7.05%
Crude Oil-CL=F$48.52$68.15$66.16-2.92%36.36%
Gold-GC=F$1,893.10$1,785.50$1,783.80-0.10%-5.77%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Employment rose by only 210,000 in November, well short of this year’s monthly average of 555,000. However, the unemployment rate fell 0.4 percentage point to 4.2%, and the number of unemployed persons dropped by 542,000 to 6.9 million. Both measures are well below their February-April 2020 highs but remain above their pre-pandemic levels (3.5% and 5.7 million, respectively). Employment has increased by 18.5 million since April 2020 but is down by 3.9 million, or 2.6%, from its pre-pandemic level in February 2020. In November, notable job gains occurred in professional and business services, transportation and warehousing, construction, and manufacturing. Employment in retail trade declined over the month. The labor force participation rate edged up to 61.8% in November — 1.5 percentage points lower than in February 2020. The employment-population ratio increased by 0.4 percentage point to 59.2% last month — lower than the February 2020 figure of 61.1%. The number of persons not in the labor force who currently want a job was 5.9 million in November, little changed over the month but up by 849,000 since February 2020. In November, the number of employed persons who teleworked because of the coronavirus pandemic declined by 0.3 percentage point to 11.3%. In November, 3.6 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. In November, average hourly earnings increased by $0.08 to $31.03. Over the past 12 months, average hourly earnings have increased by 4.8%. The average work week for all employees increased by 0.1 hour to 34.8 hours in November.
  • According to the IHS Markit US Manufacturing Purchasing Managers’ Index™, production rose in November, but at the second-slowest rate since September 2020. Survey respondents noted that the lag in production was attributable to supply delays, labor shortages, and a slowdown in new orders. The rate of cost inflation also increased from October. Although manufacturers still tried to pass on greater costs to clients, data indicated some pushback on higher prices from customers.
  • The IHS Markit U.S. Services PMI Business Activity Index registered 58.0 in November, down from 58.7 in October. Although the pace of expansion was stronger than the series average of 54.8, it was subdued in comparison to rates seen throughout 2021. November data indicated a strong rise in new business across the service sector, but supply-chain issues and higher selling prices often acted as deterrents to customers placing orders. The rate of cost inflation was the second-sharpest since October 2009, as higher supplier and fuel costs, coupled with rising wages, drove the increase in input prices.
  • For the week ended November 27, there were 222,000 new claims for unemployment insurance, an increase of 28,000 from the previous week’s level, which was revised down by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 20 was 1.4%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 20 was 1,956,000, a decrease of 107,000 from the prior week’s level, which was revised up by 14,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time there were 719,000 initial claims for unemployment insurance, and the rate for unemployment claims was 3.8%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended November 13 were Puerto Rico (3.7%), the District of Columbia (3.5%), the Virgin Islands (3.3%), Alaska (2.8%), California (2.7%), New Jersey (2.4%), Hawaii (2.3%), Illinois (2.3%), Nevada (2.0%), and Pennsylvania (2.0%). The largest increases in initial claims for the week ended November 20 were in Virginia (+12,703), New Jersey (+2,061), Michigan (+1,926), Oklahoma (+1,490), and Minnesota (+1,465), while the largest decreases were in California (-7,233), Kentucky (-3,910), the District of Columbia (-1,679), Missouri (-1,519), and Massachusetts (-1,410).

Eye on the Week Ahead

The first report on inflationary trends is available this week with the release of the November Consumer Price Index. Prices rose 0.9% in October and have risen 6.2% over the past 12 months. With the holiday season in full swing, consumer prices are not expected to show any significant slowdown.

Monthly Market Review – November 2021

The Markets (as of market close November 30, 2021)

Stocks ended November generally lower, with only the Nasdaq able to eke out a gain. The Global Dow and the Russell 2000 each lost more than 4.25%. The Dow fell 3.7% and the S&P 500 dropped 0.8%. The Nasdaq gained 0.3%.

Despite some positive economic news, global and domestic markets were sent reeling in November following reports of a new coronavirus strain. The Omicron variant, first discovered in South Africa, prompted several countries, including the United States, to impose travel restrictions. Federal Reserve Chair Jerome Powell indicated that the coronavirus variant could hinder economic recovery efforts and impact the country’s response to surging inflation. Nevertheless, Powell also suggested that the central bank could end its asset purchase program a few months sooner than planned, apparently signaling confidence in the economic recovery, despite concerns over the Omicron variant. Inflation continued to rise, as supply-chain bottlenecks and labor shortages prompted price hikes at both the manufacturing and retail levels.

The Omicron variant also impacted crude oil prices, driving them to the biggest monthly loss since early 2020. Prior to news of the variant, several countries, including the United States, responded to rising oil prices by planning to release of several million barrels of oil from strategic reserves. Bond prices rose in anticipation of rising interest rates, sending yields lower, with 10-year Treasury yields falling 11 basis points to close the month at 1.44%.

There were some positive economic signs in November. Industrial production rose, while sales of new and existing homes increased. More than 500,000 new jobs were added, and weekly claims for unemployment insurance fell to their lowest level since 1969. November saw the dollar climb higher, while gold prices dropped nearly 1.0%. Prices at the pump increased, as the national average retail price for regular gasoline was $3.395 per gallon on November 22, up from the October 25 price of $3.383 per gallon.

Stock Market Indexes

Market/Index2020 ClosePrior MonthAs of November 30Monthly ChangeYTD Change
DJIA30,606.4835,819.5634,483.72-3.73%12.67%
Nasdaq12,888.2815,498.3915,537.690.25%20.56%
S&P 5003,756.074,605.384,567.00-0.83%21.59%
Russell 20001,974.862,297.192,198.91-4.28%11.35%
Global Dow3,487.524,091.613,913.00-4.37%12.20%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.55%1.44%-11 bps53 bps
US Dollar-DXY89.8494.1295.901.89%6.75%
Crude Oil-CL=F$48.52$83.27$66.97-19.57%38.03%
Gold-GC=F$1,893.10$1,784.201,771.10-0.73%-6.44%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

