What I’m Watching This Week – 5 December 2022

The Markets (as of market close December 2, 2022)

Wall Street extended its rally for the second consecutive week as each of the benchmark indexes listed here posted gains. As is most often the case lately, the market experienced plenty of volatility last week. Ultimately, a hotter-than-expected labor report reignited inflation concerns and the continuation of an aggressive monetary policy by the Federal Reserve. Average hourly earnings have steadily increased over the past three months, while solid monthly job gains have shown that there are more positions to be filled. Investors not only dealt with inflation concerns and the Fed’s response, but traders had to assess the impact of the ongoing Russia/Ukraine war and China’s response to rising COVID cases. Despite the tumult, stocks continued to advance. Ten-year Treasury yields fell as bond prices climbed higher. Crude oil prices rallied from a three-week lag, advancing 5.0%. The dollar slid lower, while gold prices posted gains for the second week in a row.

Last Monday, Wall Street reacted negatively to the likelihood of more interest-rate hikes and the potential economic impact of China’s COVID-related lockdowns. The small caps of the Russell 2000 dropped 2.1% to lead the declining benchmark indexes. The Nasdaq fell 1.6%, while the S&P 500 and the Dow lost 1.5%. The Global Dow slid 1.4%. Ten-year Treasury yields inched up 1.2 basis points to 3.70%. Crude oil prices and the dollar advanced marginally, while gold prices fell 0.8%. Investors were discouraged to hear several Federal Reserve officials indicate that more work has to be done to curb inflation, including more substantial interest-rate increases. China’s response to rising COVID cases has led to demonstrations, which has added to that country’s uncertain economic situation.

Stocks ended mixed last Tuesday, with the Nasdaq (-0.6%) and the S&P 500 (-0.2%) declining, while the Russell 2000 (0.4%) and the Global Dow (0.2%) eked out gains. The Dow ended the session flat. The yield on 10-year Treasuries climbed 4.5 basis points to close at 3.74%. Crude oil prices, gold prices, and the dollar advanced. Investors may have tempered their enthusiasm for risk in anticipation of Federal Reserve Chair Jerome Powell’s speech on Wednesday.

News that the Federal Reserve may soften the pace of interest-rate hikes sent stocks higher last Wednesday. The Nasdaq surged 4.4% and the S&P 500 gained 3.1% to lead the benchmark indexes listed here. The Russell 2000 advanced 2.6%, followed by the Dow (2.2%) and the Global Dow (1.7%). Crude oil prices rose for the first time in several sessions following a report that U.S. reserves declined and that China may lessen COVID-related restrictions. Long-term bond prices advanced, pulling yields lower. Ten-year Treasury yields slid 4.5 basis points to 3.70%. The dollar slid lower, while gold prices increased.

Stocks closed last Thursday mixed following the prior day’s rally as investors awaited the latest jobs report due out the following day. Of the benchmark indexes listed here, only the Nasdaq (0.1%) and the Global Dow (0.9%) closed in the black. The Dow (-0.6%) led the declining indexes, followed by the Russell 2000 (-0.3%) and the S&P 500 (-0.1%). Ten-year Treasury yields dropped 17.4 basis points to 3.52% as bond prices jumped higher. The dollar declined, while gold prices climbed notably higher, gaining $57.20 to reach $1,817.10 per ounce. Crude oil prices advanced minimally, closing at about $81.33 per barrel.

Last Friday saw stocks close with mixed results. The Russell 2000 gained 0.6%, while the Dow and the Global Dow barely eked out gains. The Nasdaq slid 0.2% and the S&P 500 dipped 0.1%. The much anticipated jobs report (see below) came in better than expected, adding to the likelihood that the Federal Reserve will keep tightening even if the pace of interest-rate hikes slows. Ten-year Treasury yields fell for the third straight session, down 2.3 basis points to close at 3.50%. Crude oil prices scaled back after a brief rally, dipping $1.10 to end the session at about $80.13 per barrel. The dollar and gold prices declined.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 12/2Weekly ChangeYTD Change
DJIA36,338.3034,347.0334,429.880.24%-5.25%
Nasdaq15,644.9711,226.3611,461.502.09%-26.74%
S&P 5004,766.184,026.124,071.701.13%-14.57%
Russell 20002,245.311,869.191,892.841.27%-15.70%
Global Dow4,137.633,751.923,797.601.22%-8.22%
Fed. Funds target rate0.00%-0.25%3.75%-4.00%3.75%-4.00%0 bps375 bps
10-year Treasuries1.51%3.69%3.50%-19 bps199 bps
US Dollar-DXY95.64105.96104.50-1.38%9.26%
Crude Oil-CL=F$75.44$76.28$80.135.05%6.22%
Gold-GC=F$1,830.30$1,754.00$1,811.803.30%-1.01%

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

  • There were 263,000 new jobs added in November, in line with average growth over the prior three months (282,000). By comparison, 647,000 new jobs were added in November 2021. Job growth has averaged 392,000 in 2022, evidencing a slowdown in the number of new jobs added over the second half of the year. In November, notable job gains occurred in leisure and hospitality, health care, and government. Employment declined in retail trade and in transportation and warehousing. The unemployment rate, at 3.7%, was unchanged in November and has sat within a range of 3.5% to 3.7% since March. The number of unemployed persons slid by 48,000 to 6.0 million in November. Both the labor force participation rate and the employment-population ratio dipped one percentage point to 62.1% and 59.9%, respectively. In November, average hourly earnings rose by $0.18, or 0.6%, to $32.82. Over the past 12 months, average hourly earnings have increased by 5.1%. In November, the average work week declined by 0.1 hour to 34.4 hours.
  • The second estimate of gross domestic product revealed that the economy accelerated at an annualized rate of 2.9% in the third quarter. The initial estimate showed the GDP advanced 2.6%. GDP decreased 0.6% in the second quarter. The increase in GDP reflected increases in exports, consumer spending, nonresidential (business) fixed investment, state and local government spending, and federal government spending that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a negative in the calculation of GDP, decreased. Personal consumption expenditures, a measure of consumer spending, rose 1.7% in the third quarter, while the personal consumption expenditures price index, a measure of inflation, increased 4.3%.
  • Personal income advanced a notable 0.7% in October, according to the latest data from the Bureau of Economic Analysis. Consumers were apparently undeterred by rising prices and interest rates as personal consumption expenditures advanced 0.8% in October. The personal consumption expenditures price index, a measure of inflation, advanced 0.3% in October and 6.0% for the last 12 months, down from 6.2% for the 12 months ended in September. Core prices, excluding food and energy, rose 0.2% in October and 5.0% since October 2021, down 0.2 percentage point from the same period ended in September.
  • In October, the number of job openings edged down 353,000 to 10.3 million, according to the latest Job Openings and Labor Turnover Summary. In October, job openings decreased in state and local government (excluding education), nondurable goods manufacturing, and federal government. The number of job openings increased in other services and in finance and insurance. In October, the number and rate of hires changed little at 6.0 million and 3.9%, respectively. In October, the number of total separations, which include quits, layoffs, and discharges, changed little at 5.7 million, and the rate was unchanged at 3.7%.
  • The manufacturing sector weakened in November, according to the S&P Global US Manufacturing PMI™. The purchasing managers’ index posted 47.7 in November, down from 50.4 in October, marking the first decline in the manufacturing sector since June 2020. The downturn in operating conditions was widespread, with decreases in production, output, and new orders. Employment growth slowed as backlogs of work waned.
  • According to the latest data from the Census Bureau, the international trade in goods deficit increased 7.7% to $99.0 billion in October. Exports fell $4.7 billion, or 2.6%, while imports increased $2.4 billion, or 0.9%.
  • According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.534 per gallon on November 28, $0.114 per gallon below the prior week’s price but $0.154 higher than a year ago. Also as of November 28, the East Coast price decreased $0.070 to $3.468 per gallon; the Gulf Coast price fell $0.106 to $2.915 per gallon; the Midwest price declined $0.145 to $3.374 per gallon; the West Coast price dropped $0.187 to $4.592 per gallon; and the Rocky Mountain price decreased $0.097 to $3.539 per gallon. Residential heating oil prices averaged $5.147 per gallon on November 28, $0.284 below the previous week’s price but $1.784 per gallon more than a year ago.
  • Claims for unemployment insurance declined during the last reporting period. For the week ended November 26, there were 225,000 new claims for unemployment insurance, a decrease of 16,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 19 remained at 1.1%. The advance number of those receiving unemployment insurance benefits during the week ended November 19 was 1,608,000, an increase of 57,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended November 12 were Puerto Rico (2.1%), Alaska (2.0%), New Jersey (2.0%), California (1.8%), New York (1.4%), Massachusetts (1.3%), Montana (1.3%), Rhode Island (1.3%), Minnesota (1.2%), Washington (1.2%), and Oregon (1.2%). The largest increases in initial claims for unemployment insurance for the week ended November 19 were in Illinois (+6,586), California (+4,423), Georgia (+3,717), Michigan (+3,031), and Minnesota (+2,896), while the largest decreases were in Montana (-318), North Carolina (-133), and Arkansas (-131).

Eye on the Week Ahead

The Producer Price Index for November is available at the end of this week. The PPI is a measure of the change in prices received by producers of goods and services, and is an indicator of inflation. October saw producer prices rise by 0.2%, which was below expectations. For the year, producer prices fell from 8.5% for the 12 months ended in September to 8.0% for the year ended in October.

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Monthly Market Review – November 2022

The Markets (as of market close November 30, 2022)

A late rally at the end of the month helped push stocks higher in November, marking the second monthly advance in a row. Each of the benchmark indexes posted solid monthly gains, led by the Global Dow, which advanced nearly 11.0%. The large caps of the S&P 500 and the Dow rose more than 5.0%. The Nasdaq climbed 4.4%, while the Russell 2000 added 2.2%.

Investors welcomed news from Federal Reserve Chair Jerome Powell, who announced that the pace of interest-rate hikes can slow as soon as December, which likely means a 50-basis point increase, ending the string of 75-basis point rate hikes. The Fed may be taking note of the fact that the labor market has begun to cool (see the employment report below), while consumer price increases are showing signs of moderation. Nevertheless, prices remain elevated entering the holiday shopping season. However, business conditions remained generally positive, and consumers continued to spend, despite rising interest rates and decreasing levels of confidence (see report below).

Despite the relative good news from the Federal Reserve, Wall Street faced the ramifications of political unrest in China over that nation’s COVID-related restrictions. The issues in China are likely to have a negative impact on the global economy, particularly the U.S. economy, as China is a main source of the global supply-chain system, which is still trying to recover from the pandemic.

A drop in U.S. crude supplies boosted crude oil prices at the end of November. Nevertheless, prices ended the month lower for the fifth loss in the last six months. China’s COVID restrictions impacted the demand for crude oil, helping to keep prices muted. Prices at the pump declined in November. The national average retail price for regular gasoline was $3.534 per gallon on November 28, down from $3.742 on October 31 but $0.154 higher than a year ago.

Bond prices rose in November, pulling yields lower. Ten-year Treasury yields fell 37 basis points. The Treasury yield curve, often seen as a warning sign of an impending recession, recorded its steepest inversion in over 40 years as the 10-year Treasury yield dropped 0.78 percentage point below the two-year yield. The dollar slid lower against a basket of world currencies. Gold prices rose 9.0% in November, ending a streak of seven consecutive monthly declines.

