Month: 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/Index	2021 Close	Prior Week	As of 10/28	Weekly Change	YTD Change
DJIA	36,338.30	31,082.56	32,861.80	5.72%	-9.57%
Nasdaq	15,644.97	10,859.72	11,102.45	2.24%	-29.04%
S&P 500	4,766.18	3,752.75	3,901.06	3.95%	-18.15%
Russell 2000	2,245.31	1,742.24	1,846.92	6.01%	-17.74%
Global Dow	4,137.63	3,337.87	3,448.04	3.30%	-16.67%
Fed. Funds target rate	0.00%-0.25%	3.00%-3.25%	3.00%-3.25%	0 bps	300 bps
10-year Treasuries	1.51%	4.21%	4.01%	-19 bps	250 bps
US Dollar-DXY	95.64	111.88	110.69	-1.06%	15.74%
Crude Oil-CL=F	$75.44	$85.10	$88.24	3.69%	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.

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/Index	2021 Close	Prior Week	As of 10/21	Weekly Change	YTD Change
DJIA	36,338.30	29,634.83	31,082.56	4.89%	-14.46%
Nasdaq	15,644.97	10,321.39	10,859.72	5.22%	-30.59%
S&P 500	4,766.18	3,585.65	3,752.75	4.66%	-21.26%
Russell 2000	2,245.31	1,686.46	1,742.24	3.31%	-22.41%
Global Dow	4,137.63	3,214.82	3,337.87	3.83%	-19.33%
Fed. Funds target rate	0.00%-0.25%	3.00%-3.25%	3.00%-3.25%	0 bps	300 bps
10-year Treasuries	1.51%	4.01%	4.21%	20 bps	270 bps
US Dollar-DXY	95.64	113.30	111.88	-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	$1,662.20	0.87%	-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.

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/Index	2021 Close	Prior Week	As of 10/14	Weekly Change	YTD Change
DJIA	36,338.30	29,296.79	29,659.79	1.24%	-18.38%
Nasdaq	15,644.97	10,652.40	10,321.39	-3.11%	-34.03%
S&P 500	4,766.18	3,639.66	3,585.65	-1.48%	-24.77%
Russell 2000	2,245.31	1,702.15	1,686.46	-0.92%	-24.89%
Global Dow	4,137.63	3,230.31	3,214.82	-0.48%	-22.30%
Fed. Funds target rate	0.00%-0.25%	3.00%-3.25%	3.00%-3.25%	0 bps	300 bps
10-year Treasuries	1.51%	3.88%	4.01%	13 bps	250 bps
US Dollar-DXY	95.64	112.78	113.30	0.46%	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.

The Markets (as of market close October 7, 2022)

Market gains early last week were enough to outpace declines later, as stocks enjoyed their best weekly gains in a month. The Russell 2000, the Dow, and the Global Dow paced the benchmark indexes listed here. The S&P 500 climbed higher, while the Nasdaq was able to hold on to a marginal gain. Investors saw a strong labor report, which included an unexpected drop in the unemployment rate, as adding fuel to the Federal Reserve’s fire of continuing interest-rate hikes. Crude oil prices advanced for five consecutive days following an OPEC+ cut in production, prompting some analysts to predict prices will soon reach $100.00+ per barrel. Gas prices, which had steadily declined during the summer, are now heading higher. Last week saw 10-year Treasury yields rise 8.0 basis points, with the dollar and gold prices also advancing.

Wall Street opened the first full week of October in fine fashion following a brutal September. Each of the benchmark indexes listed here posted solid gains, led by the Russell 2000 and the Dow, which gained 2.7%. The S&P 500 rose 2.6%, the Nasdaq climbed 2.3%, and the Global Dow edged up 1.8%. Ten-year Treasury prices jumped higher, pulling yields down 15.3 basis points to close the session at 3.65%. Crude oil prices advanced $3.82 to reach $83.31 per barrel, as OPEC mulled a cut in production. The dollar dipped slightly lower, while gold prices increased nearly $38.00 to $1,709.60 per ounce.

Stocks continued to rebound last Tuesday, marking the best two-day rally since April 2020. Among the benchmark indexes listed here, the Russell 2000 (3.9%), the Global Dow (3.7%), the Nasdaq (3.3%), and the S&P 500 (3.1%) led the surge, followed closely by the Dow, which rose 2.8%. Treasury yields and the dollar slid lower. Crude oil prices advanced nearly $2.60 to hit $86.20 per barrel. Gold prices also rose for the second consecutive day, climbing nearly 2.0% to $1,733.90 per ounce.

