Month: September 2023

The Markets (as of market close September 22, 2023)

Last week was a tough one for the markets. Each of the benchmark indexes listed here fell, with the Nasdaq notching its largest weekly decline since March. Many of the market sectors decreased, with only information technology and energy posting modest gains. The yield on 10-year Treasuries, an important indicator of the economy, climbed 11.0 basis points, reaching a 16-year high earlier in the week. The Federal Reserve projected that interest rates would remain higher for longer than expected, which might lead to a slowing of the economy. Crude oil prices ended last week slipping marginally. The dollar and gold prices eked out gains.

Stocks opened last week relatively flat as investors awaited the Federal Open Market Committee’s upcoming interest-rate policy meeting and Fed Chair Jerome Powell’s subsequent press conference. The Dow, the S&P 500, and the Nasdaq gained less than 0.1%, while the Russell 2000 (-0.7%) and the Global Dow (-0.4%) declined. Yields on 10-year Treasuries dipped 0.3 basis points to end last Monday’s session at 4.31%. Crude oil prices rose 1.3%, settling at $91.95 per barrel. The dollar slid 0.2%, while gold prices rose 0.4%.

The markets ended lower last Tuesday on rising crude oil prices and higher bond yields. Declining growth stocks led the downturn, while the majority of the market sectors fell, with only health care, information technology, and communication services gaining. Each of the benchmark indexes listed here lost value with the exception of the Global Dow, which ended flat. The Russell 2000 (-0.4%) and the Dow (-0.3%) fell the furthest, followed by the S&P 500 and the Nasdaq, which slid 0.2%. Ten-year Treasury yields added 4.6 basis points to close at 4.36%. Crude oil prices increased 0.4%, reaching $91.59 per barrel. The dollar and gold prices dipped less than 0.1%.

Last Wednesday saw stocks lose value, despite the Federal Reserve opting to maintain interest rates at their current level (see below). However, Fed projections indicated that interest rates would remain higher for longer, which may have chilled investors. The Nasdaq fell 1.5%, followed by the S&P 500 (-0.9%), the Russell 2000 (-0.8%), the Global Dow (-0.4%), and the Dow (-0.2%). Yields on 10-year Treasuries dipped 1.6 basis points to 4.34%. Crude oil prices settled at $90.27, a decline of 1.0%. The dollar and gold prices advanced.

Stocks continued to tumble last Thursday, while the dollar hit its highest rate since March. Ten-year Treasury yields rose 13.1 basis points to 4.48%, the highest value since the 2008 global financial crisis. Wednesday’s comments by Fed Chair Jerome Powell (see below) likely carried over into Thursday’s trading. Each of the benchmark indexes listed here fell more than 1.0%, led by the Nasdaq (-1.8%), followed by the S&P 500 and the Russell 2000 (-1.6%), the Global Dow (-1.5%), and the Dow (-1.1%). The dollar rose 0.3%, settling at $105.41 against a basket of world currencies. Gold prices declined 1.4%. Crude oil prices fell for the second straight day after slipping 0.1% to $89.58 per barrel.

Last Friday saw Wall Street teeter between gains and losses, ultimately closing lower for the fourth straight session. The Global Dow slipped 0.4%, the Russell 2000 and the Dow fell 0.3%, the S&P 500 dipped 0.2%, and the Nasdaq lost 0.1%. Ten-year Treasury yields declined 4.2 basis points to 4.43%. Crude oil prices rebounded from earlier losses after gaining 0.8%. The dollar and gold prices advanced.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/22	Weekly Change	YTD Change
DJIA	33,147.25	34,618.24	33,963.84	-1.89%	2.46%
Nasdaq	10,466.48	13,708.33	13,211.81	-3.62%	26.23%
S&P 500	3,839.50	4,450.32	4,320.06	-2.93%	12.52%
Russell 2000	1,761.25	1,847.03	1,776.50	-3.82%	0.87%
Global Dow	3,702.71	4,136.95	4,041.49	-2.31%	9.15%
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%	4.32%	4.43%	11 bps	56 bps
US Dollar-DXY	103.48	105.34	105.61	0.26%	2.06%
Crude Oil-CL=F	$80.41	$91.14	$90.36	-0.86%	12.37%
Gold-GC=F	$1,829.70	$1,944.50	$1,945.00	0.03%	6.30%