  • Employment: The pace of job gains accelerated in October, as 531,000 new jobs were added. This followed a revised September total of 312,000 new jobs. Through the first 10 months of the year, monthly job growth has averaged 582,000. The unemployment rate declined by 0.2 percentage point to 4.6% in October. The number of unemployed persons, at 7.4 million, continued to trend down (7.7 million in September). Employment has increased by 18.2 million since a recent trough in April 2020 but is down by 4.2 million, or 2.8%, from its pre-pandemic level in February 2020. In October, notable job gains occurred in leisure and hospitality (164,000), food services and drinking places (119,000), professional and business services (100,000), retail trade (35,000), transportation and warehousing (54,000), and manufacturing (60,000). Employment decreased in local government education and state government education (-43,000 and -22,000, respectively). Among the unemployed, the number of permanent job losers declined from 2.3 million in September to 2.1 million in October but is 828,000 higher than in February 2020. The number of persons not in the labor force who currently want a job was 6.0 million, unchanged from the September total. The labor force participation rate, at 61.6%, was unchanged from the September rate and has remained within a narrow range of 61.4% to 61.7% since June 2020. The employment-population ratio was 58.8% in October, up 0.1 percentage point from the previous month. This measure is up from its low of 51.3% in April 2020 but remains below the figure of 61.1% in February 2020. In October, 11.6% of employed persons teleworked because of the pandemic, a decrease of 1.6 percentage point from the prior month. In October, 3.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic; this is down from 5.0 million in September. Average hourly earnings rose $0.11 to $30.96 in October. Earnings have increased 4.9% since October 2020. The average work week in October was 34.7 hours, a decrease of 0.1 hour from September.
  • The total number of claims for unemployment insurance fell in November. According to the latest weekly totals, as of November 13 there were 2,049,000 workers receiving unemployment insurance benefits, down from the October 16 total of 2,243,000. The unemployment rate for the week ended November 13 was 1.5%, down 0.2 percentage point from the October 16 rate of 1.7%. During the week ended November 6, Extended Benefits were available in four states/territories: Alaska, Connecticut, New Jersey, and New Mexico; 40 states reported 334,750 continued weekly claims for Pandemic Unemployment Assistance benefits (270,013 on October 9), and 41 states reported 151,556 continued claims for Pandemic Emergency Unemployment Compensation benefits (244,379 on October 9).
  • FOMC/interest rates: The Federal Open Market Committee met in November. While the Committee left the federal funds target range rate at its current 0.00%-0.25%, it decided to begin tapering its asset purchases, reducing Treasury and mortgage-backed securities buybacks by $10 billion and $5 billion per month, respectively.
  • GDP/budget: According to the second estimate from the Bureau of Economic Analysis, the economy accelerated at an annual rate of 2.1% in the third quarter after advancing 6.7% in the second quarter. Consumer spending, as measured by personal consumption expenditures, increased 1.7% in the third quarter after rising 12.0% in the prior quarter. The personal consumption price index (prices for consumer goods and services) rose 5.3% in the third quarter after climbing 6.5% in the second quarter. Excluding food and energy, the price index increased 4.5% in the third quarter compared with an increase of 6.1% in the second quarter. In the third quarter, fixed investment dipped 1.1% following a 3.3% increase in the second quarter, and residential fixed investment fell 8.3% after decreasing 11.7% in the second quarter. Exports slid 3.0% in the third quarter after increasing 7.6% in the second quarter. Imports (which are a negative in the calculation of GDP) increased 5.8% in the third quarter (7.1% in the second quarter). Overall, third-quarter GDP reflected the continued economic impact of the COVID-19 pandemic. A resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country. Also, government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households decreased.
  • The Treasury budget deficit for October came in at $165.1 billion, 42.0% lower than the deficit in the same month last year. Compared to October 2020, government receipts rose 19.0% to $283.9 billion, while government expenditures decreased 14.0% to $449.0 billion. Individual income tax receipts rose 32.0% in October, while corporate tax receipts rose 72.0%. Medicare expenditures declined by 44.0% compared to October 2020, national defense expenditures dipped by 14.0%, and spending on agriculture dropped 62.0%.
  • Inflation/consumer spending: Personal income increased 0.5% in October after falling 1.0% in September. Disposable (after-tax) personal income rose 0.3% in October after decreasing 1.3% the previous month. The increase in personal income in October primarily reflected increases in wages (0.8%), income from assets (0.9%), and dividend income (1.2%). Consumer spending rose 1.3% in October following a 0.6% increase in September. Consumer prices continued to rise in October, increasing 0.6%, after climbing 0.4% in September. Excluding food and energy, consumer prices advanced 0.4% in October. Prices have risen 5.0% since October 2020, and 4.1% excluding food and energy.
  • Prices at the consumer level continued to advance in October, increasing 0.9% following a 0.4% rise in September. Prices for consumer goods and services have increased 6.2% since October 2020. Excluding food and energy, consumer prices rose 0.6% in October (0.2% in September) and 4.6% since October 2020. Prices for food rose 0.9% in October, the same increase as in September. Energy prices rose 4.8% in October (1.3% in September), while gasoline prices jumped 6.1% (1.2% in September) and fuel oil prices climbed 12.3% (3.9% in September). Prices for new vehicles and used cars and trucks rose 1.4% and 2.5%, respectively, in October.
  • Producer prices continued to climb in October, increasing 0.6% after rising 0.5% in September. Producer prices increased 8.6% for the 12 months ended in October. Prices for services in October rose 0.2%, unchanged from the previous month, while prices for goods moved up 1.2% (1.3% in September). Producer prices less foods, energy, and trade services advanced 0.4% in October (0.1% in September) and have risen 6.2% since October 2020. Energy prices jumped 4.8% in October, with one-third of that advance attributable to a 6.7% jump in gasoline prices. The October increase in producer prices for services was driven by a 0.4% climb in trade services (trade services measure the change in margins received by wholesalers and retailers).
  • Housing: Existing home sales rose 0.8% in October after advancing 7.0% in September. Nevertheless, existing home sales have dropped 5.8% from a year ago. The median existing-home price was $353,900 in October ($352,800 in September), up 13.1% from October 2020 ($313,000). Total housing inventory at the end of October dropped 0.8% from September’s supply and is down 12.0% from one year ago. In October, unsold inventory sat at a 2.4-month supply at the present sales pace (2.5-month supply in September). Sales of existing single-family homes also increased in October, climbing 1.3% after climbing 7.7% in September. Year over year, sales of existing single-family homes are down 5.8%. The median existing single-family home price was $360,800 in October, down from $359,700 in September.
  • New single-family home sales increased in October, advancing 0.4% after increasing 7.0% in September (revised). Despite the recent monthly increase, sales of new single-family homes have decreased 23.1% from October 2020. The median sales price of new single-family houses sold in October was $407,700 ($404,700 in September). The October average sales price was $477,800 ($457,200 in September). The inventory of new single-family homes for sale in October represents a supply of 6.3 months at the current sales pace, up from the September estimate of 6.1 months.
  • Manufacturing: Industrial production rose 1.6% in October after falling 1.3% in September. About half of the gain in October reflected a recovery from the effects of Hurricane Ida. Manufacturing output increased 1.2% in October following a 0.7% decreased the previous month. The output of utilities rose 1.2% (3.7% in September), and mining output stepped up 4.1% following a 2.3% dip in September. Overall, total industrial production in October was 5.1% above its year-earlier level and at its highest reading since December 2019.
  • New orders for durable goods decreased $1.2 billion, or 0.5%, in October after falling 0.4% in September. Transportation equipment, down three of the last four months, drove the October decline, falling $2.0 billion, or 2.6%. Excluding transportation, new orders rose 0.5% in October. New orders for aircraft and parts were particularly weak, with defense aircraft and parts falling 21.8%, while nondefense aircraft dipped 14.5%. Otherwise, shipments (1.5%), unfilled orders (0.2%), and inventories (0.6%) advanced in October. New orders for nondefense capital goods decreased 1.2% in October after falling 4.4% the previous month.
  • Imports and exports: October import prices rose 1.2% following a 0.4% advance in September. The October increase was the largest monthly advance since a 1.3% rise in May. Import prices rose 10.7% over the 12 months ended in October (9.2% for the 12 months ended in September), the largest year-over-year increase since June 2021. Import fuel prices jumped 8.6% in October after advancing 3.9% in September. Import fuel prices rose 86.7% over the past year. Both the 86.7% advance in petroleum prices and a 134.0% increase in natural gas prices factored into the 12-month rise in import fuel prices in October. Export prices advanced 1.5% in October after edging up 0.1% in September. The October increase was the largest one-month increase since a 2.3% rise in May 2021. For the year ended in October, export prices rose 18.0%, the largest 12-month increase since the series was first published in September 1983.
  • The international trade in goods advance report showed the October deficit decreased by $14.1 billion, or 14.6%, to $89.2 billion. Exports increased $15.3 billion, or 10.7%, while imports rose $1.1 billion, or 0.5%. For the 12 months ended in October, exports have risen 25.5%, while imports have increased 16.3%.
  • The latest information on international trade in goods and services, out November 4, was for September and showed that the goods and services trade deficit increased by 11.2% to $80.9 billion. September exports dipped 3.0%, while imports advanced 0.6%. Year to date, the goods and services deficit increased $158.7 billion, or 33.1%, from the same period in 2020. Exports increased $274.1 billion, or 17.4%. Imports increased $432.8 billion, or 21.1%.
  • International markets:Fears that the economic recovery might be slowed by the spread of the Omicron coronavirus variant impacted global markets. Several countries imposed travel bans and other restrictions in response to the potentially more contagious variant. A new government took control in Germany, with Social Democrat leader Olaf Scholz succeeding Angela Merkel as chancellor. Expectations for higher U.S. interest rates pulled the Japanese yen to a three-year low versus the dollar. Relations between the United States and China remained tense over the status of Taiwan and trade issues. The Chinese real estate sector remained troubled, as high-profile developers tried to avert default on obligations to creditors. In the markets for November, the STOXX Europe 600 Index dropped 3.0%; the United Kingdom’s FTSE fell 2.8%; Japan’s Nikkei 225 Index dipped 5.8%; and China’s Shanghai Composite Index rose 1.7%.
  • Consumer confidence: According to the latest report from The Conference Board, consumer confidence decreased in November for the fourth time in the last five months. The Consumer Confidence Index® stands at 109.5 in November, down from 111.6 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 142.5 in November from 145.5 the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, registered 87.6 in November, down from 89.0 in October.

Eye on the Month Ahead

December will not only close 2021 but will likely be a precursor to what lies ahead in 2022. The Federal Open Market Committee meets mid-month and is expected to address rising inflationary pressures. The FOMC could accelerate the reduction of bond purchases and possibly consider raising interest rates sometime in 2022. Job growth accelerated in September and October, adding nearly 850,000 new jobs. November’s figure is projected to be in the range of 350,000 new jobs added. Industrial production is expected to expand in November despite being hampered by supply bottlenecks and labor shortages.

What I’m Watching This Week – 29 November 2021

The Markets (as of market close November 26, 2021)

Thanksgiving week proved to be a tumultuous one for investors. Each of the benchmark indexes listed here ended the week in the red following news of a new COVID variant in South Africa. In response, several countries, including the United States, initiated travel bans and tightened border controls. Crude oil prices fell 13.5% in the week as the new coronavirus strain sparked fears that lockdowns would hurt global demand. The yield on 10-year Treasuries fell 10 basis points to close below 1.55% for the first time in several sessions.

A selloff in tech shares pulled the Nasdaq down 1.3% to open the week last Monday. The Russell 2000 fell 0.5%, the S&P 500 dipped 0.3%, and the Global Dow lost 0.1%. The Dow inched up 0.1%. Treasury yields advanced nearly 600 basis points to close at 1.62%. Crude oil prices increased 0.5% to $76.35 per barrel. The dollar rose, while gold prices slipped. The market sectors were mixed, with energy, financials, consumer staples, and utilities climbing higher, while communication services, information technology, consumer discretionary, real estate, and health care fell.

The Nasdaq (-0.5%) fell for the second consecutive day last Tuesday as tech stocks continued to tumble. Energy and financials led the market sectors, helping to push the S&P 500 up 0.2%. The Russell 2000 inched 0.2% lower, while the Dow (0.6%) and the Global Dow (0.2%) advanced. Ten-year Treasury yields rose, as bond prices fell. Crude oil prices increased ahead of a move by several countries, including the United States and China, to tap their strategic oil supplies. The dollar was mixed.

Gains in real estate and energy stocks helped drive the S&P 500 higher last Wednesday. The Nasdaq reversed course and led the benchmark indexes listed here, while the Global Dow and the Russell 2000 also posted gains. The Dow was unchanged on the day. Ten-year Treasury yields and crude oil prices dipped lower. The dollar advanced. Investors got mixed reports last Wednesday. The Federal Reserve released the minutes from its early November meeting and noted that it “would not hesitate to take appropriate actions to address inflation pressures.” Since that meeting, inflation has continued to rise, which could prompt the Fed to quicken the pace of tapering its bond purchasing program. On the other hand, consumer spending rose in October from a month earlier. But the biggest news was that the number of weekly claims for unemployment benefits dipped to its lowest level since 1969 (see below).

Stocks tumbled on Black Friday, the major shopping day after Thanksgiving, as investors reacted to news of another coronavirus variant identified in South Africa. Each of the benchmark indexes listed here fell by at least 2.0%, led by the Russell 2000 (-3.7%), followed by the Global Dow (-2.7%), the Dow (-2.5%), the S&P 500 (-2.3%), and the Nasdaq (-2.2%). Crude oil prices suffered one of the largest single-day plunges, dropping 13.1% to close the day at $68.15 per barrel. Ten-year Treasury yields fell to 1.48%. The dollar dipped lower. The market fallout was widespread, with each of the market sectors closing in the red. Energy (-4.0%) and financials (-3.3%) fell the furthest.

