Month: August 2023

The Markets (as of market close August 25, 2023)

Last week saw Wall Street generally close with a mixed bag of results. The Nasdaq, the S&P 500, and the Global Dow ended the week higher, while the Dow and the Russell 2000 lost value. Investors tried to digest Federal Reserve Chair Jerome Powell’s comments from the annual Jackson Hole Economic Symposium last Friday. Powell indicated that, despite inflation coming down, prices remain too high. The central bank is prepared to hike interest rates further until inflation steadies at the Fed’s 2.0% target. Powell’s suggestion of more interest rate increases sent bond yields higher, with two-year Treasury yields rising to 5.07%. Among the market sectors, consumer discretionary and information technology gained 2.0%. Crude oil prices declined for the second straight week, while the dollar rose for the fourth consecutive week.

Stocks closed mixed to begin last week. The Dow (-0.1%) and the Russell 2000 (-0.2%) closed marginally lower, while the S&P 500 (0.7%) and the Global Dow (0.1%) closed higher. The Nasdaq ended a four-day losing streak after climbing 1.6%. Ten-year Treasury yields jumped to a 16-year high after settling at 4.34%. Information technology and consumer discretionary led the market sectors, while interest-rate sensitive sectors such as utilities and real estate fell. Crude oil prices slid 0.4% to close the day at around $80.90 per barrel. The dollar was flat, while gold prices edged up 0.4%.

Most of the benchmark indexes listed here closed lower last Tuesday, with the exception of the Nasdaq and the Global Dow, which eked out 0.1% gains. The Dow (-0.5%), the S&P 500 (-0.3%), and the Russell 2000 (-0.3%) slid lower. Yields on 10-year Treasuries slipped 1.4 basis points, but remained near the 16-year high at 4.32%. Crude oil prices declined 0.6%, settling at $80.25 per barrel. The dollar and gold prices advanced 0.3% and 0.2%, respectively.

Tech stocks rallied and bond yields fell last Wednesday. The Nasdaq led the benchmark indexes listed here, gaining 1.6%, followed by the S&P 500 (1.1%), the Russell 2000 (1.0%), the Global Dow (0.9%), and the Dow (0.5%). Ten-year Treasury yields fell 13.0 basis points to close at 4.19%. The dollar slipped lower, while gold prices rose 1.0%. Several large retailers saw their stock values fall on disappointing quarterly earnings. Nevertheless, each of the market sectors posted gains (with the exception of energy), led by information technology and communication services.

Wall Street saw stocks tumble lower last Thursday, with each of the benchmark indexes listed here losing value. The Nasdaq dropped 1.9% despite a major chip maker exceeding quarterly earnings predictions. Each of the S&P 500 market sectors declined, with information technology, consumer discretionary, and communication services dipping more than 2.0%. The S&P 500 fell 1.4%, followed by the Russell 2000 (-1.3%), the Dow (-1.1%), and the Global Dow (-0.7%). Long-term bond yields remained steady, gaining 3.1 basis points to settle at 4.23%. The dollar resumed its upward momentum, gaining 0.6%. Gold prices slipped 0.2%. Crude oil prices were flat on the day, settling at about $78.88 per barrel.

Stocks closed higher last Friday, despite hawkish comments from Fed Chair Jerome Powell. The Nasdaq reversed course from the prior day, closing up 0.9%, followed by the Dow and the S&P 500 (0.7%), while the Russell 2000 rose 0.4%. The Global Dow ticked lower (-0.1%). Ten-year Treasury yields were flat on the day. Crude oil prices bounced back from a slow week, gaining 1.2%. The dollar edged up 0.2%, while gold prices dipped 0.3%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/25	Weekly Change	YTD Change
DJIA	33,147.25	34,500.66	34,346.90	-0.45%	3.62%
Nasdaq	10,466.48	13,290.78	13,590.65	2.26%	29.85%
S&P 500	3,839.50	4,369.71	4,405.71	0.82%	14.75%
Russell 2000	1,761.25	1,859.42	1,853.63	-0.31%	5.25%
Global Dow	3,702.71	4035.30	4,047.26	0.30%	9.31%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.25%	4.23%	-2 bps	36 bps
US Dollar-DXY	103.48	103.43	104.17	0.72%	0.67%
Crude Oil-CL=F	$80.41	$81.40	$79.97	-1.76%	-0.55%
Gold-GC=F	$1,829.70	$1,918.40	$1,941.70	1.21%	6.12%