Equities slid marginally lower last Wednesday, ending a two-day uptick. The Russell 2000 (-0.7%) and the Global Dow (-0.5%) fell the furthest on the day, followed by the Nasdaq (-0.3%), the S&P 500 (-0.2%), and the Dow (-0.1%). Ten-year Treasury yields rose 14.2 basis points to 3.75%. Crude oil prices increased for the third consecutive day, reaching $87.97 per barrel. The dollar advanced, while gold prices dipped lower. With the Federal Reserve hiking interest rates to combat rising inflation, borrowing costs have escalated, with U.S. mortgage rates hitting a 16-year high of 6.75%, leading to a marked slowdown of home loan applications.

Wall Street took another turn lower last Thursday, with each of the benchmark indexes sliding lower. The Dow fell 1.2%, the S&P 500 and the Global Dow lost 1.0%, while the Nasdaq (-0.7%) and the Russell 2000 (-0.5%) dipped less than 1.0%. Crude oil prices added nearly $1.30 to top $89.00 per barrel. The yield on 10-year Treasuries hit 3.82% after closing the session up 6.7 basis points. The dollar and gold prices advanced.

Stocks ended the week sharply lower last Friday. Each of the benchmark indexes tumbled lower by the end of the session, with the Nasdaq (-3.8%) and the Russell 2000 (-2.9%) falling the furthest. The S&P 500 slid 2.8%, the Dow declined 2.1%, and the Global Dow dropped 1.9%. On the other hand, Treasury yields jumped higher, with 10-year yields adding 5.7 basis points to close the week at 3.88%. Crude oil prices rose more than $4.00, hitting $92.66 per barrel. The dollar advanced, while gold prices declined for just the second session of the week.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 10/7	Weekly Change	YTD Change
DJIA	36,338.30	28,725.51	29,296.79	1.99%	-19.38%
Nasdaq	15,644.97	10,575.62	10,652.40	0.73%	-31.91%
S&P 500	4,766.18	3,585.62	3,639.66	1.51%	-23.64%
Russell 2000	2,245.31	1,664.72	1,702.15	2.25%	-24.19%
Global Dow	4,137.63	3,168.34	3,230.31	1.96%	-21.93%
Fed. Funds target rate	0.00%-0.25%	3.00%-3.25%	3.00%-3.25%	0 bps	300 bps
10-year Treasuries	1.51%	3.80%	3.88%	8 bps	237 bps
US Dollar-DXY	95.64	112.17	112.78	0.54%	17.92%
Crude Oil-CL=F	$75.44	$79.67	$92.66	16.30%	22.83%
Gold-GC=F	$1,830.30	$1,670.50	$1,703.20	1.96%	-6.94%