Stock Market Indexes

Market/Index2021 ClosePrior MonthAs of November 30Monthly ChangeYTD Change
DJIA36,338.3032,732.9534,589.775.67%-4.81%
Nasdaq15,644.9710,988.1511,468.004.37%-26.70%
S&P 5004,766.183,871.984,080.115.38%-14.39%
Russell 20002,245.311,846.861,886.582.15%-15.98%
Global Dow4,137.633,432.623,782.8710.20%-8.57%
Fed. Funds target rate0.00%-0.25%3.00%-3.25%3.75%-4.00%75 bps375 bps
10-year Treasuries1.51%4.07%3.70%-37 bps219 bps
US Dollar-DXY95.64111.58106.03-4.97%10.86%
Crude Oil-CL=F$75.44$86.10$80.41-6.61%6.59%
Gold-GC=F$1,830.30$1,635.70$1,783.009.01%-2.58%

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: Employment rose by 261,000 in October after increasing by 263,000 in September. Monthly job growth has averaged 407,000 thus far in 2022 compared with 562,000 in 2021. In October, notable job gains occurred in health care, professional and technical services, and manufacturing. The unemployment rate increased by 0.2 percentage point to 3.7% in October, and the number of unemployed persons rose by 306,000 to 6.1 million. The unemployment rate has been in a narrow range of 3.5% to 3.7% since March. Among the unemployed, the number of workers who permanently lost their jobs remained at about 1.2 million in October. The labor force participation rate, at 62.2%, and the employment-population ratio, at 60.0%, were unchanged in October and have shown little net change since early this year. In October, average hourly earnings rose by $0.12, or 0.4%, to $32.58. Over the 12 months ended in October, average hourly earnings increased by 4.7% (5.0% for the 12 months ended in September). In October, the average work week was 34.5 hours for the fifth month in a row.
  • There were 225,000 initial claims for unemployment insurance for the week ended November 26, while the total number of insured unemployment claims was 1,608,000 as of November 19. A year ago, there were 240,000 initial claims for unemployment insurance and 1,976,000 total insured unemployment claims.
  • FOMC/interest rates: As expected, the Federal Open Market Committee increased the federal funds target rate range in November by 75 basis points to 3.75%-4.00%. Inflationary pressures have begun to show some signs of waning. The FOMC noted that “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” As such, while interest-rate hikes may not pause, the amount of each increase may lessen from the string of 75-basis point hikes.
  • GDP/budget: Gross domestic product increased 2.9% in the third quarter, according to the second estimate released by the Bureau of Economic Analysis. The third-quarter increase follows decreases in the first quarter (-1.6%) and the second quarter (-0.6%). The increase in GDP reflected advances in exports; consumer spending; nonresidential (business) fixed investment; and federal, state, and local government spending that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased. Consumer spending rose 1.7% in the third quarter after increasing 2.0% in the second quarter. Most of the increase in consumer spending was attributable to a 2.7% jump in services, while spending on durables slid 0.3%. Also dragging down GDP was a 4.1% decline in fixed investment, within which residential fixed investment dropped 26.8%, evidence of the slowdown in the housing sector. Nonresidential fixed investment jumped 5.1% in the third quarter after inching up 0.1% in the previous quarter. Exports rose 15.3% in the third quarter, while imports fell 7.3% after increasing 2.2% in the second quarter. The personal consumption expenditures price index, a measure of inflation, increased 4.3% in the third quarter following a 7.3% rise in the second quarter.
  • For October, the first month of fiscal year 2023, the Treasury budget deficit came in at $87.8 billion, down from $429.7 billion in September and under the October 2021 deficit of $165.1 billion. Compared to September, government receipts in October were $318.6 billion, a decrease of $169.1 billion, while government expenditures were $406.4 billion, $511.1 billion less than in September.
  • Inflation/consumer spending: Overall, while inflationary pressures continued to advance in October, there are signs that price increases are easing. The personal consumption expenditures price index, a preferred inflation indicator of the Federal Reserve, advanced 0.3% in October, the same increase as in September. For the year ended in October, prices have increased 6.0%. Prices less food and energy increased 0.2% in October and 5.0% since October 2021. Prices for durable goods fell 0.6% in October, while prices for nondurable goods rose 0.8%. Prices for services rose 0.4% in October. Food prices increased 0.4%, while energy prices advanced 2.5%. Consumer spending increased 0.8% in October. Spending on goods increased 1.1%, while consumer spending on services advanced 0.2%. Personal income and disposable (after-tax) personal income rose 0.7% in October. Wages and salaries increased 0.5% in October after advancing 0.6% in September.
  • The Consumer Price Index rose 0.4% in October, the same increase as in September. For the 12 months ended in October, the CPI increased 7.7% (8.2% for the 12-month period ended in September). Both the monthly and 12-month increases were below expectations. In October, the CPI less food and energy rose 0.3%, down from the September increase of 0.6%. For the 12 months ended in October, the CPI less food and energy rose 6.3% (6.6% since September 2021). Prices for shelter (0.8%) contributed over half of the overall CPI increase in October, with prices for gasoline and food also moving higher. In October, prices for used cars and trucks declined 2.4%, prices for apparel slid 0.7%, and prices for medical services decreased 0.6%. For the 12 months ended in October, food prices increased 10.9%, energy prices rose 17.6% (fuel oil prices increased 68.5%), prices for shelter advanced 6.9%, and prices for transportation services rose 15.2%.
  • Producer prices for goods and services rose 0.2% in October following a 0.4% increase in September. Producer prices increased 8.0% since October 2021 (8.5% for the 12 months ended in September). Prices less foods, energy, and trade services increased 0.2% in October and 5.4% since October 2021. October producer prices for goods moved up 0.6%, while prices for services slid 0.1%, the first decline since November 2020.
  • Housing: Sales of existing homes retreated for the ninth consecutive month in October, falling 5.9% from the September estimate. Year over year, existing home sales were 28.4% under the October 2021 total. According to the latest survey from the National Association of Realtors®, rising mortgage rates and dwindling inventory have impacted sales. The median existing-home price was $379,100 in October, down from $383,500 in September but 6.6% higher than in October 2021 ($355,700). In October, unsold inventory of existing homes represented a 3.1-month supply at the current sales pace, down 0.8% from both September 2022 and October 2021. Sales of existing single-family homes fell 6.4% in October and 28.2% since October 2021. The median existing single-family home price was $384,900 in October, down from $389,600 in September but 6.2% over the October 2021 price.
  • Sales of new single-family homes reversed course, climbing 7.5% in October after declining 10.9% in September. Sales are down 5.8% since October 2021. The jump in new home sales may be partly attributable to purchasers using prequalified mortgages that were locked in at a lower interest rate. Inventory sat at an 8.9-month supply in October (9.4 months in September). The median sales price of new single-family houses sold in October was $493,000 ($455,700 in September). The October average sales price was $544,000 ($516,400 in September).
  • Manufacturing: Industrial production decreased 0.1% in October after inching up 0.1% (revised) in September. While manufacturing output rose 0.1%, the indexes for both mining (-0.4%) and utilities (-1.5%) declined in October. The decline in mining was attributable to a drop in oil and gas extraction, which outweighed improvements in oil and gas well drilling and in coal mining. The decline in utilities reflected a decrease in electric utilities, which more than offset an increase in natural gas utilities. Overall, industrial production was up 3.3% since October 2021. The major market groups recorded mixed results in October. Gains were registered by consumer goods, business equipment, and defense and space equipment, while losses were posted by construction supplies and materials.
  • October saw new orders for durable goods beat expectations after increasing 1.0%. The October increase followed a 0.3% jump in durable goods orders in September. Excluding transportation, new orders rose 0.5% in October. Excluding defense, new orders increased 0.8%. Transportation equipment drove the October increase, climbing 2.1%. New orders for capital goods jumped 1.9% in October after increasing 0.4% the previous month.
  • Imports and exports: Import and export prices declined in October, indicating inflationary pressures may be easing. According to the U.S. Bureau of Labor Statistics, import prices slid 0.2% in October after falling 1.1% the previous month. Export prices dipped 0.3% in October after declining 1.5% in September. Import prices have not recorded a monthly increase since June 2022. Despite recent declines, import prices are up 4.2% since October 2021, the smallest yearly advance since the 12 months ended February 2021. With the October decline, export prices have fallen in each of the last four months, reflecting weakness in global demand. Export prices have increased 6.9% since October 2021.
  • The international trade in goods deficit was $99.0 billion in October, up 7.7% from September. Exports of goods fell 2.6% in October following a 1.9% decline in September. Imports of goods rose 0.9% in October after increasing 1.0% in September. Year to date, exports rose 10.7%, while imports increased 12.6%.
  • The latest information on international trade in goods and services, released November 3, is for September and shows that the goods and services trade deficit increased by 11.6% from the August deficit. September exports slid 1.1%, while imports increased 1.5%. Year over year, the goods and services deficit increased 20.2% from the same period in 2021. Both exports and imports increased 20.2% since October 2021.
  • International markets: Inflationary pressures have been soaring in Japan. Consumer prices rose in October for the 14th consecutive month, and have risen 3.7% over the last 12 months. Higher producer and import costs have been passed on to consumers, hiking prices for food, beverages, electronic appliances, and other consumer products and services. The government of the United Kingdom, in an effort to combat rising prices, indicated it would significantly tighten its fiscal policy after projecting a 9.1% inflation rate for this year. Despite that prediction, the annual rate of inflation in the eurozone fell in November for the first time since June 2021. However, the lag in inflation isn’t likely to curtail the European Central Bank from increasing interest rates further. The economy in China contracted in November as weakening economic output resulted from government-led lockdowns due to rising COVID cases. Overall for the markets in November, the STOXX Europe 600 Index rose 6.5%. The United Kingdom’s FTSE advanced roughly 6.2%. Japan’s Nikkei 225 Index advanced 1.1%, while China’s Shanghai Composite Index climbed 4.9%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® decreased in November for the second consecutive month. The November index stands at 100.2, down from 102.2 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined to 137.4 in November, down from 138.7 in October. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 75.4 in November (77.9 in October).

Eye on the Month Ahead

Rising inflation, and the government’s response to it, continued to influence the market in November. The Federal Open Market Committee increased the federal funds rate by 75 basis points in November for the fourth time this year. However, indications are that the Committee may scale back interest-rate hikes beginning in December. Oversupply and waning demand drove crude oil prices lower in November. Nevertheless, prices are expected to rise again in December as the cold weather should increase demand. As to the stock market, December is usually a good month for equities, which should make for a solid fourth quarter.

What I’m Watching This Week – 28 November 2022

The Markets (as of market close November 25, 2022)

Wall Street ended the Thanksgiving week ahead of where it began, as each of the benchmark indexes listed here posted solid gains during a week of light trading. The Global Dow led the indexes, followed by the Dow, the S&P 500, the Russell 2000, and the Nasdaq. Stocks have been rallying since October and the holiday season tends to be strong for equities heading into the final month of the year. Crude oil prices fell for the third straight week, firmly settling below $80.00 per barrel. A cap on Russian oil prices, coupled with China’s surging COVID cases, has kept oil prices muted.

Last Monday saw stocks slide lower to begin the holiday-shortened week, with the Nasdaq (-1.1%) tumbling the furthest among the benchmark indexes listed here. The Global Dow lost 0.8% after a rise in COVID-19 cases in China prompted a lockdown in parts of that country. The Russell 2000 dropped 0.6%, the S&P 500 declined 0.4%, and the Dow slipped 0.1%. Crude oil prices continued to drop, falling to $79.74 per barrel. Ten-year Treasury yields were flat, ending the session at 3.82%. The dollar gained against a basket of currencies. Gold prices fell for the third consecutive session.