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 declined 2.2% in July and 16.6% since July 2022. Once again, low inventory and high mortgage interest rates cooled the market for existing homes. Total housing inventory in July sat at a 3.3-month supply at the current sales pace. The median existing home price in July was $406,700, down from $410,000 in June, but up from $399,000 in July 2022. Sales of single-family existing homes fell 1.9% in July and 16.3% from July 2022. The supply of single-family existing homes in July was 3.2 months, up slightly from 3.1 months in June and unchanged from the supply in July 2022. The median existing single-family existing home price in July was $412,300, down from the June price of $415,700 but higher than the July 2022 price of $405,800.
• Unlike sales of existing homes, the market for new single-family homes accelerated in July. According to the latest report from the Census Bureau, sales of new single-family homes rose 4.4% last month and were 31.5% above the July 2022 estimate. Both the median sales price and the average sales price for new houses increased in July. The median sales price for new houses sold was $436,700 ($416,700 in June). The average sales price was $513,000 ($507,300 in June). The supply of new homes for sale stood at 7.3 months at the current sales pace, down slightly from the June supply of 7.5 months. Despite the July increases in the median and average sales prices, both are well below their respective values from a year ago. The median sales price is 9.5% under the July 2022 estimate, while the average sales price is down 10.1%.
• New orders for durable goods declined 5.2% in July, the first monthly decrease since February. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders decreased 5.4%. Transportation equipment, also down following four consecutive monthly increases, drove the decrease, falling 14.3% last month.
• The national average retail price for regular gasoline was $3.868 per gallon on August 21, $0.018 per gallon higher than the prior week’s price but $0.012 less than a year ago. Also, as of August 21, the East Coast price increased $0.017 to $3.728 per gallon; the Midwest price fell $0.048 to $3.720 per gallon; the Gulf Coast price rose $0.043 to $3.458 per gallon; the Rocky Mountain price climbed $0.085 to $4.039 per gallon; and the West Coast price advanced $0.107 to $4.866 per gallon. According to the U.S. Energy Information Administration, unplanned refinery outages and lower gasoline production capacity are increasing the costs of producing summer-grade gasoline in the United States this summer.
• For the week ended August 19, there were 230,000 new claims for unemployment insurance, a decrease of 10,000 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 August 12 was 1.1%, a decrease of 0.1% from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 12 was 1,702,000, a decrease of 9,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended August 5 were New Jersey (2.5%), Puerto Rico (2.4%), California (2.2%), Rhode Island (2.1%), Massachusetts (2.0%), New York (1.9%), Oregon (1.9%), Connecticut (1.8%), Pennsylvania (1.8%), and Minnesota (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 12 were in Virginia (+940), Iowa (+860), Illinois (+769), Hawaii (+664), and Arkansas (+388), while the largest decreases were in California (-3,959), Texas (-1,641), Pennsylvania (-1,155), Michigan (-1,129), and New York (-963).

Eye on the Week Ahead

The last week of August includes many important economic reports. The second estimate for the second-quarter gross domestic product is out this week. The initial estimate showed the economy expanded at an annualized rate of 2.4% over the first quarter. The report on personal income and expenditures for July is available this week. Investors should pay particular attention to the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve. Finally, the week ends with the July employment figures. Job growth expanded in June, but at a much slower pace compared to the monthly average for 2023.

The Markets (as of market close August 18, 2023)

After another week of strong economic data, investors seemed to accept that the Fed may not be done lifting interest rates after all — and that Wall Street might have started celebrating the end of the rate-hike cycle too soon. Each of the benchmark indexes listed here dropped more than 2% by the end of the week, as did crude oil prices. Gold prices also fell, while the dollar advanced. Yields on 10-year Treasuries continued their upward march, reaching 15-year highs.

Tech stocks rebounded last Monday, pushing the Nasdaq up 1.1%. The S&P 500 advanced 0.6%, and the Dow inched up 0.1%. The Russell 2000 ticked down 0.2% while the Global Dow declined 0.4%, likely impacted by the growing level of concern about China’s troubled real estate market. The 10-year Treasury yield ended the day higher at 4.18%. Crude oil and gold prices dipped, but the U.S. dollar was little changed.

Equities fell across the board on Tuesday, with each of the benchmark indexes — and all 11 of the S&P market sectors — suffering losses. The Russell 2000 declined 1.3%, followed by the S&P 500 (-1.2%), the Nasdaq (-1.1%), the Dow (-1.0%), and the Global Dow (-1.0%). It was the first day since May that the Dow, S&P 500, and Nasdaq all fell more than 1%. A strong retail sales report helped drive up the 10-year Treasury yield to 4.22%. Crude oil and gold prices fell, and the dollar was flat.

Stock prices continued their retreat last Wednesday, after the minutes from the most recent Fed meeting revealed that committee members are divided on whether more interest rate hikes will be needed to knock down inflation. The Russell 2000 declined 1.3%, followed by the Nasdaq (-1.2%), the Global Dow (-1.0%), and the S&P 500 (-0.8%). The Dow dipped 0.5%. Wall Street also fretted over the rising 10-year Treasury yield, which ended the day at a 15-year high of 4.26%. Oil and gold prices fell again, but the dollar rose.

On Thursday, investors watched stock prices tumble for the third day in a row. The tech-heavy Nasdaq and small-cap stocks that make up the Russell 2000 dropped 1.2%, while the S&P 500 and the Dow declined 0.8%, and the Global Dow lost 0.7%. Energy was the only sector that did not post a loss. The government bond market extended its worrisome sell off, pushing up the yield on 10-year Treasuries by 5 basis points to 4.31%, the highest level since 2007. Crude oil prices advanced to $80.06 per barrel after a three-day drop, gold prices fell, and the dollar was unchanged.

Last Friday, stocks capped off a volatile week with mixed returns. Energy and defensive sectors such as utilities and consumer staples outperformed, while communication services saw the steepest declines. The Russell 2000 posted a modest gain of 0.5%, and the Dow edged up less than 0.1%. The Global Dow and the Nasdaq dipped 0.3% and 0.2%, respectively. The S&P 500 ended the day flat. The 10-year Treasury yield fell to 4.25%. Crude oil prices increased to $81.40 per barrel. Gold prices inched up, but the dollar pulled back slightly.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/18	Weekly Change	YTD Change
DJIA	33,147.25	35,281.40	34,500.66	-2.21%	4.08%
Nasdaq	10,466.48	13,644.85	13,290.78	-2.59%	26.98%
S&P 500	3,839.50	4,464.05	4,369.71	-2.11%	13.81%
Russell 2000	1,761.25	1,925.11	1,859.42	-3.41%	5.57%
Global Dow	3,702.71	4,152.39	4035.3	-2.82%	8.98%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.16%	4.25%	9 bps	38 bps
US Dollar-DXY	103.48	102.86	103.43	0.55%	-0.05%
Crude Oil-CL=F	$80.41	$83.14	$81.40	-2.09%	1.23%
Gold-GC=F	$1,829.70	$1,945.90	$1,918.40	-1.41%	4.85%