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 labor sector continued to show strength in September. According to the latest figures from the Bureau of Labor Statistics, there were 263,000 new jobs added in September following an additional 315,000 jobs added in August. Monthly job growth has averaged 420,000 thus far in 2022, compared with 562,000 per month in 2021. In September, notable job gains occurred in leisure and hospitality and in health care. In September, average hourly earnings rose by $0.10, or 0.3%, to $32.46. Over the past 12 months, average hourly earnings have increased by 5.0%. In September, the average work week was 34.5 hours for the fourth month in a row. In September, the unemployment rate fell 0.2 percentage point to 3.5%. The number of unemployed persons fell 4.5% to 5.75 million in September. Among the unemployed, the number of those who permanently lost their jobs decreased by 173,000 to 1.2 million in September. The labor force participation rate was little changed at 62.3% in September, and the employment-population ratio was unchanged at 60.1%. Both measures are 1.1 percentage point below their values in February 2020, prior to the coronavirus pandemic. In September, 5.2% of employed persons teleworked because of the coronavirus pandemic, down from 6.5% in the prior month and well below the 35.4% figure from May 2020. In September, 1.4 million persons reported they had been unable to work because their employer closed or lost business due to the pandemic, down from 1.9 million in August and from 49.8 million in May 2020. Overall, the relative strength of the September jobs report will most certainly bolster the Federal Reserve’s premise that the state of the economy can withstand the present pace of interest-rate increases to combat inflation.
• Manufacturing conditions improved marginally in September, according to the latest purchasing managers’ index from S&P Global. The S&P Global US Manufacturing Purchasing Managers’ Index posted 52.0 in September, up from 51.5 in August. A reading above 50.0 indicates growth. Output and new orders expanded in September due to an increase in client demand, with the quickest rate of growth since May. Input costs rose again in September, but at a slower pace than in August. In turn, manufacturers softened the increase in selling prices in an effort to drive sales.
• September also saw business output improve in the services sector. According to the US Global Services PMI™, survey respondents indicated that business activity in the services sector contracted, but at a slower pace than in August. The decline in output was marginal, as demand increased somewhat. New orders, particularly on the domestic side, improved, while export business declined. While the data in the services sector indicates improvement, the third quarter was the second worst-performing three-month period since 2009.
• According to the latest information from the Job Openings and Labor Turnover Summary, the number of job openings decreased 1.1 million to 10.1 million at the end of August, the lowest level since June 2021. The largest decreases in job openings were in health care and social assistance (-236,000), other services (-183,000), and retail trade (-143,000). In August, the number of hires was little changed at 6.3 million, while the number of total separations was 6.0 million, little changed from the previous month. Within separations, there were 4.2 million quits and 1.5 million layoffs and discharges, little changed from the July totals.
• The international trade in goods and services trade deficit retracted by 4.3% in August, according to the latest report from the Bureau of Economic Analysis. Exports decreased 0.3% and imports fell 1.1%. Year to date, the goods and services deficit increased 24.4% from the same period in 2021. Exports increased 19.9% and imports increased 21.0%.
• Gasoline prices have risen for two consecutive weeks. The national average retail price for regular gasoline was $3.782 per gallon on October 3, $0.071 per gallon above the prior week’s price and $0.592 higher than a year ago. Also as of October 3, the East Coast price decreased $0.072 to $3.336 per gallon; the Gulf Coast price slid $0.037 to $3.081 per gallon; the Midwest price rose $0.091 to $3.722 per gallon; the West Coast price increased $0.515 to $5.687 per gallon, and the Rocky Mountain price fell $0.045 to $3.874 per gallon. Residential heating oil prices averaged $4.622 per gallon on October 3, about $1.477 per gallon more than a year ago.
• For the week ended October 1, there were 219,000 new claims for unemployment insurance, an increase of 29,000 from the previous week’s level, which was revised down by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 24 was 1.0%, an increase of 0.1 percentage point from the previous week’s rate, which was revised down by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 24 was 1,361,000, an increase of 15,000 from the previous week’s level, which was revised down by 1,000. States and territories with the highest insured unemployment rates for the week ended September 17 were New Jersey (1.8%), California (1.7%), Puerto Rico (1.6%), 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 September 24 were in Ohio (+1,586), North Carolina (+289), Tennessee (+286), Arkansas (+38), and Arizona (+35), while the largest decreases were in Michigan (-5,715), New York (-1,404), Missouri (-966), and Georgia (-799).

Eye on the Week Ahead

Important inflation data is available this week with the release of the September consumer price index, import and export prices, and the producer price index. Investors are hoping each of these reports will show inflationary pressures are slowing.

The Markets (third quarter through September 30, 2022)

The ramifications of stamping down rising inflation dominated the markets in the third quarter. Investors weighed the balance between an aggressive government policy aimed at curbing price pressures against the possibility of those very policies leading to an economic recession. That dichotomy was not lost on Federal Reserve officials, who stoically made clear that “a sustained period of below trend growth” may be a necessary byproduct as part of the effort to bring down inflation. Ultimately, investors moved away from risk, sending stocks lower for the third straight quarter of 2022, while putting an exclamation point on the worst decline in the first nine months of a year in 20 years. By the end of the quarter, the Dow, the S&P 500, and the Nasdaq had entered into bear market territory. All three benchmark indexes are down at least 21.0% on the year. Crude oil prices declined sharply in the quarter for several reasons, including waning fuel demand, China’s ongoing COVID lockdown policy, the unexpectedly benign impact of sanctions against Russian oil exports, rising inflation, and the strength of the U.S. dollar. The strength of the dollar often weighs on oil and other commodities that are priced in that currency, making them more expensive to purchasers using other currencies. Bond prices declined during the quarter, pushing yields up. The 10-year Treasury yield jumped 83 basis points since the end of June and nearly 230 basis points on the year. Gold prices struggled to maintain any momentum, ultimately falling more than 7.50% in the quarter.

Wall Street rebounded in July as investors saw a glimmer of hope that inflationary pressures were easing. An increase in consumer discretionary shares helped drive the S&P 500 up over 9.0%, the best monthly gain since the end of 2021. The Nasdaq led the benchmark indexes listed here, climbing 12.4%, followed by the Russell 2000, which rose 10.4%. The Dow added 6.7%, while the Global Dow gained 3.8%. Long-term bond prices advanced, driving bond yields lower. Ten-year Treasury yields fell 33 basis points to close the month at 2.64%, their lowest level in nearly four months. Crude oil prices slid over 7.0% to $98.23 per barrel, while prices at the pump fell on waning demand. The dollar continued to strengthen, while gold prices lost more than 1.5%. The Federal Reserve hiked interest rates 75 basis points, despite several inflationary indicators showing a slowdown in price pressures. The second estimate of the second-quarter gross domestic product showed the economy retracted by 0.6%. While industrial production rose 0.5%, durable goods orders slid 0.1%. The housing sector retracted, impacted by rising mortgage interest rates, as both existing home sales (-5.7%) and sales of new single-family homes (-9.4%) declined.