The national average retail price for regular gasoline was $3.395 per gallon on November 22, $0.004 per gallon less than the prior week’s price but $1.293 higher than a year ago. Gasoline production increased during the week ended November 19, averaging 10.1 million barrels per day. U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ended November 19 — 243,000 barrels per day more than the previous week’s average. Refineries operated at 88.6% of their operable capacity, up from the prior week’s level of 87.9%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 11/26Weekly ChangeYTD Change
DJIA30,606.4835,601.9834,899.34-1.97%14.03%
Nasdaq12,888.2816,057.4415,491.66-3.52%20.20%
S&P 5003,756.074,697.964,594.62-2.20%22.33%
Russell 20001,974.862,363.592,245.94-4.98%13.73%
Global Dow3,487.524,057.433,962.95-2.33%13.63%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.58%1.48%-10 bps57 bps
US Dollar-DXY89.8496.0496.090.05%6.96%
Crude Oil-CL=F$48.52$78.76$68.15-13.47%40.46%
Gold-GC=F$1,893.10$1,861.20$1,785.50-4.07%-5.68%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Gross domestic product increased at an annual rate of 2.1% in the third quarter of 2021, according to the second estimate released by the Bureau of Economic Analysis (BEA). GDP expanded at an annualized rate of 6.7% in the second quarter. The deceleration in GDP in the third quarter compared to the second was significantly impacted by a slowdown in personal consumption expenditures, which rose 1.7% in the third quarter compared to 12.0% in the second quarter. A few areas that increased in third-quarter GDP included private inventory investment (11.6% vs. -3.9% second quarter) and state and local government spending (4.7% vs. 0.2% second quarter). The personal consumption price index rose 5.3% in the third quarter.
  • According to the latest data from the BEA, prices consumers spend on goods and services rose 0.6% in October and is up 5.0% over the past 12 months. Personal income increased 0.5%, while disposable personal income rose 0.3%. Consumer spending increased 1.3% in October.
  • New orders for long-lasting durable goods fell for the second consecutive month in October, dropping 0.5%, following a 0.4% dip in September. Transportation equipment continued to be a drag on new orders, falling 2.6% in October after decreasing 2.8% the previous month. Excluding transportation, new orders for durable goods actually advanced 0.5%. Excluding defense, new orders rose 0.8% in October. Some items of note include new orders for communications equipment, which rose 7.9%; motor vehicles and parts advanced 4.8%; and new orders for electrical equipment, appliances, and components increased 1.2%. On the other hand, new orders for nondefense aircraft and parts fell 14.5%, defense aircraft and parts dropped 21.8%, and defense capital goods decreased 20.1%.
  • The trade deficit for goods (excluding services) was $82.9 billion in October, down $14.1 billion, or 14.6%, from the September figure. Exports rose by $15.3 billion, or 10.7%, while imports increased $1.1 billion, or 0.5%. The jump in exports was spread across several sectors, led by industrial supplies (16.6%) and automotive vehicles (14.4%). Imports were driven higher by a 5.7% increase in automotive vehicles.
  • According to the latest survey from the National Association of Realtors®, sales of existing homes rose 0.8% in October, following a 7.0% jump in September. Nevertheless, existing home sales were 5.8% lower than the October 2020 total. Housing inventory dipped 0.8% in October, representing a 2.4-month supply at the current sales pace. The October median existing-home price was $353,900, up slightly from the $351,200 price in September. Year over year, the median existing-home price was 13.1% over the October 2020 price. Sales of existing single-family homes climbed 1.3% last month but were down 5.8% from October 2020. The median existing single-family home price was $360,800 ($357,900 in September), up 13.5% from October 2020. The inventory of existing single-family homes for sale in October represented a 2.3-month supply, unchanged from the September figure.
  • Sales of new single-family homes also rose in October, increasing 0.4% over the September rate. New home sales were 23.1% below the October 2020 pace. The median sales price of new houses sold in October was $407,700. The average sales price was $477,800. Inventory sits at a supply of 6.3 months at the current sales pace.
  • For the week ended November 20, there were 199,000 new claims for unemployment insurance, a decrease of 71,000 from the previous week’s level, which was revised up by 2,000. This is the lowest level for initial claims since November 15, 1969, when it was 197,000. While encouraging, the drop in jobless claims may be attributable to several factors. Seasonal hires for the holiday shopping season increased the number of hires. This data was released a day early to accommodate Thanksgiving and is likely to be revised next week. And, customary layoffs related to end-of-year cost cutting are being replaced by businesses retaining employees in lieu of unfilled job openings. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 13 was 1.5%, a decrease of 0.1 percentage point from the previous week’s revised rate. The advance number of those receiving unemployment insurance benefits during the week ended November 13 was 2,049,000, a decrease of 60,000 from the prior week’s level, which was revised up by 29,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 762,000 initial claims for unemployment insurance, and the rate for unemployment claims was 4.2%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended November 6 were the Virgin Islands (3.0%), Alaska (2.7%), the District of Columbia (2.7%), Puerto Rico (2.7%), California (2.6%), New Jersey (2.5%), Hawaii (2.1%), Nevada (2.1%), Illinois (1.9%), and New York (1.8%). The largest increases in initial claims for the week ended November 13 were in California (+4,690), Massachusetts (+2,269), Pennsylvania (+1,994), Minnesota (+1,202), and Wisconsin (+907), while the largest decreases were in Kentucky (-8,712), Tennessee (-4,001), Ohio (-3,315), Michigan (-3,230), and Illinois (-1,184).

Eye on the Week Ahead

The purchasing managers’ manufacturing and services reports for November are available this week. Respondents have noted that while the manufacturing and services sectors continue to expand, each area has been impacted by supply bottlenecks and labor shortages. Those issues are expected to remain through the year, which will further drive cost inflation. The November employment figures are also out at the end of this week. Over 500,000 new jobs were added in October, and hourly wages rose by 0.4%.

What I’m Watching This Week – 22 November 2021

The Markets (as of market close November 19, 2021)

Stocks closed last week mixed, with the Nasdaq and the S&P 500 posting gains, while the Russell 2000, the Global Dow, and the Dow fell. Another round of strong corporate earnings data was enough to overcome investor concerns that rising inflation might accelerate the withdrawal of economic stimulus, while a resurgence of COVID-19 cases in Europe could lead to more lockdowns, stalling economic recovery. Ten-year Treasury yields ended the week where they began. Crude oil prices declined more than 2.5% to $78.76 per barrel. The dollar rose, while gold prices dipped lower. Consumer discretionary led the market sectors, advancing 3.8%, while information technology rose 2.4%. Energy fell 5.2%.

Stocks closed marginally lower to begin the week last Monday. The Russell 2000 dipped 0.5%, while the remaining benchmark indexes listed here fell by less than 0.1%. Ten-year Treasury yields increased to close at 1.62%. The dollar and crude oil prices advanced slightly. The market sectors were also mixed, with energy and utilities showing strength, while information technology, health care, and materials lagged.

Last Tuesday, equities rose following strong economic data. The majority of the benchmark indexes listed here posted solid gains after strong retail sales figures, a solid industrial production report, and favorable corporate earnings results. Only the Global Dow dipped lower, while the Nasdaq (0.8%), the S&P 500 (0.4%), the Russell 2000 (0.2%), and the Dow (0.2%) gained. Crude oil prices declined, while the dollar and 10-year Treasury yields climbed higher.

Last Tuesday’s momentum for stocks didn’t carry over to Wednesday, as each of the benchmark indexes ended the day in the red. The Russell 2000 led the decline, falling 1.2%, followed by the Dow (-0.6%), the Nasdaq (-0.3%), the S&P 500 (-0.3%), and the Global Dow (-0.3%). Along with rising inflation, housing starts slowed in October as builders wrestled with rising material prices and labor shortages. Ten-year Treasury yields and the dollar fell. Crude oil prices dipped below $80.00 per barrel, closing the day at around $78.00 per barrel. Consumer discretionary, real estate, and health care were the only sectors to advance. Energy (-1.7%) and financials (-1.1%) fell the furthest.

Consumer discretionary and information technology shares helped push the Nasdaq (0.5%) and the S&P 500 (0.3%) higher last Thursday. The Russell 2000 (-0.6%), the Global Dow (-0.4%), and the Dow (-0.2%) fell. Treasury yields and the dollar slid, while crude oil prices advanced marginally.

Wall Street was driven lower last Friday as economically sensitive market sectors, such as energy, financials, and health care, fell. Among the benchmark indexes listed here, only the Nasdaq was able to post a gain. The Russell 2000 and the Global Dow dipped 0.9%, while the Dow dropped 0.8%. The S&P 500 inched slightly lower by the close of trading. Ten-year Treasury yields and crude oil prices decreased, while the dollar advanced.

The national average retail price for regular gasoline was $3.399 per gallon on November 15, $0.011 per gallon less than the prior week’s price but $1.288 higher than a year ago. Gasoline production decreased during the week ended November 12, averaging 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 15.4 million barrels per day during the week ended November 12 — 32,000 barrels per day more than the previous week’s average. Refineries operated at 87.9% of their operable capacity, up from the prior week’s level of 86.7%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 11/19Weekly ChangeYTD Change
DJIA30,606.4836,100.3135,601.98-1.38%16.32%
Nasdaq12,888.2815,860.9616,057.441.24%24.59%
S&P 5003,756.074,682.854,697.960.32%25.08%
Russell 20001,974.862,411.782,363.59-2.00%19.68%
Global Dow3,487.524,134.924,057.43-1.87%16.34%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.58%1.58%0 bps67 bps
US Dollar-DXY89.8495.1196.040.98%6.90%
Crude Oil-CL=F$48.52$80.84$78.76-2.57%62.32%
Gold-GC=F$1,893.10$1,868.00$1,861.20-0.36%-1.69%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Retail sales continued to climb in October, increasing 1.7% after rising 0.8% (revised higher) in September. Retail sales have advanced 16.3% since October 2020. Retail trade sales rose 1.9% in October and are up 14.8% for the year. Gasoline station sales increased 3.9% in October and 46.8% from October 2020, while food services and drinking places were flat in October but have increased 29.3% from last year. This data seems to indicate that consumers are willing to spend, even at higher prices.
  • Import prices rose 1.2% last month, the largest monthly increase since May 2021. Prices for imports have risen 10.7% since October 2020, the largest 12-month increase since the year ended in June 2021. Contributing to the import price increase was an 8.1% jump in petroleum prices. Natural gas prices advanced 19.7% in October. Overall, import fuel prices increased 86.7% over the past 12 months. Petroleum prices have risen 86.1% for the year, while natural gas prices have risen 134.0%. Export prices advanced 1.5% in October, the largest one-month increase since May 2021. Export prices have increased 18.0% over the 12 months ended in October. Agricultural export prices (1.0%) and nonagricultural prices (1.5%) increased in October.
  • Industrial production rose 1.6% in October after falling 1.3% in September. Much of the October increase was reflective of the recovery from the effects of Hurricane Ida. Manufacturing output rose 1.2% last month, while factory output moved up 0.6%. Overall, total industrial production in October was 5.1% above its year-earlier level and the highest since December 2019.
  • The number of building permits for new residential construction rose by 4.0% in October. Building permits for single-family construction increased 2.7%. Overall, the number of building permits issued for residential construction is 3.4% above the October 2020 rate. Housing starts dipped 0.7% last month, while single-family housing starts slid 3.9%. Housing completions were essentially unchanged in October from the previous month but are 8.4% below the October 2020 pace. Single-family home completions fell 1.7% in October.
  • For the week ended November 13, there were 268,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level, which was revised up by 2,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 6 was 1.5%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 6 was 2,080,000, a decrease of 129,000 from the prior week’s level, which was revised up by 49,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 732,000 initial claims for unemployment insurance, and the rate for unemployment claims was 4.4%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended October 30 were the District of Columbia (3.5%), Puerto Rico (3.5%), California (3.0%), Alaska (2.5%), Hawaii (2.5%), Illinois (2.5%), New Jersey (2.4%), Nevada (2.2%), the Virgin Islands (2.2%), and Oregon (1.9%). The largest increases in initial claims for the week ended November 6 were in Kentucky (+6,716), Ohio (+3,846), Tennessee (+2,411), Illinois (+1,893), and Michigan (+1,564), while the largest decreases were in California (-4,222), the District of Columbia (-1,794), and Louisiana (-1,028).