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

• Retail sales surged 0.7% in July from the previous month — the fastest pace since January — and have increased 3.2% since July 2022. Retail trade sales advanced 0.6% from June and 2.0% from July 2022. Nonstore (online) retail sales increased 1.9% from June and 10.3% from July 2022, while sales at food services and drinking places were up 1.4% from June and 11.9% higher than last year. Other retailers that outperformed last month include sporting goods, hobby, musical instrument, and book stores (1.5%); clothing & clothing accessories stores (1.0%); and department stores (0.9%). Retailers that showed weakness in July (and tend to be sensitive to high interest rates) include furniture & home furnishing stores (-1.8%); electronics and appliance stores (-1.3%); and auto dealers (-0.4%).
• Prices for U.S. imports rose 0.4% in July after falling 0.1% the previous month. Despite the July increase, which was driven by higher fuel prices, U.S. import prices declined 4.4% over the past 12 months, after increasing 8.8% from July 2021 to July 2022. Export prices increased 0.7% in July, following a 0.7% decline in June. Even though July saw the largest monthly advance since June 2022, U.S. export prices have fallen 7.9% over the last 12 months.
• The number of residential building permits issued in July increased 0.1% from the June total and is 13.0% below the July 2022 figure. Issued building permits for single-family housing increased 0.6% in July to an annual rate of 930,000 units, the highest level in more than a year. Permits for housing projects with five units or more fell 0.2% last month and were 32.2% below the level in July 2022. Housing starts increased 3.9% last month and were 5.9% above the total from a year earlier. Single-family housing starts in July were 6.7% above the prior month’s rate. Home completions dropped 11.8% in July from June and were 5.4% below the July 2022 total. Single-family home completions in July were 1.3% higher than June’s figure.
• Industrial production rose 1.0% in July after falling in the two previous months. Manufacturing output and mining both climbed 0.5% in July after falling 0.5% and 0.9%, respectively, in June. Utilities shot up 5.4%, as hot weather spurred demand for cooling. Overall, total industrial production in July was 0.2% below last year’s level. Most major market groups recorded growth in July. Production of consumer goods led the pack with an increase of 1.4%, boosted by a 4.8% jump in the output of automotive products.
• The national average retail price for regular gasoline was $3.850 per gallon on August 14, $0.022 per gallon higher than the prior week’s price but $0.088 less than a year ago. Also, as of August 14, the East Coast price decreased $0.026 to $3.711 per gallon; the Midwest price climbed $0.090 to $3.768 per gallon; the Gulf Coast price fell $0.038 to $3.415 per gallon; the Rocky Mountain price ticked up $0.010 to $3.954 per gallon; and the West Coast price advanced $0.074 to $4.759 per gallon.
• For the week ended August 12, there were 239,000 new claims for unemployment insurance, a decrease of 11,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 5 was 1.2%, an increase of 0.1% from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 5 was 1,716,000, an increase of 32,000 from the previous week’s unrevised level. States and territories with the highest insured unemployment rates for the week ended July 29 were Puerto Rico (2.6%), New Jersey (2.5%), California (2.2%), Rhode Island (2.0%), Massachusetts (2.0%), Connecticut (1.9%), New York (1.9%), Oregon (1.9%), Pennsylvania (1.8%), and Minnesota (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 5 were in Ohio (+5,416), California (+2,363), Texas (+2,237), New Jersey (+1,622), and Connecticut (+1,288), while the largest decreases were in Missouri (-2,644), Florida (-410), Iowa (-335), Arkansas (-198), and Kentucky (-79).

Eye on the Week Ahead

Data on the housing sector for July is available this week. Sales of both new and existing homes declined in June due to rising mortgage rates and dwindling inventory. However, home prices have remained strong. Investors will also be looking for insight from the Federal Reserve’s Economic Symposium in Jackson Hole, where central bankers from around the world will meet to discuss the health of the global economy.

The Markets (as of market close August 11, 2023)

The S&P 500 and the Nasdaq fell for the second straight week, while the Dow outperformed the benchmark indexes listed here. Stocks have been relatively soft so far in August, which is not out of the ordinary. A slightly hotter-than-expected uptick in producer prices (see below) likely pushed Treasury yields higher, while cooling mega-cap growth shares, which are generally sensitive to interest rate movements. Several market sectors ended the week lower, with information technology (-4.3%) and consumer discretionary (-2.3%) falling the furthest, while energy (+3.6%) and health care (+2.1%) advanced the most. Corporate earnings season for the second quarter is winding down. With roughly 85% of the S&P 500 companies reporting results, nearly 81% have beaten profit estimates. The dollar strengthened, while gold prices notched the worst weekly performance in over a month.

Stocks jumped higher to begin the week last Monday. Each of the benchmark indexes listed here performed well enough to recoup losses from the previous week. Large caps outperformed, with the Dow gaining 1.2% and the S&P 500 adding 0.9%. The Nasdaq and the Global Dow rose 0.6%, while the Russell 2000 inched up 0.1%. Yields on 10-year Treasuries settled at 4.07%, after climbing 1.8 basis points. Crude oil prices fell 0.4% to end the day at about $82.52 per barrel. The dollar gained less than 0.1%, while gold prices fell 0.3%.