August saw stock markets give back July gains, as investors grew increasingly worried that the economy was headed toward a recession. Large-cap stocks were hit particularly hard, pulling the major benchmark indexes lower. The Nasdaq, the Dow, and the S&P 500 lost more than 4.0%. The small caps of the Russell 2000 performed best, despite closing down 2.2%. Long-term bond yields jumped higher as prices slid. The yield on 10-year Treasuries rose nearly 50 basis points to 3.13%. Crude oil and gas prices continued to fall. The dollar rose nearly 3.0% against a basket of global currencies. Gold prices declined more than 3.0%. After adding over 500,000 new jobs in July, the labor sector continued to advance, albeit at a slower pace, with the addition of 315,000 new jobs. Although the Federal Open Market Committee did not meet in August, Fed Chair Jerome Powell’s comments at the Jackson Hole gathering were definitely hawkish, confirming the Committee’s stance that inflation had to be tamed, despite some economic hardship. Adding fuel to the fire, inflationary indicators in August showed prices reversed course from the month earlier. The Consumer Price Index rose 0.1%, while the personal consumption expenditures price index rose 0.3%.

Stocks soured in September as investors worried about an impending economic recession, despite an uptick in consumer spending (personal consumption expenditures), which accounts for nearly 70% of economic activity. The Federal Reserve increased the target range for the federal funds rate 75 basis points, while anticipating ongoing increases in the target range will be appropriate. Despite a surge in stock values early in the month, each of the benchmark indexes ended September in the red. Crude oil prices fell in September for the fourth consecutive month. The yield on 10-year Treasuries rose by 67 basis points. The dollar advanced, while gold prices slid lower.

Stock Market Indexes

Market/Index	2021 Close	As of September 30	Monthly Change	Quarterly Change	YTD Change
DJIA	36,338.30	28,725.51	-8.84%	-6.66%	-20.95%
Nasdaq	15,644.97	10,575.62	-10.50%	-4.11%	-32.40%
S&P 500	4,766.18	3,585.62	-9.34%	-5.28%	-24.77%
Russell 2000	2,245.31	1,664.72	-9.73%	-2.53%	-25.86%
Global Dow	4,137.63	3,168.34	-10.21%	-9.67%	-23.43%
Fed. Funds	0.00%-0.25%	3.00%-3.25%	75 bps	150 bps	300 bps
10-year Treasuries	1.51%	3.80%	67 bps	83 bps	229 bps
US Dollar-DXY	95.64	112.17	3.18%	7.13%	17.28%
Crude Oil-CL=F	$75.44	$79.67	-10.48%	-24.71%	5.61%
Gold-GC=F	$1,830.30	$1,670.50	-2.97%	-7.61%	-8.73%