Eye on the Week Ahead

Thanksgiving week is filled with important economic reports, led by the second estimate of the third-quarter GDP. The initial estimate showed the economy expanded at a rate of 2.0%, well off the pace of 6.7% set in the second quarter. The report on personal income and outlays for October is also out this week. Although personal income fell 0.1% in September, consumer spending increased 0.6%, and consumer prices rose 0.3%. Finally, the housing sector is front and center with the latest data on sales of new and existing homes. Sales of both new and existing homes soared in September, increasing 14.0% and 7.0%, respectively.

What I’m Watching This Week – 15 November 2021

The Markets (as of market close November 12, 2021)

Although equities closed last week on a high note, it wasn’t enough to recover from mid-week losses. Each of the benchmark indexes lost ground, with the Russell 2000 falling over 1.0% to lead the pack. Inflation concerns seemed to weigh on investors’ minds during the week. While the Federal Reserve continues to suggest that inflationary pressures will calm by next year, traders may be concerned that if prices continue to rise, the Fed may consider hiking interest rates as soon as the summer of 2022. Ten-year Treasury yields edged higher. The dollar advanced, while crude oil prices fell to $80.84 per barrel. Gold prices rose for the second consecutive week, jumping nearly 2.7%. Materials led the market sectors, climbing 2.5% for the week. Consumer discretionary (-3.2%), energy (-1.7%), and utilities (-1.0%) fell the furthest.

Several of the benchmark indexes listed here reached new highs last Monday. The Dow finished up 0.3%, the S&P 500 and the Nasdaq eked out 0.1% gains, while the Russell 2000 advanced 0.2%. These advances drove each of these indexes to record highs. Among the market sectors, materials and energy led the winners, while utilities, consumer discretionary, and consumer staples fell. Ten-year Treasury yields and crude oil prices climbed higher, while the dollar dipped lower.

Stocks retreated from their longest rally since 2017 last Tuesday, as the benchmark indexes dipped from their all time highs. Consumer discretionary, financials, information technology, and health care dragged the S&P 500 lower, falling 0.4% by the close of trading. The Dow declined 0.3%, the Nasdaq and the Russell 2000 each lost 0.6%, and the Global Dow slid 0.3%. The yield on 10-year Treasuries fell to 1.43% — its lowest end-of-day rate since mid-September. Crude oil prices rose nearly 3.0%, while the dollar was mixed.

Rising inflation data shook the markets last Wednesday. Ten-year Treasury yields rose by nearly 9.0%, while the Nasdaq and the Russell 2000 each fell by about 1.6%. The S&P 500 dipped 0.8%, the Dow slipped 0.7%, and the Global Dow fell 0.5%. The dollar climbed higher, while crude oil prices fell to $81.31 per barrel, down 3.4% from the previous day’s value. Gold prices gained 1.2%. Several of the market sectors declined, led by energy (-3.0%), followed by information technology (-1.7%) and communication services (-1.3%). Consumer staples, health care, and utilities were the only sectors to close the day in the black.

Last Thursday was Veterans Day, an unusual trading day in the United States. Stock markets are open, but bond markets are closed. Tech stocks led a comeback in the Nasdaq, pushing that index up 0.5% last Thursday. The Russell 2000 also recovered some of the previous day’s losses after advancing 0.8%. The large caps didn’t fare quite as well. The S&P 500 inched up 0.1%, while the Dow fell 0.4%. The Global Dow dipped 0.1%. Crude oil prices decreased for the second consecutive day, falling to $81.12 per barrel. The dollar rose 0.3%.

Last Friday saw stocks post solid gains. The Nasdaq added 1.0%, followed by the S&P 500 (0.7%), the Dow (0.5%), the Global Dow (0.2%), and the Russell 2000 (0.1%). Ten-year Treasury yields advanced, while crude oil prices and the dollar fell. The market sectors were mixed on the day, with communication services and information technology gaining more than 1.0%, while energy and utilities dipped lower.

The national average retail price for regular gasoline was $3.410 per gallon on November 8, $0.020 per gallon more than the prior week’s price and $1.314 higher than a year ago. Gasoline production decreased during the week ended November 5, averaging 10.1 million barrels per day. U.S. crude oil refinery inputs averaged 15.4 million barrels per day during the week ended November 5 — 343,000 barrels per day more than the previous week’s average. Refineries operated at 86.7% of their operable capacity, up from the prior week’s level of 86.3%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 11/12Weekly ChangeYTD Change
DJIA30,606.4836,327.9536,100.31-0.63%17.95%
Nasdaq12,888.2815,971.5915,860.96-0.69%23.06%
S&P 5003,756.074,697.534,682.85-0.31%24.67%
Russell 20001,974.862,437.082,411.78-1.04%22.12%
Global Dow3,487.524,154.514,134.92-0.47%18.56%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.45%1.58%13 bps67 bps
US Dollar-DXY89.8494.2295.110.94%5.87%
Crude Oil-CL=F$48.52$81.40$80.84-0.69%66.61%
Gold-GC=F$1,893.10$1,819.00$1,868.002.69%-1.33%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Inflation data for October was hotter than expected. The Consumer Price Index jumped 0.9% in October after increasing 0.4% the previous month. Over the last 12 months ended in October, consumer prices have risen 6.2% — the largest 12-month increase since November 1990. Consumer prices less food and energy rose 4.6% over the last 12 months, the largest 12-month increase since August 1991. The October CPI advance was broad-based, with increases in energy (4.8%), shelter (0.5%), food (0.9%), used cars and trucks (2.5%), and new vehicles (1.4%) among the larger contributors. Gasoline prices increased 6.1% and prices for fuel oil rose 12.3%.
  • Prices that producers are charged for goods and services continued to climb higher in October. According to the latest report from the Bureau of Labor Statistics, producer prices rose 0.6% last month, after advancing 0.5% in September and 0.7% in August. Producer prices have risen 8.6% for the 12 months ended in October. Prices less foods, energy, and trade services moved up 0.4% in October after increasing 0.1% in September. For the 12 months ended in October, producer prices less foods, energy, and trade services rose 6.2%. Over 60% of the October increase in producer prices can be traced to a 1.2% rise in goods prices. Producer prices for services increased 0.2%. Driving the increase in goods prices was a 4.8% jump in energy prices. In particular, prices for gasoline rose 6.7% in October. A 0.4% increase in trade services accounted for nearly 75% of the increase in producer prices for services.
  • The Treasury budget deficit for October, the first month of fiscal year 2022, was $165.1 billion. The deficit for the previous October was $284.1 billion, or 42%, greater. Government receipts totaled $283.9 billion, while expenditures were $449.0 billion. Compared to October 2020, individual income tax receipts rose 32.0%, while corporate tax receipts jumped 72.0%.
  • According to the latest Job Openings and Labor Turnover Summary, there were 10.4 million job openings in September, a reduction of less than 200,000 from the previous month’s total. Job openings increased in health care and social assistance (+141,000); state and local government, excluding education (+114,000); wholesale trade (+51,000); and information (+51,000). Job openings decreased in state and local government education (-114,000); other services (-104,000); real estate and rental and leasing (-65,000); and educational services (-45,000). In September, hires and total separations were little changed at 6.5 million and 6.2 million, respectively.
  • For the week ended November 6, there were 267,000 new claims for unemployment insurance, a decrease of 4,000 from the previous week’s level, which was revised up by 2,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 30 was 1.6%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 30 was 2,160,000, an increase of 59,000 from the prior week’s level, which was revised down by 4,000. For comparison, last year at this time, there were 728,000 initial claims for unemployment insurance, and the rate for unemployment claims was 4.6%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended October 23 were Puerto Rico (3.7%), California (2.8%), the District of Columbia (2.5%), New Jersey (2.5%), the Virgin Islands (2.5%), Alaska (2.4%), Hawaii (2.8%), Illinois (2.2%), Nevada (2.2%), and Oregon (1.9%). The largest increases in initial claims for the week ended October 30 were in Kentucky (+2,882), Louisiana (+907), Minnesota (+885), Tennessee (+798), and New Jersey (+768), while the largest decreases were in Missouri (-3,014), Florida (-2,286), Virginia (-1,482), Oklahoma (-1,324), and Pennsylvania (-1,026).

Eye on the Week Ahead

More inflation data for October is available this week with the release of the retail sales report and import and export prices. Also worth watching is the Federal Reserve’s report on industrial production. September saw industrial production slip 1.3%, with manufacturing output falling 0.7%. That followed August, which saw industrial production fall 0.1% (revised).

What I’m Watching This Week – 8 November 2021

The Markets (as of market close November 5, 2021)

The first week of November saw stocks climb higher on the strength of favorable corporate earnings data, strong job growth, a dovish policy statement from the Federal Reserve, and favorable news on the battle against COVID-19. Several of the benchmark indexes listed here reached record highs. The Russell 2000 led the indexes for the week, followed by the Nasdaq, the S&P 500, the Global Dow, and the Dow. Ten-year Treasury yields dipped for the second consecutive week. The dollar inched higher, while crude oil prices fell. Several of the market sectors trended higher, led by consumer discretionary (5.0%), information technology (3.3%), and materials (3.2%).

Energy and consumer discretionary stocks helped drive the S&P 500 to another record high last Monday. Third-quarter corporate earnings data has continued to be strong, with results of more than 80% of the reporting companies in the S&P 500 exceeding estimates. Stocks have generally rallied since earnings season began a few weeks ago, despite ongoing and persistent supply-chain bottlenecks that have weighed on manufacturers. Also posting gains were the small caps of the Russell 2000 (2.7%), the Global Dow (1.0%), the Nasdaq (0.6%), and the Dow (0.3%). Treasury yields were flat, the dollar fell, and crude oil prices increased.

Last Tuesday, the Dow (0.4%) closed above 36,000 for the first time ever, while the S&P 500 (0.4%) and the Nasdaq (0.3%) also reached record highs. The Russell 2000 rose 0.2%, while the Global Dow dropped 0.2%. Ten-year Treasury yields fell to 1.54%. The dollar climbed higher, while crude oil prices declined. The best performing market sectors were materials, real estate, information technology, consumer staples, and health care.

Wall Street continued to trend higher last Wednesday after the Federal Reserve’s policy announcement matched expectations. The Russell 2000 gained 1.8%, followed by the Nasdaq (1.0%), the S&P 500 (0.7%), the Global Dow (0.4%), and the Dow (0.3%). With Wednesday’s gains, the S&P 500, the Dow, the Nasdaq, and the Russell 2000 each closed at record highs, a feat not seen since the beginning of 2018. The market sectors generally performed well, with only energy (-0.8%) and utilities (-0.3%) falling. Consumer discretionary (1.8%) and materials (1.1%) gained the most. Bond prices fell, pushing yields higher. The dollar and crude oil prices declined.