Stocks rose last Tuesday in what may have been an early holiday-shopping day for dip buyers. The S&P 500 closed above 4,000 for the first time since September, while the Dow reached its highest level in three months. The tech-heavy Nasdaq and the S&P 500 gained 1.4%, followed by the Global Dow (1.3%), while the Dow and the Russell 2000 advanced 1.2%. Ten-year Treasury yields shed 6.7 basis points, closing the session at 3.75%. Crude oil prices reversed a downward trend, climbing $1.12 to $81.16 per barrel. The dollar slipped lower, while gold prices eked out a gain.

Equities continued to ascend last Wednesday as minutes from the last Federal Reserve meeting reinforced expectations that interest-rate hikes may be scaled back beginning in December. Each of the benchmark indexes listed here advanced, led by the Nasdaq (1.0%) and the Global Dow (0.8%). The S&P 500 rose 0.6%, the Dow added 0.3%, and the Russell 2000 eked out a 0.1% gain. Ten-year Treasury yields gave back 5.2 basis points to close the session at 3.70%. The price of crude oil slid to $77.39 per barrel as prices approached the 2021 closing value of $75.44 per barrel. The dollar declined, while gold prices rose nearly $11.00 to $1,750.90 per ounce.

Stocks ended mixed last Friday in a shortened trading session. The New York Stock Exchange closed early the day after Thanksgiving, and trading was relatively light. The Dow (0.5%) and the Russell 2000 (0.3%) ended higher, while the Nasdaq (-0.5%) finished lower. The S&P 500 and the Global Dow ended the day flat. Ten-year Treasury yields ended marginally lower, closing at 3.69%. Crude oil prices lost $1.66 to end the day at $76.28 per barrel. The dollar advanced against a basket of currencies. Gold prices increased for the third straight session.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 11/25Weekly ChangeYTD Change
DJIA36,338.3033,745.6934,347.031.78%-5.48%
Nasdaq15,644.9711,146.0611,226.360.72%-28.24%
S&P 5004,766.183,965.344,026.121.53%-15.53%
Russell 20002,245.311,849.731,869.191.05%-16.75%
Global Dow4,137.633,682.423,751.921.89%-9.32%
Fed. Funds target rate0.00%-0.25%3.75%-4.00%3.75%-4.00%0 bps375 bps
10-year Treasuries1.51%3.81%3.69%-12 bps218 bps
US Dollar-DXY95.64106.97105.96-0.94%10.79%
Crude Oil-CL=F$75.44$80.20$76.28-4.89%1.11%
Gold-GC=F$1,830.30$1,750.80$1,754.000.18%-4.17%

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

  • New orders for durable goods rose 1.0% in October, the seventh increase in the last eight months. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders increased 0.8%. Transportation equipment, up six of the last seven months, led the increase, climbing 2.1%. New orders for nondefense capital goods in October increased 1.9%. Unfilled orders for durable goods increased for the 26th consecutive month, while inventories advanced for the 21st month in a row.
  • Sales of new single-family homes increased 7.5% in October but were 5.8% below the October 2021 rate. The median sales price for new single-family homes in October was $493,000 ($455,700 in September), while the average sales price was $544,000 ($516,400 in September). At the current sales pace, the available inventory of new single-family homes for sale in October sat at 9.7 months, down slightly from the September rate of 9.9 months.
  • According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.648 per gallon on November 21, $0.114 per gallon below the prior week’s price but $0.253 higher than a year ago. Also as of November 21, the East Coast price decreased $0.073 to $3.538 per gallon; the Gulf Coast price fell $0.116 to $3.021 per gallon; the Midwest price declined $0.158 to $3.519 per gallon; the West Coast price dropped $0.145 to $4.779 per gallon; and the Rocky Mountain price decreased $0.077 to $3.636 per gallon. Residential heating oil prices averaged $5.434 per gallon on November 21, $0.349 below the previous week’s price but $2.050 per gallon more than a year ago.
  • Claims for unemployment insurance rose notably during the last reporting period. For the week ended November 19, there were 240,000 new claims for unemployment insurance, an increase of 17,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 12 increased 0.1 percentage point to 1.1%. The advance number of those receiving unemployment insurance benefits during the week ended November 12 was 1,551,000, an increase of 48,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended November 5 were Rhode Island (2.1%), Alaska (1.9%), Puerto Rico (1.8%), New Jersey (1.7%), California (1.6%), New York (1.4%), Massachusetts (1.3%), Nevada (1.1%), Washington (1.1%), and Oregon (1.1%). The largest increases in initial claims for unemployment insurance for the week ended November 12 were in Minnesota (+1,971), North Carolina (+1,141), New Jersey (+1,020), Montana (+918), and Pennsylvania (+607), while the largest decreases were in Kentucky (-3,330), Georgia (-1,726), Florida (-1,302), Indiana (-1,136), and Texas (-1,091).

Eye on the Week Ahead

The last week of November brings with it plenty of important, market-moving economic data. The second estimate of third-quarter gross domestic product is available this week. The initial estimate showed the economy advanced 2.6% in the third quarter after decelerating in each of the year’s first two quarters. Another important report that’s out this week includes the latest data on personal income and outlays, which includes the personal consumption expenditures price index, a measure of inflation preferred by the Federal Reserve. The latest information on the labor sector is out at the end of this week with the release of the employment situation report. Job growth has been steady through October, while average hourly earnings have increased 4.7% over the past 12 months.

What I’m Watching This Week – 21 November 2022

The Markets (as of market close November 18, 2022)

Stocks fell last week following warnings from several Federal Reserve officials that more policy tightening was to come. Each of the benchmark indexes listed here closed the week lower after enjoying solid gains the previous week. The Russell 2000 and the Nasdaq fell the furthest, followed by the S&P 500, the Global Dow, and the Dow. Yields on 10-year Treasuries ended last week right where they began. Gold prices couldn’t maintain an early-week surge, ultimately closing lower by the close of trading last Friday. The dollar gained about 0.05%. An abundant supply and waning demand sent crude oil prices lower for the second week in a row.

Stocks closed lower last Monday, unable to maintain their rally from the previous week. Among the benchmark indexes listed here, the Nasdaq and the Russell 2000 (-1.1%) slid the furthest, followed by the S&P 500 (-0.9%), the Dow (-0.6%), and the Global Dow (-0.4%). Crude oil prices lost $3.70, falling to $85.27 per barrel, the lowest price in roughly three weeks as short-term demand appeared to be waning. The yield on 10-year Treasuries added 5.2 basis points to reach 3.86%. The dollar and gold prices advanced.

Equities rose higher last Tuesday on soft inflation data. Investors hoped that inflation may have peaked following the release of a lower-than-expected producer price index report for October. The Russell 2000 and the Nasdaq led the benchmark indexes listed here, both advancing 1.5%. The Global Dow climbed 1.0%, followed by the S&P 500 (0.9%) and the Dow (0.2%). Ten-year Treasury yields fell 6.6 basis points to close the session at 3.79%. The dollar slipped lower, while gold prices advanced 0.3%. Crude oil prices added nearly $1.00 to reach $86.86 per barrel.

Stocks slid lower last Wednesday as a strong retail sales report indicated the economy may be able to withstand additional interest-rate hikes. The Nasdaq, which is typically more sensitive to interest rates, fell 1.5%, while the Russell 2000 lost 1.9%. Roughly 68% of the S&P 500 companies lost value, dragging that index down 0.8%. The Global Dow declined 0.8% and the Dow slipped 0.1%. Bond prices advanced, pulling yields lower. Ten-year Treasury yields fell 10.7 basis points to end the session at 3.69%. Crude oil prices dropped $1.64 to $85.28 per barrel. The dollar was relatively flat, while gold prices continued to surge, advancing for the third consecutive session.

Last Thursday, Wall Street notched its second consecutive day of losses for the first time in two weeks. Investors hopes for a softening of the government’s policy to fight inflation were dampened by hawkish statements from senior Federal Reserve officials suggesting more aggressive interest-rate hikes. Each of the benchmark indexes closed lower, with the Russell 2000 falling the furthest, dropping 0.8%. The Global Dow and the Nasdaq slid 0.4%, the S&P 500 lost 0.3%, while the Dow was flat. Crude oil prices declined $3.62, hitting $81.97 per barrel — its lowest price since early October. Ten-year Treasury yields rose to 3.77%. The dollar advanced marginally, while gold prices fell for the first time in more than a week.

Stocks rebounded last Friday as each of the benchmark indexes listed here posted gains. The Dow and the Russell 2000 rose 0.6%, the Global Dow and the S&P 500 added 0.5%, while the Nasdaq was flat. Ten-year Treasuries rose 4.3 basis points to close the session and last week at 3.81%. Crude oil prices continued to decline, falling $1.44 to $80.20 per barrel. The dollar rose marginally, while gold prices decreased.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 11/18Weekly ChangeYTD Change
DJIA36,338.3033,747.8633,745.69-0.01%-7.13%
Nasdaq15,644.9711,323.3311,146.06-1.57%-28.76%
S&P 5004,766.183,992.933,965.34-0.69%-16.80%
Russell 20002,245.311,882.741,849.73-1.75%-17.62%
Global Dow4,137.633,695.503,682.42-0.35%-11.00%
Fed. Funds target rate0.00%-0.25%3.75%-4.00%3.75%-4.00%0 bps375 bps
10-year Treasuries1.51%3.81%3.81%0 bps230 bps
US Dollar-DXY95.64110.74106.970.56%11.85%
Crude Oil-CL=F$75.44$89.00$80.20-9.89%6.31%
Gold-GC=F$1,830.30$1,770.60$1,750.80-1.12%-4.34%