The benchmark indexes listed here declined last Tuesday as Wall Street couldn’t maintain the previous day’s momentum. The Nasdaq dropped 0.8%, followed by the Global Dow (-0.7%), the Russell 2000 (-0.6%), the Dow (-0.5%), and the S&P 500 (-0.4%). Ten-year Treasury yields declined 5.2 basis points, ending the day at 4.02%. Crude oil prices gained over 1.0% to close at about $82.80 per barrel. The dollar gained nearly 0.5%, while gold prices fell by about the same amount.

Stocks slid for the second straight day last Wednesday as investors may have been concerned that the upcoming Consumer Price Index would show prices rose in July. The Nasdaq declined 1.2%, falling the furthest among the benchmark indexes listed here. The Russell 2000 declined 0.9%, followed by the S&P 500 (-0.7%), the Dow (-0.5%), and the Global Dow (-0.1%). Crude oil prices rose 1.7% to $84.30 per barrel, the highest price per barrel in a year. Ten-year Treasury yields dipped 1.4 basis points to settle at 4.01%. The dollar and gold prices declined.

Wall Street saw a mini-bear run end last Thursday. Of the benchmark indexes listed here, only the Russell 2000 fell (-0.4%). While gains were not particularly noteworthy, the remaining indexes closed in the black, led by the Global Dow (0.3%), followed by the Dow (0.2%), and the Nasdaq (0.1%). The S&P 500 gained less than 0.1 percentage point. Investors seemed to react cautiously following the release of the latest Consumer Price Index (see below). Crude oil prices declined 1.8% to $82.86 per barrel after hitting a 12-month high the previous day. Ten-year Treasury yields rose 6.8 basis points to reach 4.08%. The dollar edged higher, while gold prices slid lower.

Stocks ended the week with mixed results last Friday. The Dow (+0.3%) and the Russell 2000 (+0.1%) ticked higher, while the Nasdaq (-0.7%), the Global Dow (-0.6%), and the S&P 500 (-0.1%) declined. Yields on 10-year Treasuries settled at 4.16% after climbing 8.8 basis points. Crude oil prices advanced 0.3%. The dollar had its best day in several sessions, closing up 0.3%. Gold prices fell 0.2%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/11	Weekly Change	YTD Change
DJIA	33,147.25	35,065.62	35,281.40	0.62%	6.44%
Nasdaq	10,466.48	13,909.24	13,644.85	-1.90%	30.37%
S&P 500	3,839.50	4,478.03	4,464.05	-0.31%	16.27%
Russell 2000	1,761.25	1,957.46	1,925.11	-1.65%	9.30%
Global Dow	3,702.71	4,164.25	4,152.39	-0.28%	12.14%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.06%	4.16%	10 bps	29 bps
US Dollar-DXY	103.48	102.02	102.86	0.82%	-0.60%
Crude Oil-CL=F	$80.41	$82.62	$83.14	0.63%	3.40%
Gold-GC=F	$1,829.70	$1,977.20	$1,945.90	-1.58%	6.35%

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

• Consumer prices rose 0.2% in July, the same increase as in June. For the 12 months ended in July, consumer prices have risen 3.2%, after increasing 3.0% for the 12 months ended in June. Consumer prices less food and energy also advanced 0.2%, matching the June increase. Year over year, consumer prices less food and energy dipped 0.1 percentage point to 4.7%. In July, prices for shelter (+0.4%) were by far the largest contributor to the monthly advance, accounting for over 90% of the increase. Food prices increased 0.2% in July after increasing 0.1% the previous month. Prices for energy rose 0.1% last month after rising 0.6% in June. Since July 2022, prices for shelter rose 7.7%, food prices increased 4.9%, while energy prices decreased 12.5%. Other indexes with notable increases over the last 12 months include motor vehicle insurance (+17.8%), recreation (+4.1%), new vehicles (+3.5%), and household furnishings and operations (+2.9%).
• Prices producers received for goods and services rose 0.3% in July after being flat in June and declining 0.3% in May. In July, prices for services increased 0.5% (the largest monthly increase since August), while prices for goods inched up 0.1%. Since July 2022, producer prices advanced 0.8%. Prices less foods, energy, and trade services (core prices) moved up 0.2% last month, the largest increase since February. For the 12 months ended in July, core prices advanced 2.7%.
• The goods and services trade deficit was $65.5 billion in June, down $2.8 billion, or 4.1%, from May. June exports dipped $0.3 billion, or 0.1%, while imports fell $3.1 billion, or 1.0%. Year to date, the goods and services deficit decreased $117.7 billion, or 22.3%, from the same period in 2022. Exports increased $37.6 billion, or 2.5%. Imports decreased $80.1 billion, or 4.0%.
• The Federal Treasury budget deficit was $220.8 billion in July, marginally lower than the June deficit, but about $10.0 billion over the July 2022 deficit. Through 11 months of fiscal year 2023, the deficit sits at $1,613.4 trillion. Over the same period in fiscal year 2022, the deficit was $726.1 billion. In July, total government expenditures exceeded receipts by $220.7 billion.
• The national average retail price for regular gasoline was $3.828 per gallon on August 7, $0.071 per gallon higher than the prior week’s price but $0.210 less than a year ago. Also, as of August 7, the East Coast price increased $0.091 to $3.737 per gallon; the Midwest price climbed $0.066 to $3.678 per gallon; the Gulf Coast price rose $0.037 to $3.453 per gallon; the Rocky Mountain price increased $0.071 to $3.944 per gallon; and the West Coast price advanced $0.069 to $4.685 per gallon.
• For the week ended August 5, there were 248,000 new claims for unemployment insurance, an increase of 21,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 29 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 29 was 1,684,000, a decrease of 8,000 from the previous week’s level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended July 22 were New Jersey (2.6%), California (2.3%), Puerto Rico (2.2%), Rhode Island (2.1%), Massachusetts (2.0%), Connecticut (1.9%), New York (1.8%), Oregon (1.8%), Pennsylvania (1.8%), and Minnesota (1.7%). The largest increases in initial claims for unemployment insurance for the week ended July 29 were in Missouri (+2,644), New Jersey (+730), Illinois (+723), Florida (+533), and Tennessee (+365), while the largest decreases were in California (-3,108), Ohio (-2,952), Georgia (-1,373), Texas (-1,102), and New York (-1,001).