The Nasdaq and the S&P 500 rose to new all time highs last Thursday, while the Dow, the Russell 2000, and the Global Dow slipped lower. Ten-year Treasury yields fell to 1.52%. The dollar rose, while crude oil prices fell below $80.00 to $79.21 per barrel. The market sectors were mixed, with consumer discretionary and information technology advancing 1.5%, while financials and real estate dipped more than 1.0%.

Stocks closed last week on a high note, with the Dow, the Russell 2000, the Nasdaq, and the S&P 500 reaching record highs. Strong jobs data and encouraging news about the viability of an antiviral pill for COVID-19 helped equities extend recent gains. The Russell 2000 advanced nearly 1.5%, followed by the Dow (0.6%), the Global Dow (0.5%), the S&P 500 (0.4%), and the Nasdaq (0.2%). Health care was the only market sector to recede. Energy jumped 1.4% to lead the gainers. Treasury yields and the dollar slid, while crude oil prices climbed back above $80.00 per barrel, closing around $81.40.

The national average retail price for regular gasoline was $3.390 per gallon on November 1, $0.007 per gallon more than the prior week’s price and $1.278 higher than a year ago. Gasoline production increased during the week ended October 29, averaging 10.2 million barrels per day. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ended October 29 — 25,000 barrels per day less than the previous week’s average. Refineries operated at 86.3% of their operable capacity, up from the prior week’s level of 85.1%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 11/5Weekly ChangeYTD Change
DJIA30,606.4835,819.5636,327.951.42%18.69%
Nasdaq12,888.2815,498.3915,971.593.05%23.92%
S&P 5003,756.074,605.384,697.532.00%25.07%
Russell 20001,974.862,297.192,437.086.09%23.41%
Global Dow3,487.524,091.614,154.511.54%19.13%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.55%1.45%-10 bps54 bps
US Dollar-DXY89.8494.1294.220.11%4.88%
Crude Oil-CL=F$48.52$83.27$81.40-2.25%67.77%
Gold-GC=F$1,893.10$1,784.20$1,819.001.95%-3.91%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • October saw 531,000 new jobs added, the unemployment rate dipped 0.2 percentage point to 4.6%, and the number of unemployed dropped 255,000 to 7.4 million. The number of unemployed and the unemployment rate continue to trend downward, but they remain above their levels prior to the pandemic (3.5% and 5.7 million, respectively, in February 2020). Thus far this year, monthly job growth has averaged 582,000. Employment has increased by 18.2 million since April 2020 but is down by 4.2 million, or 2.8%, from its pre-pandemic level in February 2020. Notable job gains occurred in leisure and hospitality, in professional and business services, in manufacturing, and in transportation and warehousing. Employment in public education declined over the month. The labor force participation rate in October, at 61.6%, was unchanged from the previous month. The employment-population ratio inched up 0.1 percentage point in October to 58.8%. Among the unemployed, 840,000 voluntarily left their jobs, up 52,000 from the September figure. Conversely, the number of persons not in the labor force who currently want a job was 6.0 million in October, essentially unchanged over the month but up by 968,000 since February 2020. In October, 11.6% of employed persons teleworked because of the pandemic, down from 13.2% in the prior month. In October, 3.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, down from 5.0 million in September. Average hourly earnings increased by $0.11 to $30.96 in October. Over the past 12 months, average hourly earnings have increased 4.9%. The average workweek decreased by 0.1 hour to 34.7 hours in October.
  • There were no surprises following the Federal Open Market Committee’s meeting last week. The target range for the federal funds rate will remain at its present 0.00%-0.25%. However, in light of the substantial further progress the economy has made toward the Committee’s goals since last December, the Committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities, beginning later this month.
  • Capacity constraints, transportation delays, rising material costs, and labor shortages continued to impact manufacturers in October, according to the latest survey of purchasing managers from IHS Markit. The IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 58.4 in October, down from 60.7 in September. Although manufacturing increased (a reading of 50.0 and above signifies growth) in September, the PMI™ was the weakest in 10 months.
  • While the manufacturing sector may be feeling the effects of supply bottlenecks, service providers enjoyed a strong October. The IHS Markit US Services PMI Business Activity Index registered 58.7 in October, up from 54.9 in September. Survey respondents noted a steep upturn in business activity in October, with the rise in output the quickest in three months. New business expanded, supported by a rise in new orders. Nonetheless, concerns regarding labor shortages and unstable supply chains led business confidence to drop to an eight-month low. The rate of cost inflation eased to an eight-month low, despite being quicker than any pace of increase since before March 2021. In response to a further rise in costs, firms raised their selling prices at the fastest rate on record.
  • The September goods and services trade deficit was $80.9 billion, up $8.1 billion, or 11.2%, from the August deficit. Exports fell $6.4 billion, or 3.0%, while imports rose $1.7 billion, or 0.6%. Year to date, the goods and services deficit increased $158.7 billion, or 33.1%, from the same period in 2020. Exports increased $274.1 billion, or 17.4%. Imports increased $432.8 billion, or 21.1%.
  • For the week ended October 30, there were 269,000 new claims for unemployment insurance, a decrease of 14,000 from the previous week’s level, which was revised up by 2,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 23 was 1.6%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 23 was 2,105,000, a decrease of 134,000 from the prior week’s level, which was revised down by 4,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 765,000 initial claims for unemployment insurance, and the rate for unemployment claims was 4.8%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended October 16 were Puerto Rico (4.2%), California (2.9%), Hawaii (2.8%), Illinois (2.8%), New Jersey (2.5%), the Virgin Islands (2.5%), Alaska (2.4%), the District of Columbia (2.3%), Nevada (2.3%), and Pennsylvania (2.0%). The largest increases in initial claims for the week ended October 23 were in the District of Columbia (+3,875), Kentucky (+2,940), Missouri (+2,048), Florida (+1,307), and Oklahoma (+1,256), while the largest decreases were in California (-13,138), Georgia (-4,107), Michigan (-2,505), Pennsylvania (-1,245), and Tennessee (-794).

Eye on the Week Ahead

Inflation data for October is available this week with the release of the Producer Price Index and the Consumer Price Index. Prices at the producer level have risen at a faster pace than consumer prices. The PPI jumped 0.5% in September and is up 8.6% over the past 12 months. The CPI advanced 0.4% in September and has risen 5.4% since last September.

Monthly Market Review – October 2021

The Markets (as of market close October 29, 2021)

October proved to be one of the best months for equities in 2021, with each of the benchmark indexes listed here enjoying solid gains. The S&P 500 had its best month since November 2020. The Nasdaq picked up over 7.25%, the largest monthly advance in more than a year. Strong third-quarter corporate earnings data helped ease investor concerns that rising inflation, supply-chain bottlenecks, labor shortages, and rising coronavirus cases would hamper corporate America. Year to date, each of the indexes is well over 16.00% higher than its respective 2020 closing value, with the S&P 500 and the Nasdaq more than 20.00% higher.

Wall Street’s strong October performance came despite a notable slowdown in economic growth as third-quarter GDP rose 2.0%, following a 6.7% increase in the second quarter. Job growth slowed, although the number of unemployment claims also decreased. Inflationary pressures appear to be more than transitory as the latest Consumer Price Index showed prices rose 0.4%, while producer prices increased 0.5%. The housing sector enjoyed solid gains as sales of both new and existing homes rose. Each of the market sectors advanced, with energy (16.9%) and consumer discretionary (9.3%) leading the way.

Ten-year Treasury yields inched higher in October, the dollar dipped lower, gold prices increased nearly 1.50%, and crude oil prices rose more than 10.00% to $83.27 per barrel. The national average retail price for regular gasoline was $3.383 per gallon on October 25, up from the September 27 price of $3.175 per gallon.

Stock Market Indexes

Market/Index2020 ClosePrior MonthAs of October 29Monthly ChangeYTD Change
DJIA30,606.4833,843.9235,819.565.84%17.03%
Nasdaq12,888.2814,448.5815,498.397.27%20.25%
S&P 5003,756.074,307.544,605.386.91%22.61%
Russell 20001,974.862,204.372,297.194.21%16.32%
Global Dow3,487.523,958.344,091.613.37%17.32%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.52%1.55%3 bps64 bps
US Dollar-DXY89.8494.2594.12-0.14%4.76%
Crude Oil-CL=F$48.52$75.03$83.2710.98%71.62%
Gold-GC=F$1,893.10$1,758.20$1,784.201.48%-5.75%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Latest Economic Reports