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

  • Prices U.S. producers received for goods and services rose 0.2% in October, the same increase as in September. Producer prices advanced 8.0% for the 12 months ended in October. Producer prices for goods rose 0.6% last month, the largest advance since a 2.2% increase in June. Most of the October increase can be traced to a 2.7% jump in prices for energy, driven higher by a 5.7% increase in gasoline prices. Prices for foods advanced 0.5%. Conversely, prices for goods less foods and energy decreased 0.1%. Producer prices for services declined 0.1% in October, the first decrease since November 2020.
  • Import and export prices declined in October for the fourth consecutive month. International trade prices haven’t increased since June 2022. Import prices fell 0.2% in October following a 1.1% decline in September. Export prices declined 0.3% last month after falling 1.5% in September. Since October 2021, import prices have risen 4.2%, while export prices increased 6.9%. Annual price increases for both import and export prices are down notably from their respective 2022 high points of 13.0% and 18.6%. This data is another indication that inflationary pressures may have peaked.
  • Retail sales increased 1.3% in October and 8.3% since October 2021. Retail trade sales were up 1.2% from September and 7.5% from October 2021. In October, gasoline station sales rose 4.1%, sales at food and beverage stores increased 1.4%, and sales at food services and drinking places climbed 1.6%.
  • Industrial production slid 0.1% in October, while its September increase was revised down to 0.1%. Manufacturing rose 0.1% last month, while mining fell 0.4% and utilities dropped 1.5%. Nevertheless, industrial production in October was 3.3% above its October 2021 reading. Over the past 12 months, manufacturing was 2.4% above its year-earlier level, mining rose 3.6%, and utilities increased 2.6%.
  • The number of residential building permits issued in October fell 2.4% from the previous month and is 10.1% below the October 2021 rate. Issued building permits for single-family homes declined 3.6% in October. The number of housing starts decreased 4.2% last month and 8.8% lower than the October 2021 rate. Single-family housing starts in October slid 6.1% under the September pace. In October, housing completions also lagged, falling 6.4% below the September rate but 6.6% above the October 2021 rate. Single-family home completions in October were 8.3% below the September rate.
  • Sales of existing homes retreated for the ninth consecutive month in October after decreasing 5.9% from the September rate. Over the 12 months ended in October, existing home sales have fallen 28.4%. According to the report from the National Association of Realtors®, higher mortgage interest rates are making it harder for some potential homebuyers to qualify for loans, squeezing them out of the market. Relatively scant inventory is also impacting sales of existing homes. Total unsold inventory sat at a 3.3-month supply in October, up from 3.1 months in September. The median price for existing homes in October was $379,100, 1.2% below the September price of $383,500 but 6.6% above the October 2021 price ($355,700). Sales of existing single-family homes also declined in October, dropping 6.4% from September and 28.2% from October 2021. The median existing single-family home price was $384,900 in October, 1.2% under the September price ($389,600) but 6.2% above the October 2021 price ($362,600).
  • According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.762 per gallon on November 14, $0.034 per gallon below the prior week’s price but $0.363 higher than a year ago. Also as of November 14, the East Coast price increased $0.021 to $3.611 per gallon; the Gulf Coast price decreased $0.049 to $3.137 per gallon; the Midwest price fell $0.099 to $3.677 per gallon; the West Coast price dropped $0.021 to $4.924 per gallon; and the Rocky Mountain price decreased $0.047 to $3.713 per gallon. Residential heating oil prices averaged $5.794 per gallon on November 14, $0.108 below the previous week’s price but $2.386 per gallon more than a year ago.
  • For the week ended November 12, there were 222,000 new claims for unemployment insurance, a decrease of 4,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 5 remained at 1.0%. The advance number of those receiving unemployment insurance benefits during the week ended November 5 was 1,507,000, an increase of 13,000 from the previous week’s level, which was revised up by 1,000. States and territories with the highest insured unemployment rates for the week ended October 29 were Puerto Rico (2.1%), California (1.8%), Alaska (1.7%), New Jersey (1.7%), Rhode Island (1.4%), New York (1.3%), Massachusetts (1.2%), Nevada (1.1%), Washington (1.1%), and Oregon (1.1%). The largest increases in initial claims for unemployment insurance for the week ended November 5 were in Kentucky (+3.453), California (+3,413), Texas (+2,415), Indiana (+1,228), and Illinois (+1,045), while the largest decreases were in Oregon (-1,276), New Jersey (-490), Florida (-391), Hawaii (-323), and Puerto Rico (-297).

Eye on the Week Ahead

There isn’t much in terms of economic data scheduled for Thanksgiving week. The October figures on durable goods orders are available. New orders for durable goods increased 0.4% in September, driven higher by new orders for transportation equipment. Excluding transportation, new orders for durable goods dipped 0.5% in September. The latest data on new home sales from the Census Bureau is out this week. Sales of new single-family homes fell nearly 11.0% in September and were down 17.6% since September 2021.

What I’m Watching This Week – 14 November 2022

The Markets (as of market close November 11, 2022)

Stocks rebounded from a sluggish start to close last week higher. Investors continued to rally behind equities on the hope that last week’s soft inflation data will prompt the Federal Reserve to curtail its interest-rate hikes. The S&P 500 rose to its best week since June, while the tech-heavy Nasdaq notched its best week in two years. Bond prices advanced, pulling Treasury yields lower. Crude oil prices slid lower, although they could jump in December when the European ban on Russian oil shipments by sea takes effect on December 5, potentially limiting supply. Gold prices advanced for the second consecutive week. The dollar endured the largest two-day fall in 13 years after plunging last Thursday and Friday.

Wall Street continued its rally, closing up last Monday for the second consecutive session. Both small caps and blue-chip stocks enjoyed a lift to begin last week, sending the Nasdaq (0.90%) and the Russell 2000 (0.60%) higher. The Dow (1.3%) led the benchmark indexes listed here, while the S&P 500 (1.0%) and the Global Dow (1.2%) also gained ground. Yields on 10-year Treasuries added 5.8 basis points to close at 4.21%. Crude oil prices and the dollar dipped lower, while gold prices inched higher.

Stocks extended their rally for a third session in a row last Tuesday as investors awaited midterm election results. Of the benchmark indexes listed here, the Global Dow led the gains, up 1.1%, followed by the Dow (1.0%), the S&P 500 (0.6%), and the Nasdaq (0.5%). The small caps of the Russell 2000 ended flat. Ten-year Treasury yields, the dollar, and crude oil prices declined. Gold prices rose for a second day in a row.

The three-session rally ended last Wednesday as investors mulled midterm election results and the consumer price index, scheduled for release the next day. The Russell 2000 (-2.7%) and the Nasdaq (-2.5%) led the declines, followed by the S&P 500 (-2.1%), the Dow (-2.0%), and the Global Dow (-1.4%). Bond prices dipped, sending the yield on 10-year Treasuries up 2.5 basis points to 4.15%. Crude oil prices slid $3.34, dragging the price per barrel down to $85.57 after data revealed an unexpected increase in domestic crude oil supplies. The dollar rose, while gold prices fell for the first time in the last four trading sessions.

Stocks surged higher last Thursday as slower-than-expected consumer price growth brought hope that the Federal Reserve might respond by curtailing its aggressive rate-hike policy. U.S. markets enjoyed their biggest single-day gain since 2020. The Nasdaq increased 7.4%, the Russell 2000 jumped 6.1%, the S&P 500 rose 5.5%, and the Dow and the Global Dow advanced 3.7% and 3.8%, respectively. The yield on 10-year Treasuries fell 32.2 basis points, closing at 3.82% — a five-week low. Crude oil prices rose marginally, reaching $86.18 per barrel. The dollar tumbled, while gold prices advanced.

Equities continued their rally last Friday, with the Global Dow (1.9%), the Nasdaq (1.9%), and the S&P 500 (0.9%) ending sharply higher. The Russell 2000 advanced 0.8% while the Dow inched up 0.1%. Treasuries did not trade last Friday in observance of Veterans’ Day. Crude oil prices increased $2.48 to $88.95 per barrel. The dollar fell for the second consecutive day, while gold prices rose for the second day in a row.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 11/11Weekly ChangeYTD Change
DJIA36,338.3032,403.2233,747.864.15%-7.13%
Nasdaq15,644.9710,475.2511,323.338.10%-27.62%
S&P 5004,766.183,770.553,992.935.90%-16.22%
Russell 20002,245.311,799.871,882.744.60%-16.15%
Global Dow4,137.633,484.103,695.506.07%-10.69%
Fed. Funds target rate0.00%-0.25%3.75%-4.00%3.75%-4.00%0 bps375 bps
10-year Treasuries1.51%4.15%3.81%-34 bps230 bps
US Dollar-DXY95.64110.74110.74-3.95%11.22%
Crude Oil-CL=F$75.44$92.56$89.00-3.85%17.97%
Gold-GC=F$1,830.30$1,685.10$1,770.605.07%-3.26%

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 release of the much-anticipated consumer price index last Thursday revealed consumer prices rose 0.4% in October, the same increase as in September. Prices excluding food and energy rose 0.3% after rising 0.6% in September. Over the last 12 months, consumer prices have risen 7.7%, down from 8.2% for the 12 months ended in September. Prices for food increased 0.6% in October following a 0.6% increase in the previous month. Energy prices, which had decreased each month since July, jumped 1.8% in October as gasoline prices increased 4.0% and fuel oil prices vaulted up 19.8%. Prices for shelter climbed 0.8% last month after increasing 0.7% in September. The October CPI held steady for the second consecutive month and is below forecasters’ expectations. The latest data may support a pivot by the Federal Reserve to a less aggressive stance.
  • The U.S. Treasury budget deficit decreased to $87.8 billion in October, the first month of fiscal year 2023. The October deficit was $341.9 billion lower than the September shortfall. Total government expenditures in October were $406.4 billion, roughly $41.0 billion below expenditures in September. Government receipts in October totaled $318.6 billion, $34.7 billion more than September receipts.
  • According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.796 per gallon on November 7, $0.054 per gallon above the prior week’s price and $0.386 higher than a year ago. Also as of November 7, the East Coast price increased $0.068 to $3.590 per gallon; the Gulf Coast price advanced $0.009 to $3.186 per gallon; the Midwest price rose $0.135 to $3.776 per gallon; the West Coast price dropped $0.083 to $4.945 per gallon; and the Rocky Mountain price decreased $0.029 to $3.760 per gallon. Residential heating oil prices averaged $5.905 per gallon on November 7, $0.069 above the previous week’s price and $2.500 per gallon more than a year ago. In fact, despite a warm start to the winter heating season, which rund from October through March, heating oil prices have increased, while propane prices have remained relatively flat from last year.
  • For the week ended November 5, there were 225,000 new claims for unemployment insurance, an increase of 7,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 29 remained 1.0%. The advance number of those receiving unemployment insurance benefits during the week ended October 29 was 1,493,000, an increase of 6,000 from the previous week’s level, which was revised up by 2,000. States and territories with the highest insured unemployment rates for the week ended October 22 were Puerto Rico (1.9%), New Jersey (1.8%), California (1.8%), Alaska (1.6%), New York (1.3%), Rhode Island (1.2%), Massachusetts (1.2%), Nevada (1.1%), and Oregon (1.1%). The largest increases in initial claims for unemployment insurance for the week ended October 29 were in California (+1,989), Oregon (+1,541), Washington (+693), Illinois (+457), and Minnesota (+456), while the largest decreases were in Florida (-1,534), Kentucky (-1,007), North Carolina (-659), Arkansas (-517), and South Carolina (-471).

Eye on the Week Ahead

There’s plenty of economic data to consider this week. A couple of reports that measure consumer price inflation are available with the release of the producer price index and the import and export prices report for October. Prices producers received for goods and services increased 0.4% in September, while prices rose 8.5% year to date. The release of import and export prices is out this week. While most inflation indicators for September increased, import and export prices did not follow suit, as both import prices and export prices decreased. Also out this week is the release of the retail sales report for October. Retail sales were flat in September.

What I’m Watching This Week – 7 November 2022

The Markets (as of market close November 4, 2022)

Despite a late-week rally, stocks closed lower last week. Investors continued to try to assess the plethora of mixed data and its impact on the economy. Inflation continued to rise, and the Federal Reserve hiked interest rates up another 75.0 basis points, yet the October job figures were above expectations — the result of which has been market volatility. For example, the S&P 500 has recorded five monthly moves of at least 7.0% either upward or downward. With the release of the consumer price index later this week, more volatility is likely. Nevertheless, each of the benchmark indexes listed here slid lower last week, led by the Nasdaq, which dropped nearly 6.0% as tech shares fell nearly 7.0%. Long-term bond prices also fell, pushing yields higher, with 10-year Treasury yields increasing 14.0 basis points. The dollar ended the week relatively flat, while gold prices advanced for the first time in a month. Crude oil prices finished at their highest price in a month, as the prospects of China’s relaxation of COVID restrictions likely will remove the lid on crude oil prices.