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 Federal Open Market Committee decided to maintain the current target range for the federal funds rate at 5.25%-5.50%. Striving to achieve maximum employment and inflation at the rate of 2.0%, the Committee suggested that it would continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2.0% over time, the Committee said it would 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. Nevertheless, the Committee projected interest rates would end the year at 5.50%-5.75%, implying another rate hike before the end of 2023. However, the FOMC stated that it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. At Fed Chair Jerome Powell’s press conference following the meeting, he indicated inflation had moderated somewhat since last year but had a long way to go before reaching the 2.0% target.
• August saw a spike in the number of issued residential building permits, after climbing 6.9% above the July estimate. However, compared to August 2022, building permits were down 2.7%. The number of single-family building permits issued in August was 2.0% above the previous month’s total. Housing starts declined 11.3% in August and 14.8% below the August 2022 rate. The decline in housing starts may have been attributable to the increase in housing completions, which rose 5.3% in August from July, and 3.8% above the August 2022 rate. However, single-family completions were down 6.6% last month.
• Sales of existing homes declined for the third consecutive month after retreating 0.7% in August. Existing home sales were down 15.3% from August 2022. The median existing home sales price was $407,100, up from July’s price of $405,700 and well above the August 2022 price of $391,700. The August median sales price has surpassed $400,000 for the third straight month. The number of existing homes for sale in August sat at a 3.3-month supply at the current sales pace, unchanged from the July estimate. Sales of existing single-family homes decreased in August, down 1.4% from July and 15.3% from August 2022. The median existing single-family home price in August was $413,500, up from the July price of $411,200 and higher than the August 2022 price of $398,800.
• The national average retail price for regular gasoline was $3.878 per gallon on September 18, $0.056 per gallon higher than the prior week’s price and $0.224 more than a year ago. Also, as of September 18, the East Coast price increased $0.021 to $3.654 per gallon; the Midwest price rose $0.027 to $3.710 per gallon; the Gulf Coast price climbed $0.065 to $3.431 per gallon; the Rocky Mountain price increased $0.058 to $4.071 per gallon; and the West Coast price advanced $0.194 to $5.163 per gallon.
• For the week ended September 16, there were 201,000 new claims for unemployment insurance, a decrease of 20,000 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 September 9 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 9 was 1,662,000, a decrease of 21,000 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 September 2 were in New Jersey (2.5%), Hawaii (2.3%), California (2.0%), New York (1.9%), Puerto Rico (1.9%), Rhode Island (1.8%), Massachusetts (1.7%), Oregon (1.6%), and Pennsylvania (1.5%). The largest increases in initial claims for unemployment insurance for the week ended September 9 were in Indiana (+2,627), Florida (+783), Kentucky (+308), Nebraska (+273), and Iowa (+162), while the largest decreases were in Ohio (-3,425), Missouri (-3,196), New York (-3,051), California (-1,880), and Texas (-1,393).

Eye on the Week Ahead

This is a very busy week for the release of some important economic data. The final estimate of second-quarter gross domestic product is available. The prior estimate showed the economy accelerated at an annualized rate of 2.1%. Also out this week is the August release of the report on personal income, consumer spending, and consumer prices. The previous month saw income creep up 0.2%, while consumer spending rose 0.8%. The personal consumption expenditures (PCE) price index, an indicator of inflation preferred by the Federal Reserve, revealed prices rose 0.2% in July and 3.3% over the past 12 months. As with the Consumer Price Index, rising energy prices, particularly oil and gasoline, are expected to impact the overall PCE price index.

The Markets (as of market close September 15, 2023)

The markets turned in a lackluster week, with only the Dow able to eke out a gain. The remaining benchmark indexes listed here lost value as investors tried to digest mixed economic data, this week’s Federal Reserve meeting, and the impact of the United Auto Workers (UAW) strike. Ten-year Treasury yields settled at 4.32%, the third-highest yield of the year. Rising long-term rates generally impact growth stocks, such as tech shares, by potentially lowering the value of future profits. While most of the market sectors gained ground last week, information technology fell 2.0%. Crude oil prices vaulted past the $90.00 per barrel mark, driven by output cuts from Saudi Arabia and Russia against a backdrop of surging global consumption.

Wall Street kicked off last week on a high note as stocks bounced back from the previous week’s declines. Consumer discretionary and communications led the market sectors, driving each of the benchmark indexes listed here higher. The Nasdaq climbed 1.1%, followed by the Global Dow (0.8%), the S&P 500 (0.7%), the Dow (0.3%), and the Russell 2000 (0.2%). The dollar and crude oil prices declined, while gold prices inched higher. Ten-year Treasury yields settled at 4.28% after adding 3.0 basis points on the day.

Tech stocks underperformed last Tuesday, sending stocks lower. Investors also geared up for Wednesday’s Consumer Price Index, which was expected to show inflation tick higher due to rising energy prices. The Nasdaq slid 1.0% and the S&P 500 fell 0.6%. The Dow and the Global Dow lost 0.1%. The Russell 2000 ended the session flat. Yields on 10-year Treasuries dipped 2.4 basis points to 4.26%. Crude oil prices surged 1.8%, settling at $88.89 per barrel. The dollar inched higher, while gold prices fell 0.6%.

The markets closed mixed last Wednesday following the release of the Consumer Price Index (see below). As predicted, rising gasoline prices pushed the CPI up to 3.7% on an annual basis, giving the Federal Reserve reason to keep interest rates unchanged following this week’s meeting. Interest-rate sensitive growth stocks including tech and communications shares, rose higher, while industrials, real estate, materials, and energy floundered. By the close of trading, the Nasdaq rose 0.3% and the S&P 500 inched up 0.1%. The Russell 2000 fell 0.8%, the Dow dipped 0.2%, and the Global Dow was flat. Ten-year Treasury yields slipped to 4.24%. Crude oil prices edged down 0.1% to $88.77 per barrel. The dollar gained 0.1%, while gold prices fell 0.2%.

Wall Street rebounded last Thursday, with each of the benchmark indexes listed here climbing higher. The Russell 2000 led the way, gaining 1.4%, while the Dow and the Global Dow advanced 1.0%. The S&P 500 and the Nasdaq rose 0.8%. Investors may have seen a rise in inflation data as support for the Federal Reserve to “pause” interest-rate hikes. Markets chose to ignore the 10th straight interest-rate increase by the European Central Bank, as all 11 market sectors finished higher. Crude oil prices soared 2.2%, reaching $90.44 per barrel, marking the first time prices surpassed $90.00 per barrel since November 2022. The yield on 10-year Treasuries added 3.9 basis points to settle at 4.28%. The dollar advanced 0.5%, while gold prices were relatively flat.