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

Latest Economic Reports

• Employment: Employment rose by 315,000 in August, better than expected but well below the revised July total of 526,000. Employment has risen by 5.8 million over the past 12 months, as the labor market continued to recover from the job losses of the pandemic-induced recession. This growth brings total employment 240,000 higher than its pre-pandemic level in February 2020. In August, job gains occurred in professional and business services, retail trade, and health care. The unemployment rate edged up to 3.7% in August (3.5% in July), and the number of unemployed persons increased by 344,000 to 6.0 million, with both measures returning to their pre-pandemic levels. Among the unemployed, the number of workers who permanently lost their jobs increased by 188,000 to 1.4 million in August. 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 1.9 million, down from 2.2 million in July. The labor force participation rate increased by 0.3 percentage point to 62.4% in August. The employment-population ratio in August, at 60.1%, little changed from the previous month. Both measures remain below their February 2020 values (63.4% and 61.2%, respectively). In August, average hourly earnings rose by $0.10 to $32.36. Over the 12 months ended in August, average hourly earnings increased by 5.2%. The average work week was 34.5 hours in August, a decrease of 0.1 hour from July.
• There were 193,000 initial claims for unemployment insurance for the week ended September 24, while the total number of insured unemployment claims was 1,347,000 as of September 17. A year ago, there were 396,000 initial claims for unemployment insurance and 2,720,000 total insured unemployment claims.
• FOMC/interest rates: The Federal Open Market Committee increased the federal funds target rate range 75 basis points following its meeting in September. With the latest increase, the FOMC has increased interest rates by 300 basis points since January. In its statement following the September meeting, the Committee expects inflation will continue to run higher for the foreseeable future. The FOMC projects interest rates will increase another 125 basis points for the remainder of 2022.
• GDP/budget: The economy has decelerated for two quarters in a row. Gross domestic product decreased 0.6% in the second quarter of 2022 after falling 1.6% in the first quarter. The decrease in GDP reflected downturns in private inventory investment, residential fixed investment, federal government spending, and state and local government spending that were partly offset by increases in exports and consumer spending. Imports, which are a subtraction in the calculation of GDP. increased. Consumer spending rose 2.0% in the second quarter after increasing 1.3% in the first quarter. Most of the increase in consumer spending is attributable to a 4.6% jump in services, while spending on durables slid 2.8%. Also dragging down GDP was a 5.0% decline in fixed investment, within which residential fixed investment dropped 17.8%, evidence of the slowdown in the housing sector. Nonresidential (business) fixed investment inched up 0.1% in the second quarter after rising 7.9% in the previous quarter. Exports rose 13.8% in the second quarter, while imports, which are a negative in the calculation of GDP, advanced 2.2% after jumping 18.4% in the first quarter. In the second quarter, the personal consumption expenditures price index, a measure of inflation, increased 7.3%.
• The Treasury budget deficit came in at $219.6 billion in August, up from $211.1 billion in July and over the August 2021 deficit of $170.6 billion. With only one month remaining in fiscal year 2022, the deficit through August sits at $945.7 billion, $1,764.9 billion lower than the deficit over the same period in fiscal year 2021, as outlays dropped $942.9 billion while receipts increased $822.0 billion. So far in this fiscal year, individual income tax receipts have risen $574.8 million, and corporate income tax receipts have increased $33.8 million.
• Inflation/consumer spending: While inflationary pressures appeared to wane in July, data for August revealed prices reversed course and moved upward. The personal consumption expenditures price index, a preferred inflation indicator of the Federal Reserve, advanced 0.3% in August after retreating 0.1% the previous month. For the year ended in August, prices have increased 6.2%. Prices less the volatile food and energy increased 0.6% in August and 4.9% since August 2021. In addition, personal income increased 0.3% in August, the same increase as in July. Wages and salaries rose 0.3% in August after jumping 0.8% higher in July. Disposable (after-tax) personal income advanced 0.4% in August following a 0.3% bump higher in July. Consumer spending, as measured by the personal consumption expenditures index, increased 0.4% after decreasing 0.2% in July. Driving the increase in the PCE index was a 0.8% rise in consumer spending on services. Spending on goods actually fell 0.5% in August following a 0.7% decline in July.
• The Consumer Price Index rose 0.1% in August, unchanged from the previous month. For the 12 months ended in August, the CPI increased 8.3% (8.5% for the 12-month period ended in July). Both the monthly and 12-month rates were above expectations. In August, the CPI less food and energy rose 0.6% after increasing 0.3% in July. Increases in prices for shelter, medical care, household furnishings and operations, new vehicles, motor vehicle insurance, and education were several of the many contributors to the broad-based monthly CPI increase. These increases were mostly offset by a 10.6% decline in the gasoline prices. Food prices continued to rise, increasing 0.8% in August as food at home prices rose 0.7%. In August, the CPI less food and energy climbed 0.6% and advanced 6.3% year over year.
• Prices that producers receive for goods and services dipped 0.1% in August following a 0.4% decline in July. Despite the recent downturn, producer prices have increased 8.7% since August 2021 (9.8% for the 12 months ended in July). Prices less foods, energy, and trade services increased 0.2% in August and 5.6% for the 12 months ended in August. The August decrease in the producer price index was attributable to a 1.2% decline in prices for goods, after falling 1.7% in July. In contrast, prices for services advanced 0.4% in August. Three-quarters of the decrease in prices for goods was attributable to a 12.7% decrease in gasoline prices.
