What I’m Watching This Week – 26 August 2019

The Markets (as of market close August 23, 2019)

Stock gains enjoyed earlier last week were lost by week’s end on ramped-up trade war rhetoric from the White House. Stocks surged earlier in the week on favorable earnings reports from some major retailers and a renewed commitment from the Federal Reserve to act accordingly in heading off a possible recession. Following China’s announcement that it would raise tariffs on U.S. imports, including a 25% tax on American-made autos, President Trump fired back, ordering domestic companies to start looking for an alternative to China. By last Friday, each of the benchmark indexes fell notably, led by the Russell 2000, which dropped over 2.25%, and the Nasdaq, which lost almost 2.00%.

Oil prices fell last week, closing at $53.89 per barrel by late Friday afternoon, down from the prior week’s price of $54.94. The price of gold (COMEX) advanced again last week, closing at $1,537.20 by late Friday afternoon, up from the prior week’s price of $1,523.60. The national average retail regular gasoline price was $2.598 per gallon on August 19, 2019, $0.026 lower than the prior week’s price and $0.223 less than a year ago.

Market/Index 2018 Close Prior Week As of 8/23 Weekly Change YTD Change
DJIA 23327.46 25886.01 25628.90 -0.99% 9.87%
Nasdaq 6635.28 7895.99 7751.77 -1.83% 16.83%
S&P 500 2506.85 2888.68 2847.11 -1.44% 13.57%
Russell 2000 1348.56 1493.64 1459.49 -2.29% 8.23%
Global Dow 2736.74 2916.65 2898.73 -0.61% 5.92%
Fed. Funds target rate 2.25%-2.50% 2.00%-2.25% 2.00%-2.25% 0 bps -25 bps
10-year Treasuries 2.68% 1.53% 1.52% -1 bps -1.16 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 News

  • Sales of existing homes rebounded in July, advancing 2.5% from their June total. Overall, sales of existing homes are up 0.6% from a year ago. The median home price was $280,800 in July, up 4.3% from last July but down from June’s record high of $285,700. Total existing housing inventory fell 1.6% from June, representing a 4.2-month supply of unsold inventory at the current sales pace. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.77% in July, down from 3.80% in June. The average commitment rate across all of 2018 was 4.54%. Sales of single-family homes increased by 2.7% in July over June.
  • Unlike sales of existing homes, new home sales plummeted in July, according to the Census Bureau. Sales of new single-family homes fell 12.8% in July from June’s pace, but are still 4.3% ahead of last year’s totals. The median sales price of new houses sold in July 2019 was $312,800. The average sales price was $388,000. There were 337,000 new houses for sale at the end of July, which represents a supply of 6.4 months at the current sales rate.
  • For the week ended August 17, there were 209,000 claims for unemployment insurance, a decrease of 12,000 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 remained at 1.2% for the week ended August 10. The advance number of those receiving unemployment insurance benefits during the week ended August 10 was 1,674,000, a decrease of 54,000 from the prior week’s level, which was revised up by 2,000.

Eye on the Week Ahead

The updated gross domestic product report for the second quarter is out this week. The initial release showed the economy advanced at a rate of 2.1%. With more economic information available, this latest iteration may show more second-quarter growth than initially reported. The G7 meetings wrap up this week, which could offer insight into the direction of the ongoing trade war between the United States and China.