Stocks slid lower to close out last week. The Nasdaq fell 1.6%, the S&P 500 lost 1.2%, the Russell 2000 declined 1.1%, the Dow declined 0.8%, and the Global Dow dipped 0.3%. Investors may have been a bit skiddish as they await this week’s Federal Reserve meeting. Also, a partial strike by UAW may have weighed on investors. Crude oil continued to climb higher as prices rose over $91.00 per barrel. The dollar ticked lower, while gold prices advanced by 0.6%. Ten-year Treasury yields ended the session at 4.32%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/15	Weekly Change	YTD Change
DJIA	33,147.25	34,576.59	34,618.24	0.12%	4.44%
Nasdaq	10,466.48	13,761.53	13,708.33	-0.39%	30.97%
S&P 500	3,839.50	4,457.49	4,450.32	-0.16%	15.91%
Russell 2000	1,761.25	1,851.54	1,847.03	-0.24%	4.87%
Global Dow	3,702.71	4,074.16	4,136.95	1.54%	11.73%
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%	4.32%	7 bps	45 bps
US Dollar-DXY	103.48	105.05	105.34	0.28%	1.80%
Crude Oil-CL=F	$80.41	$87.30	$91.14	4.40%	13.34%
Gold-GC=F	$1,829.70	$1,942.80	$1,944.50	0.09%	6.27%

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 Consumer Price Index rose 0.6% in August after increasing 0.2% in July. Surging gasoline prices accounted for more than half of the overall CPI increase. Also contributing to the August monthly increase was continued advancement in shelter prices, which rose for the 40th consecutive month. Food prices increased 0.2% in August, matching the July advance. Consumer prices less food and energy (core prices) rose 0.3% in August, following a 0.2% increase in July. Since August 2022, the CPI has increased 3.7%, a larger increase than the 3.2% advance for the 12 months ended in July. Over the 12 months ended in August, core prices rose 4.3%, down from 4.7% for the 12 months ended in July. Since August 2022, prices for food rose 4.3%, new vehicles increased 2.9%, used cars and trucks fell 6.6%, apparel rose 3.1%, and shelter advanced 7.3%. Despite the recent increase in oil and gas prices, energy prices were down 3.6% since last August.
• The Producer Price Index increased 0.7% in August following a 0.4% jump in the previous month. The August advance is the largest since June 2022. Producer prices have risen 1.6% for the 12 months ended in August. Producer prices for goods increased 2.0% last month, accounting for 80.0% of the August jump in the PPI. Over 60.0% of the August rise in goods prices can be traced to a 20.0% increase in prices for gasoline. Prices for services inched up 0.2% in August. Producer prices less foods, energy, and trade services increased 0.3% in August, the same as in July. For the 12 months ended in August, prices less foods, energy, and trade services rose 3.0%, the largest advance since moving up 3.4% for the 12 months ended in April.
• Retail and food services sales rose 0.6% in August from the previous month, and 2.5% since August 2022. Retail trade sales also increased 0.6% last month and are up 1.6% over the last 12 months. Of particular note, gasoline station sales were down 10.3% from last year, while sales at food services and drinking places were up 8.5% and nonstore retail sales increased 7.2%.
• Both import and export prices advanced in August. Import prices rose 0.5% last month after ticking up 0.1% in July. The August increase in import prices was the largest since May 2022. Fuel prices, which increased 6.7%, contributed to the jump in import prices. Excluding fuel, import prices actually declined 0.1%. Despite the increase last month, import prices are down 3.0% since August 2022. Export prices climbed 1.3% in August, the largest one-month increase since May 2022. Higher nonagricultural prices, led by rising costs for industrial supplies and materials, more than offset a decline in agricultural prices. Since August 2022, export prices have fallen 5.5%.
• Industrial production increased 0.4% in August and manufacturing output inched up 0.1%. The August reading for manufacturing was held back by a drop of 5.0% in the output of motor vehicles and parts; otherwise, factory output rose 0.6%. Mining advanced 1.4% and utilities climbed 0.9%. Total industrial production in August was 0.2% above its August 2022 level.
• The federal government monthly deficit decreased $89.3 billion in August. Government receipts were $283.1 billion, an increase of about $7.0 billion from the previous month. Government outlays were $193.9 billion, a decrease of $303.0 billion from July. For fiscal year 2023, the deficit sits at $1.5 trillion, $945.7 billion greater than the same period for fiscal year 2022.
• The national average retail price for regular gasoline was $3.822 per gallon on September 11, $0.015 per gallon higher than the prior week’s price and $0.132 more than a year ago. Also, as of September 11, the East Coast price decreased $0.022 to $3.633 per gallon; the Midwest price rose $0.053 to $3.683 per gallon; the Gulf Coast price edged up $0.002 to $3.366 per gallon; the Rocky Mountain price increased $0.014 to $4.013 per gallon; and the West Coast price advanced $0.057 to $4.969 per gallon.
• For the week ended September 9, there were 220,000 new claims for unemployment insurance, an increase of 3,000 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 September 2 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 2 was 1,688,000, an increase of 4,000 from the previous week’s level, which was revised up by 5,000. States and territories with the highest insured unemployment rates for the week ended August 26 were in New Jersey (2.6%), Hawaii (2.3%), California (2.2%), Rhode Island (2.1%), Connecticut (1.9%), Massachusetts (1.9%), New York (1.9%), Puerto Rico (1.9%), Oregon (1.7%), Minnesota (1.6%), and Pennsylvania (1.6%). The largest increases in initial claims for unemployment insurance for the week ended September 2 were in Missouri (+3,215), Indiana (+693), California (+556), Connecticut (+465), and Washington (+446), while the largest decreases were in Ohio (-2,759), New York (-2,228), Oregon (-804), Florida (-581), and Michigan (-532).

Eye on the Week Ahead

August data on the housing sector is available this week with reports on housing starts and existing home sales. However, most attention will be focused on the Federal Open Market Committee meeting, which ends on Wednesday. Several strategists estimate a 50% whether the Fed will hike interest rates at this time.