Eye on the Week Ahead

The latest data on retail sales for July is released this week. June saw retail sales inch up 0.2%. Retail sales have increased between 0.1% and 0.4% since May after dropping 0.8% in April. The Federal Reserve’s report on industrial production is also out this week. Industrial production has declined each month since May, when it rose 0.5%.

The Markets (as of market close August 4, 2023)

Stocks endured a losing week for the first time since early July. Each of the benchmark indexes listed here lost value, with the S&P 500 and the Nasdaq suffering the steepest weekly declines since March. Investors dealt with the downgrade of the U.S. government’s credit rating and evidence that job growth may be slowing (see below). Corporate earnings have generally matched or beaten expectations, but a couple of bellwether tech and communications companies proffered disappointing earnings. Bond prices fell, pushing yields higher. The dollar rose higher, while gold prices slid lower. Crude oil prices increased for the sixth straight week, the longest streak in more than a year.

Wall Street closed out the month of July on an uptick, with each of the benchmark indexes listed here posting gains by the close of trading last Monday. The Russell 2000 advanced 1.1% to lead the indexes, followed by the Global Dow and the Dow (0.3%). The Nasdaq and the S&P 500 rose 0.2%. Ten-year Treasury yields closed the day where they began at 3.95%. Crude oil prices dipped marginally to settle at $81.65 per barrel. The dollar was flat, while gold prices fell 0.4%.

Stocks closed generally lower last Tuesday, with only the Dow (0.2%) advancing among the benchmark indexes listed here. The Global Dow fell 0.7%, followed by the Russell 2000 (-0.5%), the Nasdaq (-0.4%), and the S&P 500 (-0.3%). Most of the market sectors lost value, with only industrials and information technology gaining ground. Crude oil prices declined for the second straight session, falling 0.1% to $81.73 per barrel. The yield on 10-year Treasuries rose 9.2 basis points to 4.05%. The dollar gained traction, climbing 0.4%, while gold prices slid 1.4%.

The stock market took a tumble last Wednesday, with the Nasdaq experiencing its worst day in nearly five months. Investors may have been rattled after the credit rating firm Fitch downgraded the U.S. government’s credit rating, which prompted an angry response from the White House and the Treasury Department. Fitch based its rating decision, in part, on the federal government’s growing levels of debt and political instability, including the January 6, 2021 attack on the Capitol. The Nasdaq slid 2.2%, followed by the Global Dow (-1.6%), the Russell 2000 and the S&P 500 (-1.4%), and the Dow (-1.0%). Yields on 10-year Treasuries rose 2.7 basis points to 4.07%. Crude oil prices continued to decline, dropping nearly 2.0% to $79.79 per barrel. The dollar rose 0.3%, while gold prices fell 0.4%.

Stocks declined for a third straight session last Thursday as investors continued to react to Fitch’s downgrade of U.S. bonds. Ten-year Treasury yields spiked 11.1 basis points to 4.18%, the highest yield in nine months, while the dollar slipped lower, impacted by the credit downgrade. The Global Dow fell the furthest, down 0.4%, followed by the Russell 2000 and the S&P 500, which dipped 0.3%. The Dow lost 0.2%, while the Nasdaq essentially broke even, down 0.1%. Crude oil prices reversed course, gaining 2.8% to $81.71 per barrel. Gold prices declined 0.3%.

Wall Street closed lower last Friday to end a disappointing week for stocks. Only the Global Dow (0.4%) advanced among the benchmark indexes listed here. The S&P 500 slid 0.5%, followed by the Dow and the Nasdaq, which fell 0.4%. The small caps of the Russell 2000 dipped 0.2%. Ten-year Treasury yields, which had climbed for most of the week, fell nearly 13.0 basis points on the day. Crude oil prices rose 1.3%. The dollar declined 0.5%. Gold prices ended the day up 0.4%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/4	Weekly Change	YTD Change
DJIA	33,147.25	35,459.29	35,065.62	-1.11%	5.79%
Nasdaq	10,466.48	14,316.66	13,909.24	-2.85%	32.89%
S&P 500	3,839.50	4,582.23	4,478.03	-2.27%	16.63%
Russell 2000	1,761.25	1,981.54	1,957.46	-1.22%	11.14%
Global Dow	3,702.71	4,245.17	4,164.25	-1.91%	12.46%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	3.96%	4.06%	10 bps	19 bps
US Dollar-DXY	103.48	101.64	102.02	0.37%	-1.41%
Crude Oil-CL=F	$80.41	$80.60	$82.62	2.51%	2.75%
Gold-GC=F	$1,829.70	$1,997.70	$1,977.20	-1.03%	8.06%