  • Employment: The pace of job gains continued to slow in September, as 194,000 new jobs were added, well off the pace set in August (366,000) and July (1,091,000). Through the first nine months of the year, monthly job growth has averaged 561,000. The unemployment rate declined by 0.4 percentage point to 4.8% in September. The number of unemployed persons fell by 710,000 to 7.7 million. Both measures are down considerably from their highs at the end of the February-April 2020 period. However, they remain above their levels prior to the COVID-19 pandemic (3.5% and 5.7 million, respectively, in February 2020). In September, notable job gains occurred in leisure and hospitality (74,000), professional and business services (60,000), retail trade (56,000), transportation and warehousing (47,000), and in information technology (32,000). Employment decreased by 144,000 in local government education and by 17,000 in state government education. Among the unemployed, the number of permanent job losers declined by 236,000 to 2.3 million in September but is 953,000 higher than in February 2020. The number of persons not in the labor force who currently want a job was 6.0 million, down by roughly 300,000 from the August total. The labor force participation rate in September, at 61.6%, dipped 0.1 percentage point from the August rate and has remained within a narrow range of 61.4% to 61.7% since June 2020. The employment-population ratio was 58.7% in September, up 0.2 percentage point from the previous month. This measure is up from its low of 51.3% in April 2020 but remains below the figure of 61.1% in February 2020. In September, 13.2% of employed persons teleworked because of the pandemic, little changed from the prior month. In September, 5.0 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, which is down from 5.6 million in August. Average hourly earnings rose $0.19 to $30.85. Earnings have increased 4.6% since September 2020. The average work week in September was 34.8 hours, an increase of 0.2 hours from August.
  • The number of claims for unemployment insurance fell in October. According to the latest weekly totals, as of October 16, there were 2,243,000 workers receiving unemployment insurance benefits, down from the September 18 total of 2,802,000. The unemployment rate for the week ended October 16 was 1.7%, down 0.3 percentage point from the September 18 rate of 2.0%. During the week ended October 9, Extended Benefits were available in four states/territories: Alaska, Connecticut, New Jersey, and New Mexico; 42 states reported 270,013 continued weekly claims for Pandemic Unemployment Assistance benefits (1,059,248 on September 11), and 45 states reported 244,379 continued claims for Pandemic Emergency Unemployment Compensation benefits (991,813 on September 11).
  • FOMC/interest rates: The Federal Open Market Committee did not meet in October. The next scheduled meeting is November 2-3. Nevertheless, several members of the Committee, including Chair Jerome Powell, have indicated that The Federal Reserve is likely to begin scaling back its asset purchasing program as early as November. Also, Powell acknowledged that inflationary pressures may continue to increase for a longer period than previously anticipated, which could prompt an increase in the federal funds rate.
  • GDP/budget: According to the first, or “advance” estimate from the Bureau of Economic Analysis, the economy accelerated at an annual rate of 2.0% in the third quarter after advancing 6.7% in the second quarter. Consumer spending, as measured by personal consumption expenditures, increased 1.6% in the third quarter after rising 12.0% in the prior quarter. The personal consumption price index (prices for consumer goods and services) rose 5.3% in the third quarter after climbing 6.5% in the second quarter. Excluding food and energy, the price index increased 4.5% in the third quarter compared with an increase of 6.1% in the second quarter. In the third quarter, fixed investment dipped 0.8% following a 3.3% increase in the second quarter, and residential fixed investment fell 7.7% after decreasing 11.7% in the second quarter. Exports slid 2.5% in the third quarter after increasing 7.6% in the second quarter. Imports (which are a negative in the calculation of GDP) increased 6.1% in the third quarter (7.1% in the second quarter).
  • The Treasury budget deficit for September came in at $61.5 billion, 51.0% under the deficit in the same month last year. Following the latest increase, the budget deficit for fiscal year 2021, which ends in September, widened to $2.77 trillion, 11.0% smaller than the deficit for fiscal year 2020. Compared to fiscal year 2020, government expenditures rose by 4.0% in fiscal year 2021, however that increase was offset by an 18.0% increase in government receipts. Individual income taxes rose 27.1% in fiscal year 2021, while corporate income taxes increased 76.0%.
  • Inflation/consumer spending: Prices at the consumer level continued to advance in September but at a slightly slower pace. According to the latest Personal Income and Outlays report, consumer prices rose 0.3% in September, the same increase as in August (revised). Prices have increased 4.4% since September 2020. Excluding food and energy, consumer prices rose 0.2% in September (0.3% in August) and 3.6% since September 2020. Personal income decreased 1.0% in September, while disposable (after-tax) personal income fell 1.3%. The decrease in personal income in September primarily reflected a decrease in government social benefits. Consumer spending rose 0.6% in September following a 1.0% increase in August.
  • The Consumer Price Index climbed 0.4% in September following a 0.3% jump in August. Over the 12 months ended in September, the CPI rose 5.4%. Prices less food and energy rose 0.2% in September. Higher costs for food and fuel, as well as other items, such as new vehicles, have mainly contributed to the increase in the CPI. Food prices rose 0.9% in September, while energy prices increased 1.3% (fuel oil prices climbed 3.9%), and new vehicle prices advanced 1.3%. Shelter costs, which account for about one third of the CPI, gained 0.4% in September.
  • Producer prices continued to climb in September. Prices that producers receive for goods and services increased 0.5% for the month after rising 0.7% in August and 1.0% in July. Producer prices increased 8.6% for the 12 months ended in September, the largest yearly gain since November 2010 when 12-month data was first calculated. In September, prices for services rose 0.2% (0.7% in August), and prices for goods moved up 1.3% (1.0% in August). Producer prices less foods, energy, and trade services advanced 0.1% in September (0.3% in August) and have risen 5.9% since September 2020. Energy prices jumped 2.8% in September, while prices for food rose 2.0%.
  • Housing: Existing home sales rebounded from an August dip, advancing 7.0% in September. Nevertheless, over the past 12 months, existing home sales have dropped 2.3%. The median existing-home price was $352,800 in September ($356,700 in August), up 13.3% from September 2020 ($311,500). Total housing inventory at the end of September dropped 0.8% from August’s supply and is down 13.0% from one year ago. In September, unsold inventory sat at a 2.4-month supply at the present sales pace (2.6 month supply in August). Sales of existing single-family homes also rose in September, climbing 7.7% after decreasing 1.9% in August. Year over year, sales of existing single-family homes fell 3.1%. The median existing single-family home price was $359,700 in September, down from $363,800 in August.
  • New single-family home sales increased in September, advancing 14.0% after falling 1.4% in August (revised). Despite the recent monthly increase, sales of new single-family homes have decreased 17.6% from September 2020. The median sales price of new single-family houses sold in September was $408,800 ($401,500 in August). The September average sales price was $451,700 ($446,900 in August). The inventory of new single-family homes for sale in September represents a supply of 5.7 months at the current sales pace, down from the August revised estimate of 6.5 months.
  • Manufacturing: Industrial production fell 1.3% in September following a 0.1% dip in August (revised). Manufacturing output decreased 0.7% after declining 0.4% in August, as production of motor vehicles and parts fell 7.2% due to shortages of semiconductors. Factory output elsewhere declined 0.3%. Utilities dropped 3.6%, while mining production fell 2.3%. Much of the weakness in production in September resulted from large decreases in consumer goods and materials. Business equipment, defense and space equipment, and construction supplies recorded small gains, while business supplies recorded a small loss. Despite the recent downturns, total industrial production in September was 4.6% above its year-earlier level.
  • New orders for durable goods decreased $1.0 billion, or 0.4%, in September after advancing 1.3% in August (revised). Transportation drove the September decline, falling $1.8 billion, or 2.3%. Excluding transportation, new orders rose 0.4% in September. Shipments (0.4%), unfilled orders (0.7%), and inventories (0.9%) advanced in September. New orders for nondefense capital goods decreased 4.2%, as nondefense aircraft and parts fell 27.9%. New orders for defense aircraft and parts increased 104.3% in September.
  • Imports and exports: September import prices rose 0.4% following a 0.3% dip in August. Import prices rose 9.2% over the 12 months ended in September (8.9% for the 12 months ended in August). Import fuel prices fell 2.3% in August — the first monthly decrease since October 2020. The September monthly advance was largely driven by higher fuel prices, which rose 3.7%. Nonfuel import prices were flat on the month after falling 0.1% in August. Import fuel prices advanced 68.7% for the year ended in September. Export prices edged up 0.1% in September after increasing 0.4% in August. For the year ended in September, the price index for exports rose 16.3%. Export prices have not recorded a monthly decline since a 3.5% dip in April 2020.
  • The international trade in goods advance report showed the deficit deepened by $8.1 billion, or 9.2%, to $96.3 billion. In September, exports decreased $7.0 billion, or 4.7%, while imports rose $1.1 billion, or 0.5%. For the 12 months ended in September, exports have risen 16.8%, while imports have increased 18.0%.
  • The latest information on international trade in goods and services, out October 5, was for August and showed that the goods and services trade deficit increased by 4.2% to $73.3 billion. August exports rose 0.5%, while imports advanced 1.4%. Year over year, the goods and services deficit increased $140.8 billion, or 33.7%, from August 2020. Exports increased $244.3 billion, or 17.5%. Imports increased $385.1 billion, or 21.2%.
  • International markets: Despite rising inflation in the eurozone, the European Central Bank is likely to maintain interest rates in negative territory for at least another year, diverging from other central banks including the Federal Reserve. Supply shortages, delivery bottlenecks, and labor constraints continue to drive producer prices and consumer prices higher. Consumer prices in October continued to climb in several countries including Italy (0.6%), France (0.4%), Germany (0.5%), and the United Kingdom (0.3%). China is still dealing with the economic impact of the pandemic. Unlike, the United States, which saw consumer spending rebound, China has seen consumer consumption stay subdued. In the market for October, the STOXX Europe 600 Index climbed 4.5%; the United Kingdom’s FTSE increased 2.8%; Japan’s Nikkei 225 Index rose 0.4%; and China’s Shanghai Composite Index dipped 0.6%.
  • Consumer confidence: According to the latest report from The Conference Board, consumer confidence increased in October, following declines in the previous three months. The Consumer Confidence Index® stands at 113.8, up from 109.8 in September. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose to 147.4 in October from 144.3 the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, registered 91.3 in October, up from 86.7 in September. According to the report, consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased.

Eye on the Month Ahead

Job growth has slowed somewhat, while inflation has continued to rise. The Federal Reserve has hinted that it will begin scaling back asset purchases as early as November. With inflationary pressures mounting, it is possible that an upward adjustment to the federal funds rate may occur sooner rather than later. In addition, there may be follow-up items from the G-20 meeting held on October 30 in Rome. Items on the agenda included high energy prices, supply chain problems, and a global minimum tax rate. In addition, Congress is likely to continue working to reach a deal on a $1.75 trillion economic and environmental bill in November.

What I’m Watching This Week – 1 November 2021

The Markets (as of market close October 29, 2021)

Solid corporate earnings data last week supported a strong week for equities. Investors’ fears that rising inflation, supply-chain snarls, labor shortages, and a surge in COVID-19 cases would hinder corporate earnings have yet to materialize. The Nasdaq led the benchmark indexes, followed by the S&P 500, the Dow, and the Russell 2000. The Global Dow dipped lower. Ten-year Treasury yields, gold, and crude oil prices fell, while the dollar advanced. Among the market sectors, consumer discretionary, communication services, and information technology increased the most, while energy, financials, industrials, and utilities decreased.

Wall Street opened the last week of October in fine fashion, as investors anticipated another spate of positive corporate earnings data. The Dow gained 0.2% and the S&P 500 rose 0.5%, each index closing at a record high. The big gainers were the Nasdaq and the Russell 2000, which added 0.9%. The Global Dow climbed 0.3%. Consumer discretionary, energy, and materials led the market sectors. Crude oil prices and 10-year Treasury yields dipped, while the dollar inched higher.

Last Tuesday proved to be another strong day for equities, with only the Russell 2000 failing to post a gain among the benchmark indexes listed here. The Dow was up 0.4%, and the S&P 500 rose 0.2% to eke out new record highs. The Nasdaq finished up 0.1% and the Global Dow advanced 0.3%. Crude oil and the dollar closed higher, while 10-year Treasuries fell for the fourth consecutive trading day. Most of the market sectors advanced, led by energy, utilities, and health care. Communication services and industrials declined.

The Dow and the S&P 500 fell last Wednesday after setting new records the previous day. The Russell 2000 and the Global Dow also drifted lower, while the Nasdaq was flat. Communication services and consumer discretionary were the only market sectors to advance by the close of trading. Energy fell 2.9% and financials dipped 1.7%. Ten-year Treasury yields closed below 1.60% for the first time in two weeks. Crude oil prices and the dollar also retreated.