The Markets (as of market close September 8, 2023)

Wall Street saw stocks slide lower last week, with each of the benchmark indexes closing in the red. Trading was choppy throughout the holiday-shortened week as traders anticipated this week’s inflation data. The Russell 2000 fell the furthest, followed by the Nasdaq, the S&P 500, the Global Dow, and the Dow. Crude oil prices advanced for the second straight week and are on track for a second consecutive monthly gain as some OPEC+ including Russian extended supply cuts. As investors await this week’s Consumer Price Index, rising oil prices could push overall prices higher than expected. Last week, 10-year Treasury yields rose as did the dollar, while gold prices declined.

Stocks opened last Tuesday in the red, with each of the benchmark indexes losing value. The Russell 2000 fell 2.1%, followed by the Global Dow (-0.8%), the Dow (-0.6%), the S&P 500 (-0.4%), and the Nasdaq (-0.1%). Crude oil prices reached $86.71 per barrel, a 2023 high, after Saudi Arabia and Russia said they would extend production cuts for the remainder of the year. Ten-year Treasury yields climbed 9.5 basis points to reach 4.26%. The dollar jumped 0.7%, while gold prices slid 0.8%. Ten-year Treasury yields ticked up 2.2 basis points to 4.29%. The dollar was flat. Gold prices slid 0.5%.

Wall Street saw stocks slide again last Wednesday on fears of rising inflation. Crude oil prices continued to rise, climbing to $87.55 per barrel. Interest rate-sensitive tech shares lagged, with information technology falling 1.4%. The Nasdaq fell the furthest among the benchmark indexes listed here after losing 1.1%. The S&P 500 dropped 0.7%, followed by the Dow (-0.6%), the Global Dow (-0.4%), and the Russell 2000 (-0.3%).

Last Thursday, the Nasdaq posted its fourth straight session loss, while the S&P 500 fell for the third consecutive day. Tech shares pulled the benchmark indexes lower as China reported its intent to broaden its ban on Apple iPhones. The Dow inched up 0.2% on the day, the only index of those listed here to post a gain. The Russell 2000 (-1.0%) and the Global Dow (-0.4%) declined, along with the Nasdaq (-0.9%) and the S&P 500 (-0.3%). The yield on 10-year Treasuries slipped 3.0 basis points to 4.26%. Crude oil prices reversed an upward trend, falling 0.8% to settle at $86.86 per barrel. Both the dollar and gold prices declined.

Stocks closed mostly higher last Friday. The Dow added 0.2%, while the Nasdaq and the S&P 500 each inched up 0.1%. The Russell 2000 and the Global Dow dipped 0.1% and 0.2%, respectively. Ten-year Treasury yields were flat. Thursday’s decline in crude oil prices proved short-lived as prices per barrel rose 0.5% on Friday. The dollar and gold prices were unchanged.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/8	Weekly Change	YTD Change
DJIA	33,147.25	34,837.71	34,576.59	-0.75%	4.31%
Nasdaq	10,466.48	14,031.81	13,761.53	-1.93%	31.48%
S&P 500	3,839.50	4,515.77	4,457.49	-1.29%	16.10%
Russell 2000	1,761.25	1,920.83	1,851.54	-3.61%	5.13%
Global Dow	3,702.71	4,136.77	4,074.16	-1.51%	10.03%
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%	4.17%	4.25%	8 bps	38 bps
US Dollar-DXY	103.48	104.25	105.06	0.77%	1.52%
Crude Oil-CL=F	$80.41	$85.89	$87.30	1.64%	8.57%
Gold-GC=F	$1,829.70	$1,966.90	$1,942.80	-1.23%	6.18%

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

• The international trade in goods and services deficit was $65.0 billion in July, up $1.3 billion, or 2.0% from the previous month. July exports were $251.7 billion, $3.9 billion, or 1.6%, more than June exports. July imports were $316.7 billion, $5.2 billion, or 1.7%, more than June imports. Year to date, the goods and services deficit decreased $128.3 billion, or 21.4%, from the same period in 2022. Exports increased $27.3 billion, or 1.6%. Imports decreased $101.0 billion, or 4.3%.
• Growth in the services sector slowed in August, according to the latest purchasing managers’ index from S&P Global. Business activity increased at the slowest pace in the past seven months, as a contraction in new business orders weakened output. The drop in client demand was attributed to interest rate increases and elevated inflation. As a result of the decrease in new business, new hirings by service firms were at the slowest pace in nearly a year.
• The national average retail price for regular gasoline was $3.807 per gallon on September 4, $0.006 per gallon lower than the prior week’s price but $0.061 more than a year ago. Also, as of September 4, the East Coast price decreased $0.023 to $3.655 per gallon; the Midwest price fell $0.007 to $3.630 per gallon; the Gulf Coast price dropped $0.014 to $3.364 per gallon; the Rocky Mountain price increased $0.024 to $3.999 per gallon; and the West Coast price advanced $0.032 to $4.912 per gallon.
• For the week ended September 2, there were 216,000 new claims for unemployment insurance, a decrease of 13,000 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 26 was 1.1%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 26 was 1,679,000, a decrease of 40,000 from the previous week’s level, which was revised down by 6,000. States and territories with the highest insured unemployment rates for the week ended August 19 were New Jersey (2.6%), California (2.2%), Puerto Rico (2.1%), Rhode Island (2.1%), Hawaii (2.0%), Massachusetts (2.0%), New York (1.9%), Connecticut (1.8%), Oregon (1.8%), and Pennsylvania (1.8%). The largest increases in initial claims for unemployment insurance for the week ended August 26 were in New York (+3,581), Oregon (+890), Michigan (+722), Virginia (+466), and Oklahoma (+284), while the largest decreases were in Ohio (-4,632), Missouri (-1,583), Hawaii (-1,413), Texas (-666), and Connecticut (-464).