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

• Employment slowed in July, with the addition of 187,000 new jobs, well below the average monthly gain of 312,000 over the prior 12 months. In July, job gains occurred in health care, social assistance, financial activities, and wholesale trade. The unemployment rate ticked down 0.1 percentage point to 3.5%. The labor force participation rate and the employment-population ratio, at 62.6% and 60.4% respectively, were virtually unchanged from the previous month. The total number of unemployed declined by 116,000 to 5.8 million. In July, average hourly earnings rose by $0.14, or 0.4%, to $33.74. Over the past 12 months, average hourly earnings have increased by 4.4%. The average workweek edged down by 0.1 hour to 34.3 hours in July. Employment gains for May and June were revised down by 25,000 and 24,000, respectively. With these revisions, employment in May and June combined was 49,000 lower than previously reported. The revisions for May and June, coupled with July’s figures, indicated job growth decelerated since the first quarter.
• While the overall economy seems to be holding up despite rising interest rates, one sector that apparently has been impacted is manufacturing. According to the latest survey by S&P Global, U.S. manufacturing declined further in July following a downturn in June. New orders contracted, leading firms to scale back their input buying, which caused a depletion in inventories. Purchasing managers also reported a rise in raw material costs, although selling prices remained stable as manufacturers tried to stay competitive and drive sales.
• Unlike manufacturing, the services sector continued to expand in July, but at a slower pace than in the previous month. Business activity and new orders increased, although rising interest rates weighed on customer spending. Nevertheless, exports rose at a faster pace. Meanwhile, cost pressures for service providers softened, with prices rising at the slowest pace since December 2022.
• According to the latest Job Openings and Labor Turnover report, the number of job openings in June, at 9.6 million, was little changed from the previous month. The number of hires decreased by 326,000 in June from May, while total separations fell by 288,000. Within separations, the number of quits (voluntary separations initiated by the employee) decreased by 295,000 in June, while the number of layoffs and discharges changed minimally from May.
• The national average retail price for regular gasoline was $3.757 per gallon on July 31, $0.161 per gallon higher than the prior week’s price but $0.435 less than a year ago. Also, as of July 31, the East Coast price increased $0.158 to $3.646 per gallon; the Midwest price climbed $0.208 to $3.612 per gallon; the Gulf Coast price rose $0.173 to $3.416 per gallon; the Rocky Mountain price increased $0.118 to $3.873 per gallon; and the West Coast price advanced $0.077 to $4.616 per gallon.
• For the week ended July 29, there were 227,000 new claims for unemployment insurance, an increase of 6,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 22 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 22 was 1,700,000, an increase of 21,000 from the previous week’s level, which was revised down by 11,000. States and territories with the highest insured unemployment rates for the week ended July 15 were Puerto Rico (2.6%), New Jersey (2.5%), California (2.3%), Rhode Island (2.2%), Connecticut (2.1%), Massachusetts (2.0%), New York (1.8%), Oregon (1.8%), Pennsylvania (1.8%), and Minnesota (1.7%). The largest increases in initial claims for unemployment insurance for the week ended July 22 were in Vermont (+239), Oklahoma (+93), West Virginia (+41), the Virgin Islands (+23), and South Dakota (+8), while the largest decreases were in New York (-9,526), California (-5,310), Georgia (-2,853), Pennsylvania (-2,816), and South Carolina (-2,545).

Eye on the Week Ahead

Inflation data for July is available this week. The most recent Consumer Price Index showed prices rose 0.2% in June, while the 12-month increase was 3.0%. The Producer Price Index revealed prices inched up 0.1% in June and 0.1% over the last 12 months. Inflationary pressures are clearly waning, while the economy has shown resilience.

The Markets (as of market close July 31, 2023)

Stocks closed higher in July, with each of the benchmark indexes listed here posting notable gains. Both the stock market in particular, and the economy in general, have proven to be resilient in 2023, despite rising interest rates.

The Federal Reserve, in its endeavor to bring inflation down to the government’s 2.0% target, hiked interest rates another 25.0 basis points in July, to the highest level in 22 years (see below). However, there are clear signs that inflation is finally receding. The Consumer Price Index and the personal consumption expenditures price index saw their respective 12-month rates fall to the lowest levels in nearly two years. Import and export prices dipped lower in July, as did producer prices.

The battle to reign in rising prices has also been waged throughout much of the world. While several countries in Europe and Canada have seen inflationary pressures begin to slide, they remain above preferred target rates.

Consumer spending, the bellwether of economic growth, continued to increase, although not quite at the pace set earlier in the year. The same can be said for gross domestic product, which accelerated in the second quarter and has continued to advance since the second quarter of 2022.

Employment also remained strong, with more than 200,000 new jobs added, while the unemployment rate sat at 3.6%. Wages continued to rise, however, increasing nearly 4.5% over the last 12 months. Unemployment claims are up from a year ago (see below) but remain well under the ballooning figures seen during the height of the COVID pandemic.

While many economic indicators showed strength last month, several sectors retreated. The housing market has retreated, primarily due to lack of inventory and advancing mortgage rates. Sales of new and existing homes floundered, although home prices remained strong.

Industrial production declined (see below), having fallen for two straight months. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, purchasing managers also noted a retraction in manufacturing.

While the economy remained relatively strong, the stock market proved equally robust. The S&P 500 and the Nasdaq enjoyed five straight months of gains, closing out their best seven-month stretch to start the year since 1997. Year to date, the Nasdaq is up more than 37.0%, while the S&P 500 exceeded 19.0%. In July, the Dow saw a run of 13 consecutive sessions with gains.

Last month, all of the market sectors advanced. Some notable performers included energy (8.0%), communication services (7.8%), financials (5.7%), and materials (4.0%). Information technology rose 4.5%, driven higher by rising artificial intelligence stocks.