While October proved to be a very good month for stocks, the last day of the month ended on a rather sour note. Investors may have taken advantage of the opportunity to take some profits, as stocks dipped lower last Monday. Each of the benchmark indexes lost value, led by the Nasdaq (-1.0%) and followed by the S&P 500 (-0.8%), with the Dow and the Global Dow sliding -0.4%. The Russell 2000 ended the day flat. Ten-year Treasury yields were unchanged, remaining at 4.07%. Crude oil prices gained $1.08 to close at $87.61 per barrel. The dollar dipped lower, while gold prices advanced.

Stocks ended lower last Tuesday as investors awaited the outcome of last Wednesday’s Federal Open Market Committee meeting. The Russell 2000 (0.3%) and the Global Dow (0.8%) ended the day higher, while the Nasdaq (-0.9%), the S&P 500 (-0.4%), and the Dow (-0.2%) closed lower. Tech shares weighed on equities, while energy stocks performed better. Crude oil prices climbed higher for the second consecutive day, adding $1.76 to reach $88.29 per barrel. Ten-year Treasury yields dipped 2.5 basis points to 4.05%. The dollar was flat, while gold prices advanced for the second consecutive session.

Last Wednesday, investors reacted to the latest rate hike by the Federal Reserve (see below) by moving away from stocks. The Nasdaq and the Russell 2000 lost 3.4%, the S&P 500 slid 2.5%, the Dow dropped 1.6%, and the Global Dow fell 0.9%. The yield on 10-year Treasuries closed relatively flat, remaining at 4.05%. The dollar advanced, gold prices declined, and crude oil prices rose to $89.21 per barrel. Many had hoped that the Fed would slow its aggressive interest-rate hike policy. However, Federal Reserve Chair Jerome Powell remained hawkish in his post-meeting news conference, indicating that we’re a long way from ending rate hikes. Nevertheless, while a pause is not likely, a reduction in the amount of future interest-rate increases is possible.

Wall Street continued to reel last Thursday following the hawkish rhetoric emanating from the Federal Reserve. Short-term bond prices plunged, sending yields soaring, with two-year Treasury yields climbing 19.0 basis points. Stocks also dropped, with tech shares falling the furthest, followed by communication services, heath care, and finance. The Nasdaq fell 1.7%, followed by the S&P 500 (-1.1%), the Global Dow (-1.0%), and the Russell 2000 and the Dow (-0.5%). Ten-year Treasury yields rose 6.5 basis points to 4.12%. The dollar was flat, while gold prices climbed higher. Crude oil prices dipped, closing at $88.04 per barrel.

Stocks halted a four-day slide last Friday as investors tried to gauge the latest data and its impact on whether the Federal Reserve might slow the pace of interest-rate increases. By the close of trading last Friday, the Global Dow soared up 2.4%, followed by the S&P 500 (1.4%), the Nasdaq and the Dow (1.3%), and the Russell 2000 (1.0%). Ten-year Treasury yields added 3.2 basis points to close the week at 4.15%. Crude oil prices jumped about $4.50 to hit $92.63 per barrel. The dollar slid lower, while gold prices added nearly $54.00 per ounce.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 11/4Weekly ChangeYTD Change
DJIA36,338.3032,861.8032,403.22-1.40%-10.83%
Nasdaq15,644.9711,102.4510,475.25-5.65%-33.04%
S&P 5004,766.183,901.063,770.55-3.35%-20.89%
Russell 20002,245.311,846.921,799.87-2.55%-19.84%
Global Dow4,137.633,448.043,484.101.05%-15.79%
Fed. Funds target rate0.00%-0.25%3.00%-3.25%3.75%-4.00%75 bps375 bps
10-year Treasuries1.51%4.01%4.15%14 bps264 bps
US Dollar-DXY95.64110.69110.740.05%15.79%
Crude Oil-CL=F$75.44$88.24$92.564.90%22.69%
Gold-GC=F$1,830.30$1,647.50$1,685.102.28%-7.93%

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

  • As expected, the Federal Open Market Committee increased the target range for the federal funds rate 75 basis points to 3.75%-4.00%. In support of its decision, the Committee noted that inflation remains elevated due to supply and demand imbalances related to the pandemic, higher food and energy prices, broader price pressures, and the ongoing Russia/Ukraine war. In addition, the Committee indirectly suggested that the economy has thus far weathered the aggressive monetary policies, noting that there has been modest growth in spending and production, while job gains have been robust in recent months. Nevertheless, the FOMC made it clear that it is “strongly committed to returning inflation to its 2.0% objective.” As to the pace of future increases in the target range, “the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
  • Employment added 261,000 new jobs in October, according to the latest data from the Bureau of Labor Statistics. This follows an upwardly revised September total of 315,000 (+52,000). Monthly job growth has averaged 407,000 thus far in 2022, compared with 562,000 per month in 2021. In October, notable job gains occurred in health care, professional and technical services, and manufacturing. The unemployment rate rose 0.2 percentage point to 3.7% in October, while the number of unemployed persons rose by 306,000 to 6.1 million. The labor force participation rate, at 62.2%, and the employment-population ratio, at 60.0%, were unchanged in October and have shown little net change since early this year, although these measures are 1.2 percentage point below their February 2020 values prior to the pandemic. In October, average hourly earnings rose by $0.12, or 0.4%, to $32.58. Over the past 12 months, average hourly earnings have increased by 4.7%. In October, the average work week was 34.5 hours for the fifth month in a row. Overall, the relative strength of this latest employment data supports more interest-rate hikes.
  • According to the latest purchasing managers’ report from S&P Global, manufacturing slowed in October, with the Purchasing Managers’ Index (PMI™) registering 50.4, down from September’s 52.0. A reading over 50.0 indicates growth, thus manufacturing expanded in October, but at a slower pace than in September. According to respondents, firms experienced a decline in new orders, which were linked to greater buyer hesitancy, leading to the slowest increase in employment in over two years.
  • The S&P Global US Services PMI Business Activity Index registered 47.8 in October, down from 49.3 in September. The latest survey of purchasing managers showed business activity in the services sector contracted sharply to begin the fourth quarter. New orders and client demand weakened, largely due to inflation and the strength of the dollar, which dampened foreign demand.
  • The latest Job Openings and Labor Turnover Summary for September revealed that the number of job openings increased by 147,000 to 10.7 million, offsetting a sharp decline in August. In September, the largest increases in job openings were in accommodation and food services (+215,000); health care and social assistance (+115,000); and transportation, warehousing, and utilities (+111,000). The number of job openings decreased in wholesale trade (-104,000) and in finance and insurance (-83,000). The number of hires fell by 282,000 to 6.1 million. Total separations, which includes quits, layoffs, and discharges, decreased by 370,000 to 5.7 million.
  • The latest data on international trade in goods and services shows that the trade deficit increased 11.6% in September to $73.3 billion. Exports decreased 1.1% in September, while imports increased 1.5%. Year to date, the goods and services deficit increased by $125.6 billion, or 20.2%, from the same period in 2021. Exports increased by $378.1 billion, or 20.2%. Imports increased $503.6 billion, or 20.2%.
  • According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.742 per gallon on October 31, $0.027 per gallon below the prior week’s price but $0.352 higher than a year ago. Also as of October 31, the East Coast price increased $0.041 to $3.522 per gallon; the Gulf Coast price fell $0.041 to $3.177 per gallon; the Midwest price dropped $0.047 to $3.641 per gallon; the West Coast price decreased $0.151 to $5.028 per gallon; and the Rocky Mountain price decreased $0.056 to $3.789 per gallon. Residential heating oil prices averaged $5.832 per gallon on October 31, $0.133 above the previous week’s price and $2.437 per gallon more than a year ago.
  • For the week ended October 29, there were 217,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 22 remained 1.0%. The advance number of those receiving unemployment insurance benefits during the week ended October 22 was 1,485,000, an increase of 47,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended October 15 were Puerto Rico (2.1%), New Jersey (1.8%), California (1.7%), Alaska (1.5%), New York (1.3%), Rhode Island (1.2%), Massachusetts (1.2%), Nevada (1.1%), and Oregon (1.1%). The largest increases in initial claims for unemployment insurance for the week ended October 22 were in New York (+1,726), Georgia (+1,301), New Jersey (+1.100), Pennsylvania (+1,062), and Illinois (+1,016), while the largest decreases were in Missouri (-2,213), Florida (-2,004), Michigan (-804), Tennessee (-628), and Puerto Rico (-510).

Eye on the Week Ahead

There is not much in terms of economic data released this week. However, one important inflation indicator is available, the consumer price index for October. September saw prices increase 0.4%, while year-over-year prices advanced 8.2%.

Monthly Market Review – October 2022

The Markets (as of market close October 31, 2022)

October saw stocks close higher, the first monthly gain since July. Investors were encouraged by hopes that the Federal Reserve will pull back from its aggressive interest-rate hike policy. In addition, solid third-quarter earnings could be a sign that the economy can withstand the battle to lower inflation. Each of the benchmark indexes listed here posted notable gains, led by the Dow, which rose nearly 14.0%. The Russell 2000 gained about 11.0%, followed by the Global Dow, the S&P 500, and the Nasdaq.

After two consecutive quarters of retractions, the economy expanded at an annualized rate of 2.6% in the third quarter. Personal spending, which accounts for nearly 70% of the economy, increased 1.4% in the third quarter. A strong labor market and ample savings have supported consumer spending. The Treasury deficit for fiscal year 2022 was nearly half the total of the previous fiscal year. Industrial production increased, as did new orders for durable goods. However, not all economic indicators were positive. The housing sector continued to lag, impacted by rising mortgage interest rates. Inflation indicators, which had shown a decline in August, reversed course in September. The personal consumption expenditures price index and the consumer price index increased.

Crude oil prices notched their first monthly gain since June, following the largest cut in output by OPEC since the pandemic, further straining global supplies. Crude oil prices settled at around $86.10 per barrel, up over 8.0% from August. Gas prices, which had fallen during the summer months, reversed course somewhat in October. The national average retail price for regular gasoline was $3.769 per gallon on October 24, up from $3.569 on September 26 and $0.386 higher than a year ago.

Bond prices fell in October, pushing yields higher. Ten-year Treasury yields climbed 27 basis points, likely in anticipation of a continuation of the Fed’s aggressive monetary policy. The dollar slid lower against a basket of world currencies. Gold prices fell in October, the seventh consecutive month of declining prices.