Eye on the Week Ahead

The latest reports on the Consumer Price Index and the Producer Price Index are out this week. Consumer prices edged up 0.2% in July and 3.2% for the 12 months ended in July. Producer prices rose 0.3% in July and 0.8% for the year.

The Markets (as of market close September 1, 2023)

The markets enjoyed their best week since June, with each of the benchmark indexes listed here posting solid gains. The latest jobs report (see below) showed the labor market has slowed over the past few months, while unemployment has risen, giving investors reason to think the Federal Reserve may pause interest rate hikes later this month. The majority of the market sectors moved higher, with information technology (5.3%) and energy (4.9%), leading the way. Crude oil prices ended a two-week losing streak after rising more than 7.0% last week and over 30.0% over the past two months as the Saudi-led OPEC+ extended production cuts. The dollar and gold prices closed higher.

Stocks opened last week higher as investors looked ahead to inflation data and the August jobs figures scheduled for release later in the week. The Global Dow led the benchmark indexes listed here, gaining 1.0%, followed by the Russell 2000 (0.9%) and the Nasdaq (0.8%), while the S&P 500 and the Dow advanced 0.6%. Ten-year Treasury yields slipped lower, closing at 4.21%. Crude oil prices edged higher, up 0.4% to settle at about $80.13 per barrel. The dollar dipped less than 0.1%, while gold prices rose 0.4%.

Markets notched their third straight day of gains last Tuesday. The Nasdaq climbed 1.7% to lead the benchmark indexes listed here. Following close behind the tech-heavy index were the S&P 500 (1.5%) and the Russell 2000 (1.4%). The Global Dow (1.3%) and the Dow (0.9%) also posted notable gains. A decline in job openings in July (see below) may have boosted investor hopes that the Federal Reserve would pause interest rate hikes, at least when it meets in September. Long-term bond yields declined, with 10-year Treasury yields slipping to 4.12%. Falling bond yields helped support growth stocks, with mega cap growth shares closing higher. Crude oil prices advanced again, jumping 1.4% to settle at $81.25 per barrel. The dollar fell more than 0.5%, while gold prices increased nearly 1.0%.

Each of the benchmark indexes listed here closed last Wednesday higher, notching their fourth consecutive day of gains. Once again, the tech-heavy Nasdaq led the way, climbing 0.5%, followed by the S&P 500, the Russell 2000, and the Global Dow, each of which gained 0.4%. The Dow eked out a 0.1% advance. Ten-year Treasury yields dipped lower, losing 0.4 basis points to sit at 4.11%. Crude oil prices rose to $81.65 per barrel, up 0.6% on the day. The dollar declined 0.4%, while gold prices gained 0.3%.

Stocks closed generally lower last Thursday, with only the Nasdaq able to eke out a 0.1% gain. The Dow fell 0.5%, followed by the Global Dow (-0.3%), while the S&P 500 and the Russell 2000 dipped 0.2%. Crude oil prices continued to surge, climbing 2.4% to settle at $83.58 per barrel, as OPEC+ announced further cuts in production. Ten-year Treasury yields fell 2.5 basis points to 4.09%. The dollar jumped 0.5%, while gold prices declined 0.3%.

Wall Street ended last week on a high note, with stocks climbing higher last Friday, with the exception of the Nasdaq, which ended the session flat. The Russell 2000 rose 1.1%, the Dow gained 0.3%, while the the S&P 500 and the Global Dow inched up 0.2%. Bond prices slid lower, driving yields higher. Ten-year Treasury yields climbed 8.0 basis points, settling at 4.17%. The dollar and gold prices posted gains to end the week. Crude oil prices vaulted 2.7% to $85.89 per barrel.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/1	Weekly Change	YTD Change
DJIA	33,147.25	34,346.90	34,837.71	1.43%	5.10%
Nasdaq	10,466.48	13,590.65	14,031.81	3.25%	34.06%
S&P 500	3,839.50	4,405.71	4,515.77	2.50%	17.61%
Russell 2000	1,761.25	1,853.63	1,920.83	3.63%	9.06%
Global Dow	3,702.71	4,047.26	4,136.77	2.21%	11.72%
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%	4.23%	4.17%	-6 bps	30 bps
US Dollar-DXY	103.48	104.17	104.25	0.08%	0.74%
Crude Oil-CL=F	$80.41	$79.97	$85.89	7.40%	6.82%
Gold-GC=F	$1,829.70	$1,941.70	$1,966.90	1.30%	7.50%