Bond prices fell lower in July, with yields increasing over the previous month. Ten-year Treasury yields rose 14.0 basis points from June. The 2-year Treasury yield ended July at 4.85%, down 7.0 basis points from a month earlier. The dollar dipped lower against a basket of world currencies. Gold prices ended July higher. Crude oil prices climbed in July for the second straight month. After falling for much of the year, a cutback in crude oil production has driven prices higher. Rising oil prices also impacted prices at the pump. The retail price of regular gasoline was $3.596 per gallon on July 24, $0.025 higher than the price a month earlier but $0.734 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of July 31	Monthly Change	YTD Change
DJIA	33,147.25	34,407.60	35,559.53	3.35%	7.28%
Nasdaq	10,466.48	13,787.92	14,346.02	4.05%	37.07%
S&P 500	3,839.50	4,450.38	4,588.96	3.11%	19.52%
Russell 2000	1,761.25	1,888.73	2,003.18	6.06%	13.74%
Global Dow	3,702.71	4,103.46	4,257.15	3.75%	14.97%
Fed. Funds target rate	4.25%-4.50%	5.00%-5.25%	5.25%-5.50%	25 bps	100 bps
10-year Treasuries	3.87%	3.81%	3.95%	14 bps	8 bps
US Dollar-DXY	103.48	102.93	101.89	-1.01%	-1.54%
Crude Oil-CL=F	$80.41	$70.47	$81.76	16.02%	1.68%
Gold-GC=F	$1,829.70	$1,926.20	$2,003.70	4.02%	9.51%