Stock Market Indexes

Market/Index2021 ClosePrior MonthAs of October 31Monthly ChangeYTD Change
DJIA36,338.3028,725.5132,732.9513.95%-9.92%
Nasdaq15,644.9710,575.6210,988.153.90%-29.77%
S&P 5004,766.183,585.623,871.987.99%-18.76%
Russell 20002,245.311,664.721,846.8610.94%-17.75%
Global Dow4,137.633,168.343,432.628.34%-17.04%
Fed. Funds target rate0.00%-0.25%3.00%-3.25%3.00%-3.25%0 bps300 bps
10-year Treasuries1.51%3.80%4.07%27 bps256 bps
US Dollar-DXY95.64112.17111.58-0.53%16.67%
Crude Oil-CL=F$75.44$79.67$86.108.07%14.13%
Gold-GC=F$1,830.30$1,670.50$1,635.70-2.08%-10.63%

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: Employment rose by 263,000 in September, down from the August increase of 315,000. Monthly job growth has averaged 420,000 thus far in 2022. In September, job gains occurred in leisure and hospitality and in health care. The unemployment rate edged down to 3.5% in September (3.7% in August), and the number of unemployed persons decreased by 261,000 to 5.8 million. Among the unemployed, the number of workers who permanently lost their jobs decreased by 173,000 to 1.2 million in September. Among that group, the number of persons who were unable to work because their employer closed or lost business due to the pandemic fell to 1.4 million, down from 1.9 million in August. In September, 5.2% of employed persons teleworked because of the pandemic, down from 6.5% in the prior month. By comparison, in May 2020, the first month these data were collected, 35.4% of employed persons teleworked because of the pandemic. The labor force participation rate increased by 0.1 percentage point to 62.3% in September. The employment-population ratio was unchanged at 60.1%. Both measures are 1.1 percentage point below their February 2020 values prior to the pandemic. In September, average hourly earnings rose by $0.10 to $32.46. Over the 12 months ended in September, average hourly earnings increased by 5.0%. In September, the average work week was 34.5 hours for the fourth month in a row.
  • There were 217,000 initial claims for unemployment insurance for the week ended October 22, while the total number of insured unemployment claims was 1,438,000 as of October 15. A year ago, there were 294,000 initial claims for unemployment insurance and 2,334,000 total insured unemployment claims.
  • FOMC/interest rates: The Federal Open Market Committee did not meet in October. The Committee reconvenes again during the first week of November. It is expected that the FOMC will increase the federal funds target rate range 75 basis points. Throughout October, some members of the Committee have hinted that they may be inclined to slow the pace of interest-rate hikes, possibly beginning in December. However, recent indicators showed inflationary pressures have abated very little.
  • GDP/budget: Gross domestic product increased 2.6% in the third quarter, according to the initial, or advance, estimate released by the Bureau of Economic Analysis. The third-quarter increase follows decreases in the first quarter (-1.6%) and the second quarter (-0.6%). The increase in GDP reflected advances in exports; consumer spending; nonresidential (business) fixed investment; and federal, state, and local government spending that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased. Consumer spending rose 4.6% in the third quarter after increasing 2.0% in the second quarter. Most of the increase in consumer spending is attributable to a 2.8% jump in services, while spending on durables slid 0.8%. Also dragging down GDP was a 4.9% decline in fixed investment, within which residential fixed investment dropped 26.4%, evidence of the slowdown in the housing sector. Nonresidential fixed investment jumped 3.7% in the third quarter after inching up 0.1% in the previous quarter. Exports rose 14.4% in the third quarter, while imports fell 6.9% after increasing 12.2% in the second quarter. The personal consumption expenditures price index, a measure of inflation, increased 4.2% in the third quarter following a 7.3% increase in the second quarter.
  • The Treasury budget deficit came in at $429.7 billion in September, up from $219.6 billion in August and over the September 2021 deficit of $64.9 billion. The deficit for fiscal year 2022, which runs from October through September, was $1.4 trillion, $1.4 trillion lower than the deficit in fiscal year 2021, as outlays dropped $550.0 billion while receipts increased $850.1 billion. For fiscal year 2022, individual income tax receipts increased by $587.8 billion, and corporate income tax receipts increased by $53.0 million.
  • Inflation/consumer spending: Inflationary pressures continued to rise in September, despite the Federal Reserve’s hawkish policy. The personal consumption expenditures price index, a preferred inflation indicator of the Federal Reserve, advanced 0.3% in September, the same increase as in August. For the year ended in September, prices have increased 6.2%. Prices less food and energy increased 0.5% in September and 5.1% since September 2021. Prices for durable goods dipped 0.1% in September, while prices for nondurable goods rose 0.4%. Prices for services rose 0.6% in September. Food prices increased 0.6%, while energy prices fell 2.4%. Consumer spending, impacted by rising prices, increased 0.6% in September. Spending on goods increased 0.6%, while consumer spending on services advanced 0.8%. Personal income and disposable (after-tax) personal income rose 0.4% in September. Wages and salaries increased 0.6% in September, doubling the August advance.
  • The Consumer Price Index rose 0.4% in September following a 0.1% increase in August. For the 12 months ended in September, the CPI increased 8.2% (8.3% for the 12-month period ended in August). Both the monthly and 12-month rates were above expectations. In September, the CPI less food and energy rose 0.6% (the same increase as in August) and 6.6% since September 2021. Price increases were broad-based in September, with the largest advances occurring in transportation services, medical care services, shelter, new vehicles, energy services, and food. These increases were mostly offset by declines in energy prices, used cars and trucks, and apparel.
  • Prices that producers receive for goods and services rose 0.4% in September following a 0.2% decline in August. Despite the recent downturn, producer prices have increased 8.5% since September 2021 (8.7% for the 12 months ended in August). Prices less foods, energy, and trade services increased 0.4% in September and 5.6% since September 2021. The September prices for both goods and services increased 0.4%. Over 25.0% of the September increase in services can be traced to a 6.4% jump in prices for traveler accommodation services. Nearly 60.0% of the increase in goods prices can be linked to a 1.2% increase in food prices.
  • Housing: Sales of existing homes retreated for the eighth consecutive month in September, falling 1.5% from the August estimate. Year over year, existing home sales were 23.8% under the September 2021 total. According to the latest survey from the National Association of Realtors®, rising mortgage rates and dwindling inventory have impacted sales. The median existing-home price was $384,800 in September, down from $391,700 in August but 8.4% higher than in September 2021 ($355,100). Unsold inventory of existing homes represents a 3.2-month supply at the current sales pace, unchanged from August. Sales of existing single-family homes also fell, down 0.9% in September, the same decline as in August. Sales of existing single-family homes have fallen 23.0% since September 2021. The median existing single-family home price was $391,000 in September, down from $398,800 in August but 8.1% over the September 2021 price.
  • Sales of new single-family homes declined 10.9% in September following a 24.7% August surge. Sales are down 17.6% since September 2021. Mortgage interest rates increased in September, slowing sales and increasing inventory, which sat at a 9.2-month supply (8.1 months in August). The median sales price of new single-family houses sold in September was $470,600 ($435,800 in August). The September average sales price was $517,700 ($529,000 in August).
  • Manufacturing: Industrial production increased 0.4% in September after dipping 0.1% in August. The September increase was due to a 0.4% rise in manufacturing output and a 0.6% advance in mining, which were somewhat offset by a 0.3% decline in utilities. Overall, industrial production was up 5.3% since September 2021. Most major market groups posted increases in September. Construction supplies recorded the largest gain (1.1%), while business supplies recorded the only decline (0.2%).
  • September saw new orders for durable goods increase 0.4% after advancing 0.2% in August. Excluding transportation, new orders decreased 0.5% in August. Excluding defense, new orders increased 1.4%. Transportation equipment drove the September increase, climbing 2.1%. New orders for capital goods jumped 3.5% in September after increasing 0.3% the previous month.
  • Imports and exports: While most indicators showed that inflation rose in September, both import and export prices declined. According to the U.S. Bureau of Labor Statistics, import prices slid 1.2% and export prices dipped 0.8% in September. Import prices retracted 3.7% in the third quarter of 2022, the largest three-month drop since the quarter ended May 2020. Year to date, import prices are up 6.0%, the smallest yearly advance since the 12 months ended February 2021. The September decline in export prices marked the third consecutive monthly decline, reflective of weakness in global demand. Prices for exports declined 6.2% in the third quarter, the largest three-month decrease since the period ended December 2008. Export prices have increased 9.5% since September 2021, the smallest 12-month decrease since the year ended February 2021.
  • The international trade in goods deficit was $92.2 billion in September, up 5.7% from August. Exports of goods fell 1.5% in September following a 0.7% decline in August. Imports of goods rose 0.8% in September, making up for some of the 1.5% decline in August.
  • The latest information on international trade in goods and services, released October 5, is for August and shows that the goods and services trade deficit narrowed by 4.3% from the July deficit. August exports were 0.3% less than July exports. August imports were 1.1% lower than July imports. Year over year, the goods and services deficit increased 24.4% from the same period in 2021. Exports increased 19.9%, while imports increased 21.0%.
  • International markets: The rate of inflation in the eurozone reached double digits in October. According to Eurostat, the European Union’s statistics agency, consumer prices have risen 10.7% since October 2021, the fastest rate of increase since 1997 when records were first kept. This latest data will surely challenge the European Central Bank, which suggested a slowdown in the pace of its interest-rate increases. The increase in consumer prices was accelerated by Russia’s invasion of Ukraine, coupled with Moscow’s decision to cut natural gas supplies to Europe. Other European countries are seeing price inflation skyrocket. Italy’s annual rate of inflation vaulted from 9.4% in September to 12.8% in October. Germany’s annual rate of inflation increased from 10.9% in September to 11.6% in October. Russia’s economy is also being impacted by its war in Ukraine. According to its central bank, Russia is on target for a recession as world sanctions against that country, plus the withdrawal of Western businesses are offsetting the windfall from high energy prices. In Asia, China’s strict COVID policies have impacted factory output, which contracted in October. Overall for the markets in October, the STOXX Europe 600 Index rose 5.5%. The United Kingdom’s FTSE advanced roughly 3.2%. Japan’s Nikkei 225 Index advanced 5.2%, while China’s Shanghai Composite Index lost 4.3%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® decreased in October after two consecutive months of gains. The October index stands at 102.5, down from 107.8 in September. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined sharply to 138.9 in October, down from 150.2 in September. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 78.1 in October (79.5 in September).

Eye on the Month Ahead

The Federal Open Market Committee meeting during the first week of November will likely see another 75-basis point interest rate increase, although there is some discussion among the Committee to slow the pace of increases moving forward. However, the latest data showed inflation rose, which may influence the Fed to continue its aggressive policies.

What I’m Watching This Week – 31 October 2022

The Markets (as of market close October 28, 2022)

Wall Street continued its weekly rally last week, with each of the benchmark indexes listed here posting solid gains. Traders focused on positive earnings reports from major megacap technology and communication companies rather than the latest data that showed inflation continuing to rise, opening the door for more interest-rate hikes from the Federal Reserve. Solid corporate earnings in the third quarter may be evidence that the economy can withstand the battle against inflation. However, a slowdown in manufacturing and the housing market could be an indication that the rate increases are impacting at least some parts of the economy. Nevertheless, stocks rallied for the second consecutive week, making it look likely that October will be a strong month.

Stocks closed last Monday higher, adding to gains from the prior week. The rally came as investors held out hope that the Federal Reserve might slow the pace of interest-rate hikes after November. The Dow led the benchmark indexes, climbing 1.3%, followed by the S&P 500 (1.2%), the Nasdaq and the Global Dow (0.9%), and the Russell 2000 (0.4%). Crude oil prices slipped marginally to $84.76 per barrel. The dollar was relatively flat. Gold prices declined, while the yield on 10-year Treasuries inched up 2.1 basis points to 4.23%. Globally, Chinese stocks plunged with the Shanghai Composite falling 2.0%, while Hong Kong’s Hang Seng index closed at its lowest level since 2009 on the heels of President Xi Jinping securing a third term as head of the Chinese Communist Party. Great Britain, trying to recover from a market decline and economic malaise, saw former Chancellor Rishi Sunak, became that country’s third Prime Minister in the last seven weeks.

Wall Street continued to rally last Tuesday. Stocks climbed higher, while bond yields declined. Each of the benchmark indexes listed here gained ground with the Russell 2000 (2.7%) setting the pace, followed by the Nasdaq (2.3%), The S&P 500 (1.6%), the Global Dow (1.5%), and the Dow (1.1%). Ten-year Treasury yields lost 12.6 basis points to close at 4.10%. The dollar dropped 1.0%, while gold prices added $3.30 to reach $1,657.40 per ounce. Crude oil prices rose as concerns over tight supplies returned.