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 latest Personal Income and Outlays report from the Bureau of Economic Analysis, July saw personal income increase 0.2%, although disposable (after-tax) income was unchanged from the previous month. The personal consumption expenditures price index, the preferred inflation indicator of the Federal Reserve, advanced 0.2% in July. Excluding food and energy (core prices), the PCE price index also increased 0.2%. However, over the past 12 months ended in July, consumer prices increased 3.3%, an increase of 0.3 percentage point over the comparable period ended in June. Core prices rose 4.2% since July 2022, up 0.1 percentage point from the 12-month period ended in June, but well below the percentage changes for the 12-month periods ended in March, April, and May. In July, consumer spending rose 0.8%, following an increase of 0.6% in June.
• There were 187,000 new jobs added in August, less than the average monthly gain of 271,000 over the prior 12 months. The August total, coupled with a net downward revision of 110,000 over the previous two months, suggests that hiring has slowed considerably since the spring. In August, job gains occurred in health care, leisure and hospitality, social assistance, and construction. The unemployment rate rose by 0.3 percentage point to 3.8% in August, and the number of unemployed persons increased by 514,000 to 6.4 million. Both measures are similar to a year earlier, when the unemployment rate was 3.7% and the number of unemployed persons was 6.0 million. Among the unemployed, the number of workers who lost jobs and persons who completed temporary jobs increased by 294,000 to 2.9 million in August, offsetting a decrease of 280,000 in July. In August, the labor force participation rate rose by 0.2 percentage point to 62.8% after being flat since March. The employment-population ratio was unchanged over the month at 60.4%. In August, average hourly earnings rose by $0.08, or 0.2%, to $33.82. Over the past 12 months, average hourly earnings have increased by 4.3%. The average workweek edged up by 0.1 hour to 34.4 hours in August.
• The second estimate of gross domestic product for the second quarter revealed that the economy expanded at an annualized rate of 2.1%, comparable to the 2.0% increase in the first quarter. Consumer prices, as measured by the personal consumption expenditures price index, rose 2.5% and 3.7%, excluding food and energy. Consumer spending increased 1.7%, down from 4.2% in the first quarter. Fixed investment advanced 3.9%, driven higher by a 6.1% increase in nonresidential fixed investment. Residential investment dipped 3.6%. Both exports (-10.6%) and imports (-7.0%) declined in the second quarter. Federal government spending increased 1.2%, while state and local government spending advanced 4.7%.
• In July, the number of job openings edged down 338,000 to 8.8 million. Over the month, job openings decreased in professional and business services (-198,000); health care and social assistance (-130,000); state and local government, excluding education (-67,000); state and local government education (-62,000); and federal government (-27,000). By contrast, job openings increased in information (+101,000) and in transportation, warehousing, and utilities (+75,000). The number of hires also declined in July, falling 167,000 to 5.8 million. Total separations decreased 208,000 to 5.5 million. Within separations, the number of quits decreased to 3.5 million (-253,000), while the number of layoffs and discharges changed little.
• The advance report on international trade in goods showed the trade deficit expanded by $2.3 billion, or 2.6%, in July. Exports of goods rose 1.5%, while imports advanced 1.9%.
• Manufacturing contracted further in August. The S&P Global US Manufacturing PMI fell to 47.9 in August, down from 49.0 in July. A reading of less than 50.0 indicates contraction in the manufacturing sector. Manufacturing has trended lower every month since November 2022, expect for a brief uptick in April. The reduction in business conditions were driven by a decline in new orders, which survey respondents blamed on a weakening economy. Demand for goods produced in the U.S. has fallen 13 times in the past 15 months. In addition, export orders decreased for the 15th straight month in August.
• The national average retail price for regular gasoline was $3.813 per gallon on August 28, $0.055 per gallon lower than the prior week’s price and $0.014 less than a year ago. Also, as of August 28, the East Coast price decreased $0.050 to $3.678 per gallon; the Midwest price fell $0.083 to $3.637 per gallon; the Gulf Coast price dropped $0.080 to $3.378 per gallon; the Rocky Mountain price fell $0.064 to $3.075 per gallon; and the West Coast price advanced $0.014 to $4.880 per gallon. According to the U.S. Energy Information Administration, Hurricane Idalia impacted U.S. Gulf Coast production and pipeline facilities. In addition, over the past several weeks, a combination of crude oil production cuts by Saudi Arabia, low U.S. gasoline inventories, and announced refinery maintenance in the Northeast have increased the regular gasoline retail price by 6.0% ($0.22/gal).
• For the week ended August 26, there were 228,000 new claims for unemployment insurance, a decrease of 4,000 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 19 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 19 was 1,725,000, an increase of 28,000 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 12 were New Jersey (2.5%), California (2.2%), Puerto Rico (2.2%), Massachusetts (2.0%), Rhode Island (2.0%), New York (1.9%), Connecticut (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 August 19 were in Hawaii (+3,553), South Carolina (+113), Vermont (+105), New Mexico (+62), and Idaho (+51), while the largest decreases were in Ohio (-5,905), Illinois (-1,266), New Jersey (-1,182), Virginia (-1,149), and California (-1,083).

Eye on the Week Ahead

The first full week of September is a slow one for the release of important economic information. The July report on international trade in goods and services is available this week. The trade deficit fell by over 4.0% in June, with imports declining by 1.0%. Also out this week are the August survey results from purchasing managers in the services sector. Unlike manufacturing, services has seen growth for much of the year.

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

August proved to be a tough month for stocks, with each of the benchmark indexes listed here ending the month notably lower. Investors tried to decipher mixed economic data throughout the month, attempting to gauge the course of the economy, while trying to determine what the Federal Reserve will do with interest rates moving forward.

Speaking of the Federal Reserve, it did not meet in August, so interest rates remained unchanged. However, Fed Chair Jerome Powell spoke at the Jackson Hole Economic Symposium (see below) and reiterated the Fed’s intent to continue its restrictive policy until interest rates fell to 2.0%.

Throughout Europe and North America, countries continued to direct economic policy aimed at curtailing consumer price increases. Though inflation certainly cooled, it remained well above targeted levels, prompting central banks to focus policy toward stifling rising prices.

Consumers increased their spending on durable goods and nondurable goods and services. The increase in spending included higher prices for energy. Gross domestic product accelerated in the second quarter (see below), but at a slower pace than in the first quarter. Nevertheless, the economy has advanced each quarter since the second quarter of 2022.

Job growth slowed since the first quarter. The monthly average for job gains in the second quarter was 228,000 compared to 312,000 in the first quarter. Wages continued to rise, however, increasing nearly 4.4% over the last 12 months. Unemployment claims are up from a year ago (see below).

