What I’m Watching This Week – 28 August 2017

The Markets (as of market close August 25, 2017)

Amid a scarcity of economic data and the lightest trading levels of the year, stocks managed to end the week in positive territory, as measured by the indexes tracked below. The Russell 2000 was the week’s leader, notching a weekly gain of nearly 1.5%, with all other indexes posting advances of between 0.5% and 1%.

The price of crude oil (WTI) closed at $47.87 per barrel, down from the prior week’s closing price of $48.73 per barrel. The price of gold (COMEX) reached $1,296.50 by early Friday evening, $6.20 higher than the prior week’s price of $1,290.30. The national average retail regular gasoline price decreased to $2.360 per gallon on August 21, 2017, $0.024 lower than the prior week’s price and $0.167 more than a year ago.

Market/Index 2016 Close Prior Week As of 8/25 Weekly Change YTD Change
DJIA 19762.60 21674.51 21813.67 0.64% 10.38%
Nasdaq 5383.12 6216.53 6265.64 0.79% 16.39%
S&P 500 2238.83 2425.55 2443.05 0.72% 9.12%
Russell 2000 1357.13 1357.79 1377.45 1.45% 1.50%
Global Dow 2528.21 2810.24 2834.52 0.86% 12.12%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.19% 2.17% -2 bps -27 bps

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 Headlines

  • New home sales fell by a whopping 9.4% in July to a total of 571,000 (from 630,000 in June), the lowest rate in seven months, according to the U.S. Census Bureau and the Department of Housing and Urban Development. That figure is also 8.9% below the July 2016 sales figure of 627,000. The median sales price of new houses sold in July 2017 was $313,700, while the average sales price was $371,200. The seasonally adjusted estimate of new houses for sale at the end of July was 276,000. This represents a supply of 5.8 months at the current sales rate.
  • The National Association of Realtors® reported that existing home sales followed a similar trend for the same month, as large demand drops in the Northeast and Midwest outweighed increases in the South and West. Overall, total existing-home sales, which include single-family homes, townhomes, condominiums, and co-ops, fell 1.3% to a seasonally adjusted annual rate of 5.44 million in July from a downwardly revised 5.51 million in June. July’s sales pace is still 2.1% above a year ago but is the lowest of 2017.
  • New orders for manufactured durable goods decreased $16.7 billion, or 6.8%, to $229.2 billion in July, reported the U.S. Census Bureau. This decrease, down three of the last four months, followed a 6.4% June increase. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders decreased 7.8%. Transportation equipment, also down three of the last four months, drove the decrease, $17.4 billion, or 19.0%, to $74.3 billion.
  • In what could be her last appearance at the Federal Reserve’s annual retreat in Jackson Hole, Wyoming, chair Janet Yellen defended regulations enacted in the wake of the financial crisis, while noting that the Fed remains open to possible “improvements” that would help “efficiently maintain a resilient financial system.” At the same meeting, European Central Bank President Mario Draghi voiced similar sentiment. He criticized a global trend toward economic protectionism and warned that looser financial regulations could reinvigorate the types of incentive scenarios that led to the financial crisis.
  • In the week ended August 19, the advance figure for seasonally adjusted initial claims for unemployment insurance was 234,000, an increase of 2,000 from the previous week’s unrevised level. The advance seasonally adjusted insured unemployment rate was 1.4% for the week ended August 12, unchanged from the previous week’s unrevised rate. During the week ended August 12, there were 1,954,000 receiving unemployment insurance benefits, unchanged from the previous week’s revised level.

Eye on the Week Ahead

Observers will be monitoring the lingering effects of Hurricane Harvey on the Gulf region and the storm’s potential economic and market impacts, including possible increases in oil and gas prices. Other potential influences during the week will likely include the second estimate of Q2 GDP figures and the August employment figures.