• Housing: Sales of existing homes retreated for the seventh consecutive month in August, falling 0.4% from the July estimate. Year over year, existing home sales were 19.9% under the August 2021 total. According to the latest survey from the National Association of Realtors®, rising mortgage rates have impacted sales. In addition, inventory remains tight as homeowners are reluctant to sell after locking in historically low mortgage rates in recent years. The median existing-home price was $389,500 in August, down from $399,200 in July but 7.7% higher than August 2021 ($361,500). Unsold inventory of existing homes represents a 3.2-month supply at the current sales pace, unchanged from July. Sales of existing single-family homes also fell, down 0.9% in August. Sales of existing single-family homes have fallen 19.2% since August 2021. The median existing single-family home price was $396,300 in August, down from $405,800 in July but 7.6% over the August 2021 price.
• Sales of new single-family homes soared in August, increasing 28.8% from July’s total but 0.1% below the August 2021 estimate. Although mortgage interest rates increased in August, the price of homes sold decreased, helping drive sales. The median sales price of new single-family houses sold in August was $436,800 ($466,300 in July). The August average sales price was $521,800 ($556,700 in July). The inventory of new single-family homes for sale in August represents a supply of 8.5 months at the current sales pace, down from July’s 10.6-month supply.
• Manufacturing: Industrial production slipped 0.2% in August after advancing 0.5% in July. The decrease in industrial production can be traced to a 2.3% drop in utilities output and a flat reading for mining. In August, manufacturing output gained 0.1% after increasing 0.6% in the previous month. In August, production gains of at least 1.0% were recorded by machinery, by computer and electronic products, by aerospace and miscellaneous transportation equipment, and by miscellaneous manufacturing. Overall, total industrial production in August was 3.7% higher than it was a year earlier. Since August 2021, manufacturing has risen 3.3%, mining has jumped 8.4%, while utilities have decreased 1.6%.
• August saw new orders for durable goods decrease 0.2% after falling 0.1% in July. Excluding transportation, new orders rose 0.2% in August. Excluding defense, new orders decreased 0.9%. Transportation equipment drove the August decline, falling 1.1% after decreasing 0.7% in July. New orders for capital goods slid 0.8% in August after increasing 3.9% the previous month.
• Imports and exports: Import prices declined 1.0% in August following a 1.5% decrease in July, according to the U.S. Bureau of Labor Statistics. The August decrease marks the first time import prices have decreased in consecutive months since February, March, and April 2020. Prices for imports advanced 7.8% for the year ended in August, the smallest 12-month increase since the index rose 7.1% from March 2020 to March 2021. In August, lower fuel and nonfuel prices contributed to the monthly decrease. Fuel import prices fell 6.8% in August following a 7.5% decrease the previous month. Despite the August decline, import fuel prices advanced 48.5% over the past year. Prices for nonfuel imports declined for the fourth consecutive month, dipping 0.2% in August. Prices for U.S. exports fell 1.6% in August following a 3.7% drop the previous month. Lower agricultural and nonagricultural prices contributed to the August decline. Prices for exports have risen 10.8% since August 2021.
• The international trade in goods deficit was $87.3 billion in August, down 3.2% from July. Exports of goods were $179.8 billion in August, $1.7 billion less than in July. Imports of goods were $267.1 billion in August, $4.6 billion less than July imports.
• The latest information on international trade in goods and services, released September 7, is for July and shows that the goods and services trade deficit narrowed by 12.6%, to $70.6 billion from the June deficit. July exports were $0.5 billion more than June exports. July imports were $9.7 billion lower than June imports. Year over year, the goods and services deficit increased $136.6 billion, or 29.0%, from the same period in 2021. Exports increased 19.0%, while imports increased 22.1%.
• International markets: The global fight against rising inflation apparently has a long way to go, and economies are beginning to feel the impact. The Bank of England, undeterred by the prospects of an economic recession, tightened its monetary policy further in September, hiking the bank rate 50 basis points to 2.25%, equaling the August rate hike, which marked the first time in 27 years that the bank rate had been increased by more than 25 basis points. Stocks reacted poorly to comments from the BOE, following a pledge to proceed with planned tax cuts while continuing to raise interest rates. With these moves, the BOE has revised the near-term outlook for inflation from 13.3% in October to nearly 11.0%. In addition, the British government announced the introduction of an energy-price guarantee that will cap household energy costs for the next two years. Nevertheless, the eurozone’s annual rate of inflation hit 10.0% in September, the highest growth rate in prices since 1997. The war in Ukraine took another turn following Russian President Vladimir Putin’s move to annex portions of eastern Ukraine, further adding to stock market concerns. In China, weakening manufacturing and a slowdown in the property sector prompted the People’s Bank of China to relax its monetary policy in diverging from the policy tightening at other central banks. Overall for the markets in September, the STOXX Europe 600 Index slid 6.6%. The United Kingdom’s FTSE fell roughly 5.1%. Japan’s Nikkei 225 Index plunged 6.2%, while China’s Shanghai Composite Index lost 5.1%.
• Consumer confidence: The Conference Board Consumer Confidence Index® increased in September for the second consecutive month. The September index stands at 108.0, up from 103.6 in August. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, improved to 149.6 in September, up from 145.3 in August. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, rose to 80.3 in September (75.8 in August).