Stocks rebounded last Thursday on another round of strong corporate earnings data. Real estate, industrials, and consumer discretionary helped drive the S&P 500 up 1.0% to a new record high. The Dow also recovered from Wednesday’s losses, gaining 0.7%, while the Nasdaq jumped 1.4% to reach a record high. Prices on 10-year Treasuries fell pushing yields higher. Crude oil prices rose to $83.13 per barrel. The dollar dipped nearly 0.5% against a basket of currencies.

Equities closed last week mixed, with the Dow, the S&P 500, and the Nasdaq posting gains, while the Russell 2000 and the Global Dow dipped lower. Ten-year Treasury yields fell on rising inflation and the prospect of interest-rate hikes. Crude oil prices and the dollar advanced. Communication services, health care, and information technology led the market sectors. Real estate, energy, utilities, and materials lost ground.

The national average retail price for regular gasoline was $3.383 per gallon on October 25, $0.061 per gallon more than the prior week’s price and $1.240 higher than a year ago. Gasoline production increased during the week ended October 22, averaging 10.1 million barrels per day. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ended October 22 — 58,000 barrels per day more than the previous week’s average. Refineries operated at 85.1% of their operable capacity, up from the prior week’s level of 84.7%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 10/29Weekly ChangeYTD Change
DJIA30,606.4835,677.0235,819.560.40%17.03%
Nasdaq12,888.2815,090.2015,498.392.71%20.25%
S&P 5003,756.074,544.904,605.381.33%22.61%
Russell 20001,974.862,291.272,297.190.26%16.32%
Global Dow3,487.524,101.964,091.61-0.25%17.32%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.65%1.55%-10 bps64 bps
US Dollar-DXY89.8493.6294.120.53%4.76%
Crude Oil-CL=F$48.52$84.20$83.27-1.10%71.62%
Gold-GC=F$1,893.10$1,794.50$1,784.20-0.57%-5.75%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • The initial or “advance” estimate of third-quarter gross domestic product showed that economic growth slowed more than expected, as rising cases of the Delta variant led to new restrictions and delays in business reopenings. Gross domestic product increased at an annual rate of 2.0% in the third quarter. In the second quarter, GDP increased 6.7%. Consumer spending, as measured by personal consumption expenditures, increased 1.6% compared with an increase of 12.0% in the second quarter, likely reflective of decreasing government assistance. Consumer spending on services rose 7.9% in the third quarter, while durable goods expenditures contracted 26.2%. Fixed investment dipped 0.8%, driven lower by a 7.7% drop in residential fixed investment. Exports decreased 2.55%, while imports (a negative in the calculation of GDP) rose 6.1%. The personal savings rate fell from 10.5% in the second quarter to 8.9% in the third quarter. Disposable (after-tax) personal income decreased 0.7% compared to a 25.7% drop in the second quarter. The personal consumption expenditures price index, a measure of inflation, increased 5.3% in the third quarter, compared with an increase of 6.5% in the second quarter.
  • Personal income (-1.0%) and disposable personal income (-1.3%) fell in September, reflective of a decrease in government social benefit payments in response to the pandemic. Wages and salaries rose 0.8% and personal income receipts on assets increased 0.2%. The drop in personal income didn’t greatly impact consumer spending, which advanced 0.6% in September. Consumer prices for goods and services increased 0.3% in September, the same increase as in August. For the 12 months ended in September, consumer prices have risen 4.4%. Excluding food and energy, consumer prices are up 3.6% since September 2020.
  • Sales of new single-family homes surged in September, climbing 14.0% above the August rate. Despite the September increase, new home sales are 17.6% below the September 2020 estimate. The median sales price of new houses sold in September 2021 was $408,800. The average sales price was $451,700. The estimate of new houses for sale at the end of September was 379,000, which represents a supply of 5.7 months at the current sales pace.
  • New orders for long-lasting, durable goods slipped in September, falling 0.4% following four consecutive monthly increases. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders decreased 2.0%. Transportation equipment, down two of the last three months, drove the decrease, dropping $1.8 billion, or 2.3%. Several categories saw new orders fall in September including computers and electronic products (-0.3%), electrical equipment, appliances, and components (-0.5%), motor vehicles and parts (-2.9%), and nondefense aircraft and parts (-27.9%). New orders for defense aircraft and parts increased 104.3% in September. New orders for capital goods (used in the production of other consumer goods) dipped 0.4%, pulled lower by a 4.2% drop in nondefense capital goods. New orders for defense capital goods rose 28.4%.
  • The advance report on international trade in goods for September showed the deficit increased $8.1 billion, or 9.2%, to $96.3 billion. Exports of goods for September were $142.2 billion, $7.0 billion, or 4.7%, less than August exports. Imports of goods for September were $238.4 billion, $1.1 billion, or 0.5%, more than August imports.
  • For the week ended October 23, there were 281,000 new claims for unemployment insurance, a decrease of 10,000 from the previous week’s level, which was revised up by 1,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 16 was 1.7%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 16 was 2,243,000, a decrease of 237,000 from the prior week’s level, which was revised down by 1,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 768,000 initial claims for unemployment insurance, and the rate for unemployment claims was 5.3%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended October 9 were the District of Columbia (7.4%), Puerto Rico (3.7%), California (3.2%), Georgia (2.7%), Illinois (2.7%), Hawaii (2.6%), New Jersey (2.5%), Nevada (2.4%), the Virgin Islands (2.4%), and Alaska (2.3%). The largest increases in initial claims for the week ended October 16 were in California (+9,748), Tennessee (+1,688), Florida (+1,266), Georgia (+1,088), and Illinois (+512), while the largest decreases were in Virginia (-7,380), Michigan (-4,083), Pennsylvania (-4,033), Kentucky (-2,753), and Ohio (-2,287).

Eye on the Week Ahead

The latest employment figures for October are available at the end of this week. September saw 194,000 new jobs added, although the unemployment rate continued to fall, settling at 4.8%. The Markit purchasing managers surveys for manufacturing and services are also out this week. Survey respondents have noted that supply bottlenecks and labor shortages have hindered overall production.

What I’m Watching This Week – 25 October 2021

The Markets (as of market close October 22, 2021)

Each of the benchmark indexes listed here advanced last week, led by the S&P 500, which rose 1.6%. Corporate earnings data for the third quarter has gotten off to a solid start to help push stocks higher. However, investors are paying close attention to elevated inflation, driven higher by global supply-chain constraints and labor shortages. According to Chair Jerome Powell, the Federal Reserve is closely monitoring price pressures, which may last longer than previously expected, increasing the possibility that the Fed may raise interest rates sooner than anticipated. Treasury yields and crude oil prices rose last week, while the dollar slid. Gold prices climbed higher but remain well below their 2020 year-end values. The market sectors closed last week generally higher, with only communication services lagging. Real estate (3.2%), health care (2.9%), and financials (2.8%) led the advancing sectors.


Stocks opened last Monday mixed, with megacaps and growth stocks outperforming value shares and cyclicals. The Nasdaq gained 0.8%, followed by the S&P 500 (0.3%) and the Russell 2000 (0.1%). The Dow (-0.1%) and the Global Dow (-0.2%) dipped. Crude oil prices slid, while Treasury yields and the dollar advanced. The market sectors were mixed, with consumer discretionary, information technology, and communication services advancing, while utilities, energy, and industrials slipped.


More solid corporate earnings data helped drive stocks higher last Tuesday. The Nasdaq and the S&P 500 each advanced 0.7%, while the Dow gained 0.6%. The Global Dow added 0.5% and the Russell 2000 increased 0.3%. Ten-year Treasury yields increased 322 basis points to close at 1.63%. Crude oil prices rose to $82.87 per barrel. The dollar edged lower. Among the market sectors, only consumer discretionary failed to advance. Health care, energy, and utilities rose by more than 1.0%.


Another day of favorable corporate quarterly earnings data helped push the Dow and the S&P 500 higher last Wednesday. The Nasdaq slipped 0.1%. The Russell 2000 and the Global Dow also advanced. Treasury yields inched higher, the dollar dipped lower, while crude oil prices climbed to over $84.00 per barrel. Health care, real estate, and utilities each rose over 1.5% on a day that saw several of the market sectors advance.


Consumer discretionary shares helped push the S&P 500 up 0.3% to reach a record high last Thursday. The Nasdaq led the benchmarks after climbing 0.6%. The Russell 2000 also advanced 0.3%. The Global Dow dropped 0.6%, while the Dow was flat. Ten‐year Treasury yields and the dollar increased, while crude oil prices fell to $82.67 per barrel.


Stocks closed mixed last Friday, with the Dow edging up 0.2% to reach a record high. The Global Dow, the only other index to post a gain, inched up 0.1%. The Nasdaq fell 0.8%, the Russell 2000 dipped 0.2%, and the S&P 500 dropped 0.1%. Ten-year Treasury yields and the dollar slid, while crude oil prices rose. The market sectors also returned mixed results last Friday, with consumer staples, energy, financials, health care, industrials, real estate, and utilities advancing, while communication services, consumer discretionary, information technology, and materials fell.