Stocks were mixed last Wednesday, with the Russell 2000 (0.5%) and the Global Dow (0.9%) increasing. The Dow was flat, while tech shares pulled the Nasdaq down 2.0%, while the S&P 500 lost 0.7%. Ten-year Treasury yields fell for the second consecutive day after closing at 4.01%, down about 9.3 basis points. Crude oil prices advanced $2.94 to $88.26 per barrel. The dollar slid lower, while gold prices rose 0.65% to $1,668.80.

Last Thursday saw the Dow (0.6%) and the Russell 2000 (0.1%) post gains, while the Nasdaq (-1.6%), the S&P 500 (-0.6%), and the Global Dow (-0.4%) lost ground. Ten-year Treasury yields slid lower, down 7.8 basis points to close at 3.93%. The dollar climbed higher, while gold prices fell. Prices for crude oil rose less than $1.00, reaching $88.71 per barrel.

Stocks surged last Friday to end a turbulent week with gains. Favorable earnings reports from major technology and communications companies helped drive shares higher. The Nasdaq rose 2.9%, followed by the Dow (2.6%), the S&P 500 (2.5%), the Russell 2000 (2.3%), and the Global Dow (0.8%). Ten-year Treasury yields added 7.3 basis points to close the week at 4.01%. Crude oil prices slid lower to $88.24 per barrel. The dollar climbed higher for the second straight session, while gold prices declined.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 10/28Weekly ChangeYTD Change
DJIA36,338.3031,082.5632,861.805.72%-9.57%
Nasdaq15,644.9710,859.7211,102.452.24%-29.04%
S&P 5004,766.183,752.753,901.063.95%-18.15%
Russell 20002,245.311,742.241,846.926.01%-17.74%
Global Dow4,137.633,337.873,448.043.30%-16.67%
Fed. Funds target rate0.00%-0.25%3.00%-3.25%3.00%-3.25%0 bps300 bps
10-year Treasuries1.51%4.21%4.01%-19 bps250 bps
US Dollar-DXY95.64111.88110.69-1.06%15.74%
Crude Oil-CL=F$75.44$85.10$88.243.69%16.97%
Gold-GC=F$1,830.30$1,662.20$1,647.50-0.88%-9.99%

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

  • According to the first estimate of gross domestic product, the economy accelerated at a rate of 2.6% in the third quarter following decreases in the first and second quarters of 2022. Increases in exports, consumer spending, nonresidential (business) fixed investment, and federal, state, and local government spending helped drive the third-quarter increase in GDP. The consumer price index, a measure of inflation, advanced 4.2% in the third quarter, lower than the 7.3% increase in the second quarter. The advance estimate of GDP is based on incomplete data and may change with the releases of the second and third estimates.
  • According to the latest report from the Bureau of Economic Analysis, September saw personal income and disposable (after-tax) personal income increase 0.4%. Consumer spending rose 0.6% in September and consumer prices advanced 0.3%. Excluding food and energy, consumer prices advanced 0.5%. From September 2021, consumer prices increased 6.2%. Last month, prices for goods decreased 0.1%, primarily attributable to a drop in gasoline and other energy goods. Prices for services increased 0.6%, led by housing and transportation services. Food prices rose 0.6% in September, while energy prices fell 2.4%. From a year ago, food prices increased 11.9% and energy prices advanced 20.3%.
  • The Federal Reserve released the budget statement for September, the last month of fiscal year 2022. The government deficit for September was $429.7 billion, $210.1 billion higher than the August deficit and $364.7 billion greater than the September 2021 deficit. A major contributing factor in the September deficit increase was $430.0 billion in spending attributable to student debt forgiveness. The deficit for FY 2022 was $1,375.4 trillion, well below the FY 2021 deficit of $2,775.6 trillion. Government expenditures in this fiscal year ($6,271.5 trillion) were marginally less than in the previous fiscal year ($6,821.6 trillion), while government receipts in FY 2022 ($4,896.1 trillion) were higher than in FY 2021 ($4,046.0 trillion). Individual income tax receipts were $587.8 million more than in FY 2021, while corporate income tax receipts increased by $53.0 million over the same period.
  • New orders for manufactured durable goods in September, up six of the last seven months, increased 0.4%, according to the U.S. Census Bureau. This followed a 0.2% August increase. Excluding transportation, new orders decreased 0.5%. Excluding defense, new orders increased 1.4%. Transportation equipment, up five of the last six months, drove the increase, advancing 2.1%. New orders for durable goods rose 10.9% since September 2021.
  • The advance report from the Census Bureau revealed that the international trade in goods (excluding services) deficit in September was $92.2 billion, an increase of 5.7% from the August estimate. Accounting for the rise in the trade deficit was a 0.8% increase in imports, which was more than offset by a 1.5% decrease in exports. Since September 2021, exports rose 23.5%, while imports advanced 12.9%.
  • Sales of new single-family homes could not maintain their August pace of growth, falling 10.9% in September. For the 12 months ended in September, new single-family home sales fell 17.6%. Rising mortgage rates were the main driver of the fall in new home sales in September. The inventory of available new single-family homes for sale sits at 9.2 months, at the current sales pace. The median sales price in September was $470,600, while the average sales price was $517,700.
  • According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.769 per gallon on October 24, $0.102 per gallon below the prior week’s price but $0.386 higher than a year ago. Also as of October 24, the East Coast price decreased $0.043 to $3.481 per gallon; the Gulf Coast price fell $0.101 to $3.218 per gallon; the Midwest price dropped $0.100 to $3.688 per gallon; the West Coast price decreased $0.263 to $5.179 per gallon, and the Rocky Mountain price decreased $0.072 to $3.845 per gallon. Residential heating oil prices averaged $5.704 per gallon on October 24, $0.018 below the previous week’s price but $2.307 per gallon more than a year ago.
  • For the week ended October 22, there were 217,000 new claims for unemployment insurance, an increase of 3,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 15 remained 1.0%. The advance number of those receiving unemployment insurance benefits during the week ended October 15 was 1,438,000, an increase of 55,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended October 8 were Puerto Rico (2.5%), California (1.7%), New Jersey (1.7%), New York (1.3%), Alaska (1.3%), Rhode Island (1.2%), Massachusetts (1.1%), and Oregon (1.1%). The largest increases in initial claims for unemployment insurance for the week ended October 15 were in Missouri (+1,850), Tennessee (+285), Hawaii (+191), Iowa (+131), and Mississippi (+119), while the largest decreases were in Florida (-3,593), New York (-3,089), California (-2,817), Texas (-1,576), and Puerto Rico (-1,535).

Eye on the Week Ahead

The Federal Open Market Committee meets this week, the result of which is expected to produce another 75-basis-point interest rate increase. The employment figures for October are also out at the end of this week. The labor sector has been relatively strong throughout the year, most recently adding 263,000 new jobs in September, while average hourly earnings have risen 5.0% since September 2021.

What I’m Watching This Week – 24 October 2022

The Markets (as of market close October 21, 2022)

Wall Street enjoyed a notable surge last week, as investors clung to hopes the Federal Reserve may consider scaling back its aggressive policy stance against rising inflation. A report last Friday indicated that some members of the Fed are willing to debate a smaller interest-rate hike in December, while slowing down the pace of increases moving forward. The Dow, the S&P 500, and the Nasdaq notched their largest weekly gains in four months. Investors looked favorably on risk last week after some favorable company quarterly results, lower company stock valuations, and a reversal of economic policy in the United Kingdom, which led to the resignation of its prime minister. Long-term bond yields advanced last week, gold prices closed higher, while the dollar slipped lower. Crude oil prices dipped on fears of a global economic slowdown.

Stocks surged higher last Monday. Investor sentiment was buoyed by a batch of solid earnings data from some major banks, coupled with the United Kingdom’s reversal of fiscal stimulus proposals announced in September. Technology and consumer discretionary shares gained notably, helping push the Nasdaq up 3.4%, while the S&P 500 rose 2.7%, with all 11 sectors posting gains. The Russell 2000 added 3.2%, the Dow climbed 1.9%, and the Global Dow advanced 1.8%. Ten-year Treasury yields gained minimally, closing at 4.01%. Crude oil prices dipped slightly, ending the day around $85.58 per barrel. The dollar swung lower, while gold prices advanced.

Last Tuesday, Wall Street enjoyed a second day of positive returns. Instead of focusing on the potential of an economic recession driven by higher interest rates, investors assessed the impact of actual corporate earnings on the economy. Each of the benchmark indexes listed here added value, with the S&P 500, the Dow, and the Russell 2000 gaining a little more than 1.1%. The Nasdaq and the Global Dow rose 0.9%. Crude oil prices fell $2.26 to $83.20 per barrel on reports that the United States may release more oil from the Strategic Petroleum Reserve. The yield on 10-year Treasuries dipped to 3.99%, the dollar was flat, while gold prices slid lower.

Stocks failed to keep the rally going last Wednesday as each of the benchmark indexes listed here ended the day in the red. The Russell 2000 dropped 1.7% to lead the decline, followed by the Nasdaq (-0.9%), the S&P 500 (-0.7%), the Global Dow (-0.5%), and the Dow (-0.3%). With the decline in stock values, Treasury yields rose higher, with the 10-year note adding 12.9 basis points to end the session at 4.12%. Crude oil prices climbed to $85.88 per barrel. The dollar advanced, while gold prices fell for the second consecutive day.

Last Thursday saw stocks slide lower for the second consecutive day. The Russell 2000 fell 1.2%, followed by the S&P 500 (-0.8%), the Nasdaq (-0.6%), the Global Dow (-0.4%), and the Dow (-0.3%). Ten-year Treasury yields added another 9.9 basis points to hit 4.22%. Crude oil prices fell minimally to $85.71 per barrel. The dollar and gold prices declined.