Eye on the Quarter Ahead

The fourth quarter is expected to continue the trends from the previous three months. Inflationary pressures are likely to slow as the Federal Reserve continues its aggressive policies until inflation settles at the target 2.0% rate. The market will probably continue exhibiting roller coaster turbulence in response to the Fed’s moves. Employment should remain strong, although rising mortgage interest rates will almost certainly impede the housing sector. As we enter the final three months of 2022, questions remain as to the direction of the war in Ukraine, oil and gasoline prices, and whether the economy will remain relatively positive or head toward a recession.

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

Wall Street ended a very tepid month of September on a downswing. Each of the benchmark indexes listed here lost value last week, as investors continued to worry about the impact the Federal Reserve policies will have on the economy. The 0.3% increase in the August personal consumption expenditures price index certainly didn’t help support the possibility of an easing of the aggressive rate-hike tightening employed by the Fed. While stock values dipped, long-term bond prices also declined last week. With prices waning, bond yields rose higher. The 10-year Treasury yield jumped 25 basis points last week. Crude oil prices edged up, while the dollar slipped lower. Gold prices rose about $20.00 per ounce.

Stocks extended their sell-offs last Monday, as central banks across the world ramped up efforts to curb inflation, which increased worries that their actions may create an economic recession. After falling 1.0%, the S&P 500 ended last Monday’s session at its lowest level since December 2020. Treasury yields advanced, with the yield on 10-year Treasuries climbing 18 basis points to 3.87%, its highest level since April 2010. While the British pound dropped, the dollar climbed to yet another record high. Federal officials added to negative sentiment by indicating that additional tightening is needed to stem inflation, even if it means incurring job losses. In addition to the dip in the S&P 500, the Dow slid 1.1%, the Nasdaq fell 0.6%, the Russell 2000 lost 1.4%, and the Global Dow dropped 1.9%. Crude oil prices declined to $76.55 per barrel, their lowest levels since January.

Wall Street closed last Tuesday with mixed results. The Nasdaq (0.3%) and the Russell 2000 (0.4%) edged higher, while the Dow (-0.4%), the S&P 500 (-0.2%), and the Global Dow (-0.4%) slid lower. Bond yields continued to climb higher, with 10-year Treasury yields adding 8.6 basis points to hit 3.96%. Crude oil prices rose 2.70% to $78.43 per barrel. The dollar was flat, while gold prices inched up 0.2%. Investors continued to hear Federal Reserve officials proffer their commitment to aggressively fight rising inflation. With Tuesday’s losses, the S&P 500 fell for the sixth straight session, marking its longest losing streak since February 2020. Nevertheless, while traders are looking for the Fed to ease its stance, data continues to show that the economy may be able to withstand more tightening. Orders for core durable goods rose in August (see below), and consumer sentiment increased for a second consecutive month.

In what may turn out to be nothing more than dip-buyers taking a plunge in the market, stocks rose higher last Wednesday, ending a six-day slide. With the surge in stocks, bond prices fell, sending yields higher. The small caps of the Russell 2000 led the surge, adding 3.2% on the day, followed by the Nasdaq (2.1%), the S&P 500 (2.0%), the Dow (1.9%), and the Global Dow (1.2%). The yield on 10-year Treasuries lost nearly 26 basis points, settling at 3.70%. Crude oil prices rose 4.5% to reach $82.03 per barrel. The dollar slid lower, while gold prices advanced nearly 2.0%.

Unfortunately, the prior day’s advance in stocks was probably a one-off, as Wall Street fell sharply last Thursday. With the latest gross domestic product showing the economy retracted for a second consecutive quarter, investors were again concerned that the Federal Reserve’s aggressive fight against inflation may harm the economy. The Nasdaq slid 2.8%, followed by the Russell 2000, which lost 2.4%. The S&P 500 fell 2.1%, the Dow declined 1.5%, and the Global Dow dipped 0.9%. With Thursday’s losses, the S&P 500 is on track for its poorest September since 2008. Ten-year Treasury yields rose 4.2 basis points to 3.74%. Crude oil prices fell $0.55 to $81.60 per barrel. The dollar inched lower while gold prices declined.

Stocks closed the week the same way it began, in the red. Each of the benchmark indexes ended last Friday lower, led by the Dow (-1.7%), followed by the S&P 500 and the Nasdaq (-1.5%), the Global Dow (-0.8%), and the Russell 2000 (-0.6%). Ten-year Treasury yields added 5.7 basis points to hit 3.80%. Crude oil prices and the dollar fell, while gold prices rose higher.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 9/30	Weekly Change	YTD Change
DJIA	36,338.30	29,590.41	28,725.51	-2.92%	-20.95%
Nasdaq	15,644.97	10,867.93	10,575.62	-2.69%	-32.40%
S&P 500	4,766.18	3,693.23	3,585.62	-2.91%	-24.77%
Russell 2000	2,245.31	1,679.59	1,664.72	-0.89%	-25.86%
Global Dow	4,137.63	3,267.25	3,168.34	-3.03%	-23.43%
Fed. Funds target rate	0.00%-0.25%	3.00%-3.25%	3.00%-3.25%	0 bps	300 bps
10-year Treasuries	1.51%	3.69%	3.80%	11 bps	229 bps
US Dollar-DXY	95.64	113.19	112.17	-0.90%	17.28%
Crude Oil-CL=F	$75.44	$79.43	$79.67	0.30%	5.61%
Gold-GC=F	$1,830.30	$1,651.70	$1,670.50	1.14%	-8.73%