The national average retail price for regular gasoline was $3.322 per gallon on October 18, $0.055 per gallon more than the prior week’s price and $1.172 higher than a year ago. Gasoline production increased during the week ended October 15, averaging 10.1 million barrels per day. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ended October 15 — 71,000 barrels per day less than the previous week’s average. Refineries operated at 84.7% of their operable capacity, down from the prior week’s level of 86.7%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 10/22Weekly ChangeYTD Change
DJIA30,606.4835,294.7635,677.021.08%16.57%
Nasdaq12,888.2814,897.3415,090.201.29%17.08%
S&P 5003,756.074,471.374,544.901.64%21.00%
Russell 20001,974.862,265.652,291.271.13%16.02%
Global Dow3,487.524,089.464,101.960.31%17.62%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.57%1.65%8 bps74 bps
US Dollar-DXY89.8493.9493.62-0.34%4.21%
Crude Oil-CL=F$48.52$82.25$84.202.37%73.54%
Gold-GC=F$1,893.10$1,768.80$1,794.501.45%-5.21%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Industrial production fell 1.3% in September following a 0.1% drop in August (revised). In September, manufacturing output decreased 0.7%, driven lower by a 7.2% decline in the production of motor vehicles and parts, as shortages of semiconductors continued to hobble operations. The output of utilities dropped 3.6%, as demand for cooling subsided after a warmer-than-usual August. Mining production fell 2.3%. Despite the decrease in September, total industrial production rose at an annual rate of 4.3% for the third quarter, its fifth consecutive quarter with a gain of at least 4%. Total industrial production in September was 4.6% above its year-earlier level.
  • New home construction slowed in September. According to the latest report from the Census Bureau, the number of issued building permits for all housing types fell 7.7% last month. Permits for single-family homes dipped 0.9%. Housing starts dropped 1.6% last month, while single-family housing starts were virtually unchanged from August. Housing completions in September declined 4.6%. Housing completions of single-family homes were virtually unchanged.
  • Existing-home sales rose 7.0% in September after seeing sales wane the previous month. Nevertheless, sales of existing homes are down 2.3% from September 2020. Total housing inventory in September fell 0.8% from August and is down 13.0% from September 2020. Unsold inventory sits at a 2.4-month supply at the present sales pace, down from the August pace of 2.6 months. The median existing-home price was $352,800 in September, down from the August price of $356,700. Single-family home sales rose 7.7% last month but are down 3.1% from a year ago. The median existing single-family home price was $359,700 in September, down from the August price of $363,800.
  • The September Treasury statement of government receipts and outlays is the final one for fiscal year 2021. The government deficit was $61.5 billion in September, $109.1 billion lower than the August deficit and 51.0% less than the September 2020 deficit. In September, outlays totaled $521.1 billion (5.0% higher than September 2020), while receipts totaled $459.5 billion (23.0% over September 2020). The total government deficit for FY 2021 was $2.8 trillion — 11.0% smaller than the FY 2020 shortfall. For FY 2021, government expenditures rose by 4.0% ($6.8 trillion), which was more than offset by an 18.0% increase in receipts ($4.1 trillion). In fiscal year 2021, individual income tax receipts were 27.1% higher than FY 2020. Employment and general retirement receipts increased by 31.3%. Corporate income taxes rose by 76.0% over FY 2020.
  • For the week ended October 16, there were 290,000 new claims for unemployment insurance, a decrease of 6,000 from the previous week’s level, which was revised up by 3,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 9 was 1.8%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 9 was 2,481,000, a decrease of 122,000 from the prior week’s level, which was revised up by 10,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 798,000 initial claims for unemployment insurance, and the rate for unemployment claims was 5.7%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended October 2 were Puerto Rico (4.3%), Illinois (3.5%), California (3.3%), the District of Columbia (3.0%), Hawaii (3.0%), New Jersey (2.7%), Nevada (2.6%), Alaska (2.4%), Pennsylvania (2.3%), and New York (2.2%). The largest increases in initial claims for the week ended October 9 were in Michigan (+3,673), Missouri (+2,566), Maryland (+2,337), New Mexico (+2,012), and Kentucky (+1,454), while the largest decreases were in Tennessee (-989), California (-851), Florida (-839), New Jersey (-464), and Alabama (-301).

Eye on the Week Ahead The initial estimate for the third-quarter gross domestic product is out this week. The economy advanced at an annualized rate of 6.7% in the second quarter. The latest data on durable goods orders is also available this week. New orders increased by 1.8% in August

What I’m Watching This Week – 18 October 2021

The Markets (as of market close October 15, 2021)

Despite a shaky start, Wall Street enjoyed a strong week of gains. A favorable start to corporate earnings season helped lift equities higher. Each of the benchmark indexes listed here posted solid weekly gains, led by the Nasdaq and the S&P 500. The dollar and Treasury yields slipped, while crude oil prices rose 3.5% to $82.25 per barrel. Despite the generally positive week, investors will continue to keep an eye on economic data and rising prices. Higher oil, gas, and other commodity prices could raise concerns about inflationary pressures and how they could drag down corporate profit margins. Materials shortages, rising wages, and shipping bottlenecks have driven up costs for producers. Many have passed these costs on to consumers, leading to more persistent inflation. Initial earnings data comes from banks and financial institutions. The next few weeks will see earnings reports from the bulk of companies in most sectors and may reveal the impact that inflation and supply demands has had on earnings margins so far in the third quarter.

Monday was the Columbus Day and Indigenous Peoples’ Day public holidays but stock markets were open and bond markets were closed. The Dow and the S&P 500 fell 0.7%, while the Nasdaq and the Russell 2000 dipped 0.6% on what was a fairly slow trading day. Crude oil prices rose 1.5% to reach $80.51 per barrel, a multi-year high. Investors may be waiting for the next round of corporate earnings data to weigh the potential impact of rising energy prices, labor costs, and supply-chain bottlenecks.

Stocks fell again last Tuesday. Only the small caps of the Russell 2000 ended the day in the black, gaining 0.6%. The Global Dow (-0.4%), the Dow (-0.3%), the S&P 500 (-0.2%), and the Nasdaq (-0.1%) declined. Ten-year Treasury yields dipped below 1.6%, closing the day at 1.58%. Crude oil prices were little changed, while the dollar advanced 0.2%. Consumer discretionary, real estate, and utilities led the market sectors, while communication services, information technology, and health care declined by at least 0.5%.

Equities rose for the first time in four sessions last Wednesday. With inflationary pressures continuing to run hot (see Consumer Price Index information below), technology shares increased, as investors seemed to focus on companies better able to pass on higher costs to consumers. The Nasdaq led the surge, climbing 0.7%, followed by the Russell 2000 and the S&P 500, which climbed 0.3%. The Dow and the Global Dow broke even on the day. Treasury yields, crude oil prices, and the dollar declined. Among the market sectors, utilities (1.1%) and information technology (0.6%) advanced, while financials dipped 0.6%.

Stocks rallied last Thursday, buoyed by strong bank earnings reports and encouraging unemployment data. Each of the benchmark indexes listed here gained at least 1.0%, led by the Nasdaq and the S&P 500, which added 1.7%. The Dow gained 1.6%, the Russell 2000 climbed 1.4%, and the Global Dow advanced 1.1%. The dollar and Treasury yields eased for the second consecutive day, while crude oil prices rose to $81.53 per barrel. Materials and information technology gained 2.4% and 2.3%, respectively, to lead the market sectors.

The market advanced for the third consecutive day last Friday. Strong earnings data and stronger-than-expected retail sales provided encouragement for investors. The Dow advanced 1.1%, followed by the Global Dow (0.9%), the S&P 500 (0.8%), and the Nasdaq (0.5%). The small caps of the Russell 2000 slipped 0.4%. Ten-year Treasury yields climbed 3.8%, crude oil prices rose 1.2%, while the dollar was little changed. The market sectors closed Friday generally higher, with consumer discretionary (1.8%) and financials (1.5%) leading the pack.

The national average retail price for regular gasoline was $3.267 per gallon on October 11, $0.077 per gallon more than the prior week’s price and $1.100 higher than a year ago. Gasoline production increased during the week ended October 8, averaging 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.1 million barrels per day during the week ended October 8 — 700,000 barrels per day less than the previous week’s average. Refineries operated at 86.7% of their operable capacity, down from the prior week’s level of 89.6%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 10/15Weekly ChangeYTD Change
DJIA30,606.4834,746.2535,294.761.58%15.32%
Nasdaq12,888.2814,579.5414,897.342.18%15.59%
S&P 5003,756.074,391.344,471.371.82%19.04%
Russell 20001,974.862,233.092,265.651.46%14.72%
Global Dow3,487.524,026.664,089.461.56%17.26%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.60%1.57%-3 bps66 bps
US Dollar-DXY89.8494.1093.94-0.17%4.56%
Crude Oil-CL=F$48.52$79.48$82.253.49%69.52%
Gold-GC=F$1,893.10$1,756.80$1,768.800.68%-6.57%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Consumer prices continued to escalate in September. According to the latest report from the Bureau of Labor Statistics, the Consumer Price Index increased 0.4% last month after advancing 0.3% in August. Over the last 12 months ended in September, consumer prices have risen 5.4%. The price index less food and energy rose 0.2% in September and 4.0% over the last 12 months. In September, several price indexes increased, including the index for food (0.9%), food at home (1.2%), energy (1.3%), fuel oil (3.9%), new vehicles (1.3%), and shelter (0.4%). Price indexes that decreased include apparel (-1.1%), used cars and trucks (-0.7%), and transportation services (-0.5%). Since September 2020, the price index for energy has risen 24.8%, with gasoline prices advancing 42.1% and fuel oil prices up 42.6%.
  • Producer prices advanced 0.5% in September after climbing 0.7% the previous month. Producer prices have risen 8.6% over the past 12 months ended in September, the largest 12-month increase in the history of the index, which began November 2010. A 1.3% increase in goods accounted for nearly 80% of the overall price increase. Driving goods prices higher was a 2.8% jump in prices for energy (gasoline prices rose 3.9%). Producer prices for services moved up 0.2% in September, led by a 0.9% increase in trade services (a measure of the margins received by wholesalers and retailers).
  • Retail sales increased 0.7% in September following a 0.9% jump in August. Retail sales have risen 13.9% since September 2020. Excluding motor vehicle and gasoline sales, retail sales advanced 0.7%, an indication that total consumer spending was strong in September.
  • Import prices climbed 0.4% in September after declining 0.3% the prior month. The September rise in imports was the largest one-month increase since a 1.1% advance in June. In September, the advance was led by higher fuel import prices (3.7%). Since September 2020, import prices have risen 9.2%. Export prices ticked up 0.1% following a 0.4% increase in August. Export prices haven’t declined since April 2020 and are up 16.3% over the past 12 months.
  • The number of job openings decreased by 659,000 in August to 10.4 million. The rate of job openings also declined 0.4 percentage point to 6.6%. In August, there were 6.8 million hires, a decrease of 439,000 from July’s total. The number of separations in August, at 6.0 million, rose by 209,000. Within separations, the number of quits increased in August to 4.3 million (+242,000), and the quits rate increased to a series high of 2.9%. Over the 12 months ended in August, hires totaled 72.6 million and separations totaled 66.7 million, yielding a net employment gain of 5.9 million.
  • For the week ended October 9, there were 293,000 new claims for unemployment insurance, a decrease of 36,000 from the previous week’s level, which was revised up by 3,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 2 was 1.9%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 2 was 2,593,000, a decrease of 134,000 from the prior week’s level, which was revised up by 13,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 833,000 initial claims for unemployment insurance, and the rate for unemployment claims was 6.3%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended September 25 were Illinois (4.4%), Puerto Rico (4.3%), California (3.3%), Hawaii (2.9%), the Virgin Islands (2.8%), New Jersey (2.7%), the District of Columbia (2.6%), Nevada (2.6%), Alaska (2.5%), and Pennsylvania (2.5%). The largest increase in initial claims for the week ended October 2 was in Pennsylvania (+1,707), while the largest decreases were in California (-14,733), the District of Columbia (-3,905), Michigan (-3,370), Missouri (-2,598), and Texas (-2,376).

Eye on the Week Ahead

The Federal Reserve’s report on industrial production for September is available this week. The industrial sector has been advancing, despite supply-chain bottlenecks and labor shortages, which have led to increased costs. Data from the housing sector is also out this week, with reports on housing starts and existing home sales. Housing starts rose nearly 4.0% in August, although sales of existing homes fell more than 2.0%.