Following two days of negative returns, stocks surged higher to end the week last Friday. Each of the benchmark indexes listed here closed the day solidly in the black, led by the Dow (2.5%) and followed by the S&P 500 (2.4%), the Nasdaq (2.3%), the Russell 2000 (2.2%), and the Global Dow (1.5%). Ten-year Treasury yields slid marginally lower to 4.21%. Crude oil prices closed at about $85.13 per barrel. The dollar fell, while gold prices advanced.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 10/21Weekly ChangeYTD Change
DJIA36,338.3029,634.8331,082.564.89%-14.46%
Nasdaq15,644.9710,321.3910,859.725.22%-30.59%
S&P 5004,766.183,585.653,752.754.66%-21.26%
Russell 20002,245.311,686.461,742.243.31%-22.41%
Global Dow4,137.633,214.823,337.873.83%-19.33%
Fed. Funds target rate0.00%-0.25%3.00%-3.25%3.00%-3.25%0 bps300 bps
10-year Treasuries1.51%4.01%4.21%20 bps270 bps
US Dollar-DXY95.64113.30111.88-1.25%16.98%
Crude Oil-CL=F$75.44$85.78$85.10-0.79%12.80%
Gold-GC=F$1,830.30$1,647.90$1,662.200.87%-9.18%

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 increased 0.4% in September after declining 0.1% the previous month. In September, manufacturing output rose 0.4% for the second consecutive month. Mining moved up 0.6% while utilities fell 0.3% last month. Overall, total industrial production in September was 5.3% above its year-earlier level.
  • The number of issued residential building permits rose 1.4% in September over the August total but remain 3.2% below the September 2021 pace. Issued permits for single-family home construction in September were 3.1% below the previous month’s level. Building permits for multi-family residences drove the overall increase in September, with permits for 2-4 units increasing 2.1% and permits for residences of 5 or more units rising 8.2%. In September, housing starts were 8.1% lower than the August total and 7.7% under the September 2021 rate. Single-family housing starts in September were 4.7% below the August figure. Housing completions rose 6.1% in September and 15.7% above the September 2021 rate. Completions of single-family homes in September were 3.2% above the August pace.
  • Sales of existing homes fell 1.5% in September, marking the eighth consecutive month of declines. Since September 2021, existing-home sales are down 23.8%. Relatively low inventory and rising mortgage interest rates, which are nearing 7.0% nationally, are factors that have slowed sales. In September, unsold inventory sat at a 3.2-month supply at the current sales pace, unchanged since July. The median existing-home price in September was $384,800, down from $391,700 in August but higher than the September 2021 price of $355,100. Sales of existing single-family homes slipped 0.9% last month and are down 23.0% over the last 12 months. The median existing single-family home price was $391,000 in September, down from $398,800 in August but up from $361,800 in September 2021.
  • Gasoline prices decreased last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.871 per gallon on October 17, $0.041 per gallon below the prior week’s price but $0.549 higher than a year ago. Also as of October 17, the East Coast price increased $0.045 to $3.524 per gallon; the Gulf Coast price rose $0.025 to $3.319 per gallon; the Midwest price fell $0.093 to $3.788 per gallon; the West Coast price decreased $0.231 to $5.442 per gallon; and the Rocky Mountain price decreased $0.030 to $3.917 per gallon. Residential heating oil prices averaged $5.726 per gallon on October 17, $0.381 above the previous week’s price and $2.360 per gallon more than a year ago.
  • For the week ended October 15, there were 214,000 new claims for unemployment insurance, a decrease of 12,000 from the previous week’s level, which was revised down by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 8 was 1.0%. The advance number of those receiving unemployment insurance benefits during the week ended October 8 was 1,385,000, an increase of 21,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended October 1 were California (1.7%), New Jersey (1.7%), New York (1.3%), Alaska (1.2%), Massachusetts (1.2%), Rhode Island (1.2%), and Nevada (1.1%). The largest increases in initial claims for unemployment insurance for the week ended October 8 were in Florida (+10,665), California (+4,996), New York (+3,387), Texas (+2,382), and Pennsylvania (+1,900), while the largest decreases were in Missouri (-3,137), North Carolina (-1,520), Connecticut (-897), Puerto Rico (-431), and Arkansas (-138).

Eye on the Week Ahead

This is an important week for economic data. The initial estimate of the third-quarter gross domestic product is released this week. GDP has retracted over each of the first two quarters of the year declining 0.6% in the second quarter. Also out this week is the September data on personal income and spending. This report includes the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve.

What I’m Watching This Week – 17 October 2022

The Markets (as of market close October 14, 2022)

Wall Street closed generally lower last week, with only the Dow able to garner a gain. The latest data showed inflation is stubbornly rising, which could lead to more hawkish rate hikes from the Federal Reserve. While some big financial institutions reported solid third-quarter earnings, a few major banks’ earnings were not so positive. Long-term bond prices slid lower, driving yields higher. The dollar continued to strengthen against a basket of currencies. Crude oil prices dipped lower as falling demand more than offset receding output.

Stocks underperformed for the fourth consecutive session last Monday, kicking off the week on a sour note. The Nasdaq ended the day with its lowest close since July 2020 after falling 1.0%. The S&P 500 slid 0.8%, the Dow dipped 0.3%, the Russell 2000 declined 0.6%, and the Global Dow lost 0.7%. The dollar rose against most other major currencies. Ten-year Treasury yields ended the day where they began, at 3.88%. Crude oil prices fell for the first time in several days, slipping to $90.80 per barrel. Gold lost its momentum from the previous week after falling $33.90 to $1,675.40 per ounce. Investor trepidation was driven by the impact of rising interest rates, the escalation of the Russia/Ukraine war, and restrictions placed on China’s access to U.S. technology, which could slow chip demand worldwide.

Investors fled risk last Tuesday after Bank of England Governor Andrew Bailey reiterated that the central bank’s quantitative easing would end by the end of the week. Tech shares took the brunt of the losses, with the Nasdaq losing 1.1% and the S&P 500 falling 0.7%. The Global Dow dipped 0.8%, while the Russell 2000 and the Dow made minimal gains. Bond prices slid lower, pushing yields up, with 10-year Treasury yields climbing 5.1 basis points to 3.93%. Crude oil prices fell for the second consecutive day, down $2.55 to $88.58 per barrel. The dollar advanced marginally, while gold prices declined.

Equities continued to slide lower last Wednesday. The Global Dow fell 0.5%, followed by the S&P 500, which lost 0.3% to land at its lowest level since November 2020. Stocks rallied earlier in the day but faded by the end of the session. The yield on 10-year Treasuries dipped to 3.90%, the dollar edged higher, while gold prices declined $6.40 to $1,679.60 per ounce.

Stocks surged higher last Thursday despite inflation data that’s bound to support further interest-rate hikes. In what may have been driven by dip buyers and put options, each of the benchmark indexes listed here posted solid gains, led by the Dow (2.8%), followed by the S&P 500 (2.6%), the Russell 2000 (2.4%), the Nasdaq (2.2%), and the Global Dow (2.0%). Ten-year Treasury yields rose 5.0 basis points to 3.95%. Crude oil prices jumped $1.88 to $89.15 per barrel. The dollar and gold prices slid lower.

Last Thursday’s rally was short-lived as stocks dipped lower on Friday to end last week. Mixed third-quarter corporate earnings data from several banks pulled financials lower. Energy stocks also declined on the heels of falling crude oil prices. Overall, each of the benchmark indexes listed here lost value last Friday, with the tech-heavy Nasdaq falling more than 3.0%. The Russell 2000 and the S&P 500 dropped more than 2.3%, while the Dow slid 1.3%. The Global Dow lost 0.6%. As stocks declined, bond yields rose. Ten-year Treasury yields rose 5.8 basis points to hit 4.01%, the first time yields eclipsed 4.0% this year. Crude oil and gold prices fell, while the dollar advanced.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 10/14Weekly ChangeYTD Change
DJIA36,338.3029,296.7929,659.791.24%-18.38%
Nasdaq15,644.9710,652.4010,321.39-3.11%-34.03%
S&P 5004,766.183,639.663,585.65-1.48%-24.77%
Russell 20002,245.311,702.151,686.46-0.92%-24.89%
Global Dow4,137.633,230.313,214.82-0.48%-22.30%
Fed. Funds target rate0.00%-0.25%3.00%-3.25%3.00%-3.25%0 bps300 bps
10-year Treasuries1.51%3.88%4.01%13 bps250 bps
US Dollar-DXY95.64112.78113.300.46%18.47%
Crude Oil-CL=F$75.44$92.66$85.78-7.42%13.71%
Gold-GC=F$1,830.30$1,703.20$1,647.90-3.25%-9.97%

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

  • In what will certainly support further interest-rate hikes by the Federal Reserve, the Consumer Price Index rose 0.4% in September and 8.2% since September 2021. Prices less food and energy increased 0.6% last month. The September CPI was driven by price increases in shelter (0.7%), food (0.8%), and medical care (1.0%). Price hikes also occurred in transportation (1.9%) and new vehicles (0.7%), Gasoline prices slid 4.9%, contributing to a 2.1% decline in overall energy prices.
  • In September, the prices producers received for their goods and services rose 0.4%, following decreases of 0.2% in August and 0.4% in July. For the 12 months ended in September, producer prices have risen 8.5%, down from 8.7% for the 12 months ended in August 2022. Prices for both services and goods advanced 0.4% last month. Prices less foods, energy, and trade services also rose 0.4% in September, the largest monthly increase since May 2022.
  • While prices for domestic goods and services rose in September, import and export prices fell for the third consecutive month. According to the latest data from the Bureau of Labor Statistics, import prices, reflecting the strength of the dollar, decreased 1.2% in September after declining 1.1% in August. Export prices fell 0.8% last month following a 1.7% drop in August. Since September 2021, import prices have risen 6.0%, while export prices have increased 9.5%. Import fuel prices fell 7.5% for the second month in a row, although import fuel prices have risen 32.3% from September 2021. Nonfuel import prices declined 0.4% in September. A drop in prices for industrial supplies and materials more than offset higher prices for foods, feeds, and beverages. On the export side of the ledger, prices for both agricultural and nonagricultural exports fell in September.
  • Retail sales were virtually unchanged in September from August, but have risen 8.2% for the 12 months ended in September. Retail trade sales slipped 0.1% last month, but are up 7.8% since September 2021. Several retailers saw sales decrease in September, including motor vehicle and parts dealers (-0.4%); furniture and home furnishing stores (-0.7%); electronics and appliance stores (-0.8%); building material and garden equipment and supplies dealers (-0.4%); gasoline stations (-1.4%); sporting goods, book stores, and related retailers (-0.7%); and miscellaneous store retailers (-2.5%). Several retailers saw sales increase in September including food and beverage stores (0.4%); health and personal care stores (0.5%); clothing and clothing accessories stores (0.5%); general merchandise stores, including department stores (0.7%); nonstore, or online, retailers (0.5%); and food services and drinking places (0.5%).
  • Gasoline prices continued to increase last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.912 per gallon on October 10, $0.130 per gallon above the prior week’s price and $0.645 higher than a year ago. Also as of October 10, the East Coast price increased $0.143 to $3.479 per gallon; the Gulf Coast price rose $0.213 to $3.294 per gallon; the Midwest price advanced $0.159 to $3.881 per gallon; the West Coast price decreased $0.014 to $5.673 per gallon; and the Rocky Mountain price increased $0.073 to $3.974 per gallon. Residential heating oil prices averaged $5.332 per gallon on October 10, $0627 above the previous week’s price and $2.048 per gallon more than a year ago. Also, EIA reported that households using heating oil as their primary fuel for space heating will spend 27.0% more this winter than last winter due to higher prices for heating oil, increased heating demand, and colder temperatures.
  • For the week ended October 8, there were 228,000 new claims for unemployment insurance, an increase of 9,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 1 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 1 was 1,368,000, an increase of 3,000 from the previous week’s level, which was revised up by 4,000. States and territories with the highest insured unemployment rates for the week ended September 24 were Puerto Rico (2.0%), California (1.8%), New Jersey (1.7%), New York (1.4%), Alaska (1.2%), Massachusetts (1.2%), Rhode Island (1.2%), Connecticut (1.1%), and Nevada (1.1%). The largest increases in initial claims for the week ended October 1 were in Puerto Rico (+3,966), Missouri (+3,830), Massachusetts (+2,245), North Carolina (+1,651), and California (+1,253), while the largest decreases were in Florida (-1,203), Ohio (-754), Georgia (-684), Virginia (-343), and New York (-335).

Eye on the Week Ahead

The Federal Reserve’s September report on industrial production is out this week. August saw production slip 0.2%, although manufacturing output inched 0.1% higher. The housing sector is also front and center this week with the release of the September reports on housing starts and existing home sales. Housing starts rose 12.2% in August, due primarily to a rise in construction of multi-unit properties. Building permits slid 10.0%. Sales of existing homes also fell in August, down 0.4% for the month and 19.9% since August 2021.