Corporate profits in the United States rose by 1.6% in the second quarter of 2023, surpassing market expectations that predicted a nearly 6.0% decline. Of the 91.2% of S&P 500 companies that reported earnings results, 78.7% reported earnings above analyst expectations, which surpasses the prior four-quarter average of 73.4% and is well-above the long-term average of 66.4%.

The secondary housing market retreated, primarily due to lack of inventory and advancing mortgage rates. However, sales of new homes advanced. Sale prices for existing homes declined, while prices for new, single-family homes increased.

Industrial production, which had declined for two straight months, picked up the pace, albeit minimally (see below). According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, purchasing managers also noted a retraction in manufacturing. However, the services sector remained strong.

While the economy remained relatively strong, the stock market followed a strong July with a tepid August. The economic-sensitive Russell 2000 was hit the hardest, falling more than 5.0%. The S&P 500 and the Nasdaq each snapped streaks of five straight months of gains. Overall, despite the August downturn, stocks remained in the black for the year.

Each of the market sectors ended August lower, with the exception of energy, which gained 1.3%. Utilities fell more than 6.5%, while consumer staples and real estate dropped more than 3.0%.

Bond prices fell in August, with yields increasing over the previous month. Ten-year Treasury yields rose 18.0 basis points from July. The 2-year Treasury yield ended August at 4.86%, down 5.0 basis points from a month earlier. The dollar climbed higher against a basket of world currencies. Gold prices ended August lower. Crude oil prices climbed in August for the third 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 $3.813 per gallon on August 28, $0.056 higher than the price a month earlier but $0.014 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of August 31	Monthly Change	YTD Change
DJIA	33,147.25	35,559.53	34,721.91	-2.36%	4.75%
Nasdaq	10,466.48	14,346.02	14,034.97	-2.17%	34.09%
S&P 500	3,839.50	4,588.96	4,507.66	-1.77%	17.40%
Russell 2000	1,761.25	2,003.18	1,899.68	-5.17%	7.86%
Global Dow	3,702.71	4,257.15	4,130.12	-2.98%	11.54%
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%	3.95%	4.09%	14 bps	22 bps
US Dollar-DXY	103.48	101.89	103.64	1.72%	0.15%
Crude Oil-CL=F	$80.41	$81.76	$83.53	2.16%	3.88%
Gold-GC=F	$1,829.70	$2,003.70	$1,966.10	-1.88%	7.45%