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 209,000 in June from May compared with an average monthly gain of 278,000 so far this year. In June, employment trended upward in government, health care, social assistance, and construction. The unemployment rate edged down 0.1 percentage point to 3.6%. In June, the number of unemployed persons fell by 140,000 to 5.9 million. The employment-population ratio, at 60.3%, and the labor force participation rate, at 62.6%, were unchanged in June from the previous month. Both measures have shown little net change since early 2022. In June, average hourly earnings increased by $0.12 to $33.58. Over the 12 months ended in June, average hourly earnings rose by 4.4%. The average workweek in June, at 34.4 hours, edged up 0.1 hour from May.
• There were 221,000 initial claims for unemployment insurance for the week ended July 22, 2023. The total number of workers receiving unemployment insurance was 1,690,000. By comparison, over the same period last year, there were 211,000 initial claims for unemployment insurance, and the total number of claims paid was 1,317,000.
• FOMC/interest rates: The Federal Open Market Committee raised the federal funds target range rate by 25.0 basis points in July, bringing the target range for the federal funds rate to its highest level since 2001. The Committee noted that inflation remained elevated, while economic activity expanded at a moderate pace. Job gains have been robust, and the unemployment rate remained low. The FOMC statement indicated that the U.S. banking system was sound and resilient. Overall, the FOMC will base its decisions on available data and “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.”
• GDP/budget: Economic growth remained steady in the second quarter, as gross domestic product increased 2.4%, compared with a 2.0% increase in the first quarter. The acceleration in second-quarter GDP compared to the previous quarter primarily reflected increases in private inventory investment and nonresidential fixed investment. Consumer spending, as measured by personal consumption expenditures, rose 1.6% in the second quarter compared to a 4.2% increase in the first quarter. Consumer spending on long-lasting durable goods inched up 0.4% in the second quarter after advancing 16.3% in the prior quarter. Spending on services rose 2.1% in the second quarter (3.2% in the first quarter). Nonresidential fixed investment increased 7.7% after rising 0.6% in the first quarter. Residential fixed investment fell 4.2% in the second quarter, little changed from the first quarter (-4.0%). Exports decreased 10.8% in the second quarter, following an increase of 7.8% in the first quarter. Imports, which are a negative in the calculation of GDP, decreased 7.8% in the second quarter after advancing 2.0% in the previous quarter. Consumer prices increased 2.6% in the second quarter compared to a 4.1% advance in the first quarter. Excluding food and energy, consumer prices advanced 4.8% in the second quarter (4.9% in the first quarter).
• The federal budget had a $227.8 billion deficit in June, well above the year-earlier deficit of $88.8 billion. The deficit for the first nine months of fiscal year 2023 was $1.393 trillion compared to $515.1 billion through the comparable period of the previous fiscal year. In June, government receipts totaled $418.3 billion for the month and $3.413 trillion for the current fiscal year. Government outlays were $646.1 billion in June and $4.805 trillion through the first nine months of fiscal year 2023. By comparison, receipts in June 2022 were $460.8 billion and $3.835 trillion through the first nine months of the previous fiscal year. Expenditures were $549.6 billion in June 2022 and $4.350 trillion through the comparable period in FY22.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.5% in June and 9.1% since June 2022. Personal income and disposable personal income rose 0.3% in June, following a 0.5% increase in May. Consumer prices rose 0.2% in June, as did prices less food and energy. However, prices have risen 3.0% since June 2022. This is the lowest 12-month increase in consumer prices since the year ended in March 2021.
• The Consumer Price Index rose 0.2% in June after increasing 0.1% in May. Over the 12 months ended in June, the CPI advanced 3.0%, down from 4.0% for the year ended in May. This is the lowest 12-month rate since March 2021. Excluding food and energy prices, the CPI rose 0.2% in June and 4.8% over the last 12 months, marking the lowest 12-month rate since October 2021. Prices for shelter, which rose 0.4%, contributed more than 70.0% of the overall increase in the June CPI. Also advancing in June were prices for food (0.2%), energy (0.6%), and apparel (0.3%). For the 12 months ended in June, food prices have increased 3.0%, while energy prices have fallen 16.7%.
• Prices that producers received for goods and services inched up 0.1% in June, following a 0.3% decline in the previous month. Producer prices increased 0.1% for the 12 months ended in June, the lowest 12-month rate since August 2020. Driving the overall increase in producer prices was a 0.2% jump in prices for services. Goods prices were flat. Producer prices excluding food and energy rose 0.1% in June and 2.4% for the year. Energy prices rose 0.7% in June but fell 23.9% since June 2022. Food prices dipped 0.1% in June but were up 0.2% for the 12 months ended in June.
• Housing: Sales of existing homes decreased 3.3% in June. Since June 2022, existing-home sales dropped 18.9%. According to the report from the National Association of Realtors®, sales have fallen 23.0% during the first half of the year. In June, total existing-home inventory sat at a 3.1-month supply at the current sales pace. The dearth of available homes for sale has negatively impacted transactions. The median existing-home price was $410,200 in June, the second-highest price of all time and down only 0.9% from the record-high of $413,800 in June 2022. Sales of existing single-family homes dropped 3.4% in June and 18.8% from June 2022. The median existing single-family home price was $416,000 in June, up from the May price of $401,500 but well below the June 2022 price of $420,900.
• New single-family home sales declined in June, falling 2.5%, marking the first monthly decrease since February. Despite the June decrease, sales were up 23.8% from a year earlier. The median sales price of new single-family houses sold in June was $415,400 ($417,300 in May). The June average sales price was $494,700 ($488,700 in May). The inventory of new single-family homes for sale in June increased to 7.4 months, up from 7.2 months in May.
• Manufacturing: Industrial production declined 0.5% in June after falling 0.2% in May. Manufacturing decreased 0.3% in June, driven lower, in part, by a 3.0% decrease in motor vehicles and parts, and a 1.6% decline in petroleum. In June, mining slid 0.2%, while utilities dropped 2.6%. Total industrial production in June was 0.4% below its year-earlier level. Most major market groups posted declines in June. Consumer durables fell 2.7%, led by decreases in appliances, furniture, and carpeting (-3.8%) and automotive products (-3.6%). The decrease of 0.9% for consumer nondurables reflected declines in clothing (-2.1%), energy (-1.8%), and food and tobacco (-1.3%).
• New orders for durable goods rose for the fourth straight month after increasing 4.7% in June. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 6.2%. Transportation equipment, also up four consecutive months, led the increase, climbing 12.1%.
• Imports and exports: June saw both import and export prices decrease. Import prices fell 0.2%, following a 0.4% decline in May. The June drop in import prices was the fifth decrease out of the first six months of 2023. Imports declined 6.1% over the past year, the largest 12-month decrease since the year ended May 2020. Import fuel prices rose 0.8% in June, offset by a 0.4% decline in nonfuel import prices. Export prices fell 0.9% in June after declining 1.9% in the previous month. Lower prices for nonagricultural exports and agricultural exports in June contributed to the overall decrease. Export prices fell 12.0% from June 2022 to June 2023, the largest over-the-year decline since the series was first published in September 1984.
• The international trade in goods deficit fell $4.0 billion, or 4.4%, in June. Exports of goods increased 0.2% from May, while imports of goods decreased 1.4%.
• The latest information on international trade in goods and services, released July 6, was for May and revealed that the goods and services trade deficit fell $5.5 billion, or 7.3%, from April. Exports for May were $2.4 billion, or 0.8%, below April exports. Imports were $7.5 billion, or 2.3%, less than April imports. Year to date, the goods and services deficit decreased $101.7 billion, or 22.8%, from the same period in 2022. Exports increased $48.0 billion, or 3.9%. Imports decreased $53.7 billion, or 3.2%.
• International markets: Inflation continued to be the dominant topic last month. In the United Kingdom, although consumer prices inched up 0.1% in June, the 12-month rate remained elevated at 7.9%, still about 6.0 percentage points higher than the Bank of England’s target. In France, consumer prices rose 0.2% for the month, while falling from an annual rate of 5.1% to 4.5%. The 12-month rate of inflation in the Eurozone dipped from 6.1% to 5.5%, while Germany saw consumer prices remain at 6.4% for the 12 months ended in June. China, on the other hand, has seen consumer prices fall, which has depleted corporate profits and could lead to a reduction in the workforce. The prospects of Chinese deflation could benefit global trade partners, such as the United States, by easing product prices. However, China’s slowing economy could also reduce that country’s demand for materials and consumer goods, which would negatively impact world trade. For July, the STOXX Europe 600 Index increased 2.3%; the United Kingdom’s FTSE rose 2.3%; Japan’s Nikkei 225 Index fell 1.7%; and China’s Shanghai Composite Index ticked up 1.5%.
• Consumer confidence: Consumer confidence sits at the highest level since July 2021. The Conference Board Consumer Confidence Index® increased in July to 117.0, up from 110.1 in June. The July increase marked the second straight monthly gain in consumer confidence. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, improved to 160.0 in July, up from 155.3 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, rose to 88.3 in July from 80.0 in June. Importantly, according to the Conference Board’s report, the Expectations Index climbed above 80.0, the level associated with a recession. Despite rising interest rates, consumers are more upbeat, likely reflecting falling inflation and a tight labor market.

Eye on the Month Ahead

Investors will focus on corporate earnings and the labor market in August. The Federal Open Market Committee does not meet in August, so there will be no change to the Federal Funds target rate. Manufacturing, which has slowed during the summer months, looks to pick up steam in August.