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

• Following the third and final estimate of gross domestic product, the economy retracted 0.6% in the second quarter after decreasing 1.6% in the first quarter. Private domestic investment fell 14.1% in the second quarter, pulled lower by a 17.8% decline in residential fixed investment. Exports rose 13.8%, which was offset by a 2.2% increase in imports, which are a negative in the calculation of GDP. Personal consumption expenditures, a measure of consumer spending, rose 2.0% in the second quarter after increasing 1.3% in the first quarter. Much of the increase in PCE is attributable to a 4.6% advance in services. Spending on goods fell 2.6%. The personal consumption expenditures price index, a measure of inflation, rose 7.3% in the second quarter.
• According to the latest data from the Bureau of Economic Analysis, the personal consumption price index for August advanced 0.3% after falling 0.1% in July. This result will surely bolster the Federal Reserve’s aggressive policies intended to curb rising inflation. Since August 2021, consumer prices have risen 6.2%. Prices excluding food and energy, advanced 4.9% during that 12-month period. Personal income rose 0.3% in August, while disposable personal income increased 0.4%. Consumer spending also increased in August, with the personal consumption expenditures index vaulting 0.4% after decreasing 0.2% in July.
• New orders for manufactured durable goods fell for the second consecutive month, declining 0.2% in August. This decrease followed a 0.1% July decrease. Excluding transportation, new orders increased 0.2%. Excluding defense, new orders decreased 0.9%. Transportation equipment, also down two consecutive months, drove the August decrease after falling 1.1%. Despite the recent declines, new orders for durable goods have increased 10.9% since August 2021. New orders for nondefense capital goods in August decreased 2.7%, while new orders for defense capital goods increased 10.1%.
• Sales of new single-family homes jumped a surprising 28.8% in August over July’s estimate. Since August 2021, sales of new single-family homes are down a mere 0.1%. The number of new single-family homes for sale represents a supply of 8.5 months at the current sales pace. Prices of new single-family homes sold in August fell. The median sales price of new houses sold in August was $436,800. The average sales price was $521,800. 
• The international trade in goods deficit decreased more than expected in August. The deficit was $87.3 billion, 3.2% lower than the July goods trade deficit. Imports of goods fell 1.7% after declining 2.9% in July. Imports of industrial supplies decreased 6.9%, while capital goods imports slipped 1.8%. Motor vehicle imports rose 3.8% in August. Exports dropped 0.9% in August. Auto exports slid 8.9% after rising 6.7% the previous month. Consumer exports rose 8.0% in August.
• Prices at the pump rose for the first time in several weeks. The national average retail price for regular gasoline was $3.711 per gallon on September 26, $0.057 per gallon above the prior week’s price and $0.536 higher than a year ago. Also as of September 26, the East Coast price decreased $0.049 to $3.408 per gallon; the Gulf Coast price slid $0.039 to $3.118 per gallon; the Midwest price rose $0.113 to $3.631 per gallon; the West Coast price increased $0.327 to $5.172 per gallon; and the Rocky Mountain price advanced $0.042 to $3.919 per gallon. Residential heating oil prices averaged $3.237 per gallon on September 23, about $0.064 per gallon more than the prior week’s price.
• For the week ended September 24, there were 193,000 new claims for unemployment insurance, a decrease of 16,000 from the previous week’s level, which was revised down by 4,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 17 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 17 was 1,347,000, a decrease of 29,000 from the previous week’s level, which was revised down by 3,000. States and territories with the highest insured unemployment rates for the week ended September 10 were New Jersey (1.9%), California (1.8%), Puerto Rico (1.6%), New York (1.5%), Alaska (1.2%), Massachusetts (1.2%), Nevada (1.2%), Pennsylvania (1.2%), and Rhode Island (1.2%). The largest increases in initial claims for the week ended September 17 were in Michigan (+6,102), Georgia (+1,837), New York (+1,709), New Jersey (+1,164), and California (+1,130), while the largest decreases were in Indiana (-1,103), Arkansas (-386), Kentucky (-295), Virginia (-288), and Oklahoma (-264).
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Eye on the Week Ahead

The employment figures for September are out this week. August saw over 300,000 new jobs added, while average hourly earnings rose 0.3% for the month and were up 5.2% since August 2021.