What I’m Watching This Week – 11 November 2019

The Markets (as of market close November 8, 2019)

The Dow hit a new record high last week, and each of the benchmark indexes listed here posted solid gains as investors received encouraging news on the trade front. Both the United States and China sent signals out that an initial trade agreement would be signed in the near future, marking the first phase of the trade deal between the economic giants. As money flowed into stocks, long-term bond prices fell, pushing yields higher. For the week, the S&P 500 posted its fifth straight week of gains, while the Nasdaq advanced for the sixth consecutive week. The largest gainer last week was the Global Dow, which climbed over 1.50%.

Oil prices rose last week, closing at $57.39 per barrel by late Friday afternoon, up from the prior week’s price of $56.14. The price of gold (COMEX) fell for the first time in several weeks, closing at $1,459.20 by late Friday afternoon, down from the prior week’s price of $1,515.70. The national average retail regular gasoline price was $2.605 per gallon on November 4, 2019, $0.009 more than the prior week’s price but $0.148 less than a year ago.

Market/Index 2018 Close Prior Week As of 11/8 Weekly Change YTD Change
DJIA 23327.46 27347.36 27681.24 1.22% 18.66%
Nasdaq 6635.28 8386.40 8475.31 1.06% 27.73%
S&P 500 2506.85 3066.91 3093.08 0.85% 23.39%
Russell 2000 1348.56 1589.33 1598.86 0.60% 18.56%
Global Dow 2736.74 3109.68 3157.91 1.55% 15.39%
Fed. Funds target rate 2.25%-2.50% 1.50%-1.75% 1.50%-1.75% 0 bps -75 bps
10-year Treasuries 2.68% 1.72% 1.93% 21 bps -75 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

  • The goods and services trade deficit was $52.5 billion in September, according to the latest report from the Bureau of Economic Analysis. The deficit in September was down $2.6 billion from August’s total. September exports were $1.8 billion less than August exports, while imports in September were $4.4 billion under the prior month’s figure. Year-to-date, the goods, and services deficit increased $24.8 billion, or 5.4%, from the same period in 2018. Over that 12-month period, exports fell 0.4% while imports increased 0.8%. The goods trade figures showed surpluses with several trade partners, including South and Central America ($5.0 billion), Hong Kong ($2.8 billion), and the United Kingdom ($0.7 billion). Notable goods trade deficits were recorded with China ($28.0 billion), the European Union ($15.7 billion), Mexico ($9.1 billion), and Japan ($5.9 billion).
  • The services sector of the economy continues to outpace the manufacturing sector. According to the latest report from the Institute for Supply Management, the October Non-Manufacturing Index increased 2.1 percentage points above its September reading. Survey respondents noted growth in business activity, new orders, and employment. Only prices received for services decreased in October from the prior month. The report indicated that, despite the positive results, “respondents continue to be concerned about tariffs, labor resources, and the geopolitical climate.”
  • The Bureau of Labor Statistics reported last week that the number of job openings fell 277,000 (3.8%) in September from the prior month. The job openings rate was 4.4% in September (4.6% in August) as the number of total private job openings edged down (-262,000). In September, the number of hires increased slightly (+50,000), as did the number of separations (+76,000). Hires increased in construction, manufacturing, professional and business services, leisure and hospitality, and trade, transportation, and utilities. Hires decreased in federal government, financial activities, and information.
  • For the week ended November 2, there were 211,000 claims for unemployment insurance, a decrease of 8,000 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 October 26. The advance number of those receiving unemployment insurance benefits during the week ended October 26 was 1,689,000, a decrease of 3,000 from the prior week’s level, which was revised up by 2,000.

Eye on the Week Ahead

Inflation indicators are available this week with reports on consumer prices, producer prices, retail sales, and import and export prices. Inflation has been running lower than the Fed’s 2.0% target rate for much of the year. Also, the Federal Reserve’s report on industrial production is out this week. Manufacturing production was off in September, pulled down by weakening demand for U.S. exports.