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 187,000 in July from June, less than the average monthly gain of 312,000 over the prior 12 months. In July, employment trended upward in health care, social assistance, financial activities, and wholesale trade. The unemployment rate edged down 0.1 percentage point for the second straight month to 3.5%. In July, the number of unemployed persons fell by 116,000 to 5.8 million. The employment-population ratio, at 60.4%, ticked up 0.1 percentage point, while the labor force participation rate, at 62.6%, was unchanged. In July, average hourly earnings increased by $0.14 to $33.74. Over the 12 months ended in July, average hourly earnings rose by 4.4%. In July, the average workweek edged down 0.1 hour to 34.3 hours.
• There were 228,000 initial claims for unemployment insurance for the week ended August 26, 2023. The total number of workers receiving unemployment insurance was 1,725,000. By comparison, over the same period last year, there were 206,000 initial claims for unemployment insurance, and the total number of claims paid was 1,343,000.
• FOMC/interest rates: The Federal Open Market Committee did not meet in August. However, Federal Reserve Chair Jerome Powell spoke before the 2023 Jackson Hole Economic Symposium. His remarks reinforced the Fed’s intent to bring inflation down to its 2.0% target. The Fed Chair noted that, although inflation has moved down from its peak, it remains too high. Powell reiterated the Fed’s stance that it is prepared to raise rates further and to maintain its restrictive economic policy until the 2.0% target rate has been achieved. The Federal Reserve is scheduled to meet next in September.
• GDP/budget: Economic growth remained steady in the second quarter, as gross domestic product increased 2.1%, compared with a 2.0% increase in the first quarter. The acceleration in second-quarter GDP compared to the previous quarter primarily reflected a smaller decrease in private inventory investment and an acceleration in nonresidential fixed investment. These movements were partly offset by a downturn in exports, and decelerations in consumer spending and federal government spending. Imports turned down. Consumer spending, as measured by personal consumption expenditures, rose 1.7% in the second quarter compared to a 4.2% increase in the first quarter. Consumer spending on long-lasting durable goods inched down 0.3% in the second quarter after advancing 16.3% in the prior quarter. Spending on services rose 2.2% in the second quarter (3.2% in the first quarter). Nonresidential fixed investment increased 6.1% after rising 0.6% in the first quarter. Residential fixed investment fell 3.6% in the second quarter, little changed from the first quarter (-4.0%). Exports decreased 10.6% 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 7.0% in the second quarter after advancing 2.0% in the previous quarter. Consumer prices increased 2.5% in the second quarter compared to a 4.1% advance in the first quarter. Excluding food and energy, consumer prices advanced 3.7% in the second quarter (4.9% in the first quarter).
• The federal budget had a $220.8 billion deficit in July, nearly $10.0 billion above the July 2022 budget deficit. Through the first 10 months of fiscal year 2023, the deficit was $1.613 trillion compared to $726.1 billion through the comparable period of the previous fiscal year. In July, government receipts totaled $276.2 billion for the month and $3.689 trillion for the current fiscal year. Government outlays were $496.9 billion in July and $5.302 trillion through the first 10 months of fiscal year 2023. By comparison, receipts in July 2022 were $269.3 billion and $4.105 trillion through the first 10 months of the previous fiscal year. Expenditures were $480.4 billion in July 2022 and $4.831 trillion through the comparable period in FY22.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.8% in July and 9.1% since July 2022. Personal income rose 0.2% in July, while disposable personal income was unchanged from June. Consumer prices rose 0.2% in July, matching the June increase. Consumer prices excluding food and energy (core prices) also rose 0.2% in July. However, over the 12 months ended in July, consumer prices increased 3.3%, 0.3 percentage point above the rate for the period ended in June.
• The Consumer Price Index rose 0.2% in July, the same increase as in June. Over the 12 months ended in July, the CPI advanced 3.2%, up from 3.0% for the year ended in June. Core prices, excluding food and energy, rose 0.2% in July and 4.7% over the last 12 months, marking the lowest 12-month rate since October 2021. Prices for shelter, which rose 0.4%, contributed more than 90.0% of the overall increase in the June CPI. Also advancing in July were prices for food (0.2%), energy (0.1%), and medical care commodities (0.5%). For the 12 months ended in July, food prices have increased 4.9%, while energy prices have fallen 12.5%.
• Prices that producers received for goods and services increased 0.3% in July after being unchanged in June. Producer prices increased 0.8% for the 12 months ended in July. Driving the overall increase in producer prices was a 0.5% jump in prices for services. Goods prices inched up 0.1%. Producer prices excluding food, energy, and trade services rose 0.2% in July and 2.7% for the year. Energy prices were unchanged in July but were down 16.8% since July 2022. Food prices advanced 0.5% in July but were down 0.2% for the 12 months ended in July.
• Housing: Sales of existing homes decreased 2.2% in July following a 3.4% decline in June. Since July 2022, existing-home sales dropped 16.6%. According to the report from the National Association of Realtors®, two factors have stifled sales activity: rising mortgage rates and limited inventory. In July, total existing-home inventory sat at a 3.3-month supply at the current sales pace, up from 3.1 months in June. The median existing-home price was $406,700 in July, down from the June price of $410,000. Sales of existing single-family homes dropped 1.9% in July and 16.3% from July 2022. The median existing single-family home price was $412,300 in July, down from the June price of $415,700 but above the July 2022 price of $405,800.
• New single-family home sales increased in July, advancing 4.4% after falling 2.9% in June. Overall, single-family home sales were up 31.5% from a year earlier. The median sales price of new single-family houses sold in July was $436,700 ($416,700 in June). The July average sales price was $513,000 ($507,300 in June). The inventory of new single-family homes for sale in July decreased to 7.3 months, down from 7.5 months in June.
• Manufacturing: Industrial production advanced 0.1% in July after declining in both May and June. Manufacturing rose 0.5% in July, driven higher, in part, by a 5.2% increase in motor vehicles and parts. Factory output edged up 0.1%. In July, mining moved up 0.5%, while utilities increased 5.4%. Total industrial production in July was 0.2% below its year-earlier level. Most major market groups recorded growth in July. The production of consumer durables was boosted by a jump of 4.8% in the output of automotive products. Similarly, the abnormally hot weather in July lifted the indexes of energy consumer goods and energy materials, which advanced 3.7% and 2.1%, respectively.
• New orders for durable goods fell for the first time in the last five months in July, after declining 5.2%. This followed a 4.4% June increase. 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%.
• Imports and exports: July saw both import and export prices increase. Import prices rose 0.4%, following a 0.1% decline in June. The July increase in import prices was only the second monthly advance of 2023. Imports declined 4.4% over the past year. Import fuel prices rose 3.6% in July, while nonfuel import prices were unchanged. Export prices rose 0.7% in July after declining 0.7% in the previous month. The advance in July was the largest monthly increase since a 1.1% rise in June 2022. Higher prices in July for both agricultural and nonagricultural exports contributed to the overall advance. Despite the July increase, U.S. export prices fell 7.9% for the 12 months ended in July 2023.
• The international trade in goods deficit increased $2.3 billion, or 2.6%, in July. Exports of goods increased 1.5% from June, while imports of goods decreased 1.9%.
• The latest information on international trade in goods and services, released August 8, was for June and revealed that the goods and services trade deficit fell $2.8 billion, or 4.1%, from May. Exports for June were $0.3 billion, or 0.1%, below May exports. Imports were $3.1 billion, or 1.0%, less than May imports. 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%.
• International markets: While inflationary pressures may have eased somewhat over the last few months, current data shows that several European nations still face inflated prices, indicating that central banks still have more work to do. The Eurozone harmonised index of consumer prices (HICP) came in at 5.3% for the 12 months ended in August, unchanged from the annual rate for July. The United Kingdom’s Consumer Price Index dipped lower to 6.8% in July, still well above the 2.0% target rate. Elsewhere, China’s economy showed further signs of weakening in August. The Chinese real estate market continued to slump, factories saw exports decline, while consumer spending waned. For August, the STOXX Europe 600 Index increased 0.4%; the United Kingdom’s FTSE fell 0.6%; Japan’s Nikkei 225 Index rose 1.4%; and China’s Shanghai Composite Index dropped 4.9%.
• Consumer confidence: Consumer confidence declined in August, reversing monthly increases in June and July. The Conference Board Consumer Confidence Index® decreased in August to 106.1, down from 114.0 in July (revised). The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 144.8 in August, down from 153.0 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 80.2 in August from 88.0 in July.

Eye on the Month Ahead

The Federal Open Market Committee meets in September, having not convened since July. Indications are that the Committee may be inclined to hike interest rates up 25.0 basis points at this time, and possibly once more before the end of the year. Despite seeing interest rates increased to historic levels, the economy has survived thus far. Gross domestic product has risen in each of the first two quarters of the year. While manufacturing and housing have slowed, job gains have remained steady, while unemployment has changed minimally throughout the year.