Month: October 2023

The Markets (as of market close October 27, 2023)

Last week saw Wall Street endure another lackluster performance. Investors continued to fret over hawkish comments from Federal Reserve officials as inflation remained above the Fed’s target rate of 2.0%. In addition, higher bond yields and unrest in the Middle East also weighed on the market. Each of the benchmark indexes listed here ended the week lower, adding to losses from the previous week. The S&P 500 and the Nasdaq Composite entered correction territory during the week. Each of the market sectors declined, with the exception of utilities, which inched up 0.3%. Communication services and energy declined more than 7.0%. Crude oil prices fell, although a sharp climb last Friday could be the result of a widening of the Israel-Hamas conflict.

Last Monday saw a pullback in bond yields help propel growth sector stocks. Tech shares climbed higher as corporate earnings season began to ramp up. While the Nasdaq (0.27%) gained ground, the remaining benchmark indexes listed here were not so fortunate. The small caps of the Russell 2000 dropped 0.9%, followed by the Dow (-0.6%), the Global Dow (-0.3%), and the S&P 500 (-0.2%). Ten-year Treasury yields dipped 8.6 basis points to 4.82%. Crude oil prices fell 2.3% to settle at $86.02 per barrel. The dollar and gold prices declined.

Stocks rebounded last Tuesday as investors awaited earnings reports from some big tech companies. The S&P 500 ended a five-day losing streak after gaining 0.7%. The Dow and the Global Dow advanced 0.6%, while the largest climbers were the Nasdaq (0.9%) and the Russell 2000 (0.8%). Ten-year Treasury yields ticked up minimally, closing at 4.84%. Crude oil prices continued to drop, settling at $83.57 per barrel after retreating 2.3%. The dollar reversed course from the prior day, gaining 0.7%. Gold prices lagged.

Wall Street couldn’t maintain the prior day’s momentum last Wednesday as stocks declined on some disappointing corporate earnings data and a jump in Treasury yields. The Nasdaq dropped 2.4%, with megacaps tumbling. The S&P 500 fell for the fifth session out of the last six after losing 1.4%. The small caps of the Russell 2000 fell 1.5%, the Global Dow declined 0.5%, and the Dow dipped 0.3%. Ten-year Treasury yields advanced 11.3 basis points to 4.95% as bond prices fell, reflecting fears that interest rates could stay higher for longer. Crude oil prices rose 1.8%, closing at $85.24 per barrel. The dollar and gold prices inched higher.

Stocks continued to tumble last Thursday. The tech-heavy Nasdaq fell 1.8% as mixed earnings data had investors wondering whether big tech companies were overvalued. The S&P 500 slid 1.2%, the Dow dropped 0.8%, and the Global Dow declined 0.7%. The Russell 2000 edged up 0.4%. Bond prices gained value, pulling yields lower, with 10-year Treasury yields falling 10.8 basis points to 4.84%. The dollar inched up 0.1%, while gold prices were flat. Crude oil prices hovered around $83.46 per barrel, a decrease of about 2.3%.

Megacap stocks moved higher on solid earnings reports, helping the tech-heavy Nasdaq to post a 0.4% gain last Friday. The remaining benchmark indexes didn’t fare as well. The small-cap Russell 2000 fell 1.3%, with the Dow dropping 1.1%. The Global Dow and the S&P 500 declined 0.5%, with the latter entering correction territory. Ten-year Treasury yields were flat. Crude oil prices gained 2.4%. The dollar slipped lower, while gold prices gained 1.0%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 10/27	Weekly Change	YTD Change
DJIA	33,147.25	33,127.28	32,417.59	-3.72%	-2.20%
Nasdaq	10,466.48	12,983.81	12,643.01	-5.70%	20.80%
S&P 500	3,839.50	4,224.16	4,117.37	-4.86%	7.24%
Russell 2000	1,761.25	1,680.79	1,636.94	-4.81%	-7.06%
Global Dow	3,702.71	3,875.99	3,820.27	-3.21%	3.17%
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%	4.92%	4.84%	-8 bps	97 bps
US Dollar-DXY	103.48	106.16	106.56	0.11%	2.98%
Crude Oil-CL=F	$80.41	$89.02	$85.10	-3.03%	5.83%
Gold-GC=F	$1,829.70	$1,991.70	$2,016.50	3.84%	10.21%

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 initial, or advance, estimate of gross domestic product showed the economy accelerated at an annualized rate of 4.9% in the third quarter, well above the 2.1% advance in the second quarter. While the initial estimate is based on incomplete source data, it certainly shows economic strength despite rising interest rates. The largest contributor to the increase in third-quarter GDP was a 4.0% increase in personal consumption expenditures (consumer spending), which ticked up 0.8% in the second quarter. Consumer spending rose on goods and services, with spending on durable goods jumping 7.6%, while spending on services rose 3.6%. Fixed investment advanced 0.8%, driven higher by a 3.9% increase in residential fixed investment. Nonresidential fixed investment moved down 0.1%. Exports increased 6.2%, while imports, which are a negative in the calculation of GDP, advanced 5.7%. The personal consumption expenditures price index increased 2.9%. Excluding food and energy, consumer prices rose 2.4%.

• Consumer prices rose 0.4% in September, the same increase as in August. Core prices, excluding food and energy, increased 0.3% last month, exceeding the 0.1% increase in August. However, over the last 12 months, overall consumer prices dipped 0.1 percentage point to 3.4%, while core prices decreased from 3.9% to 3.7%. Consumer spending advanced 0.7% in September, while personal income and disposable (after-tax) personal income increased 0.3%.
• Sales of new single-family homes rose 12.3% in September and 33.9% from a year ago. The median sales price of new houses sold in September 2023 was $418,800. The average sales price was $503,900. The estimate for new homes for sale at the end of September represented a supply of 6.9 months at the current sales pace.
• The advance report on international trade in goods showed the goods deficit rose $1.1 billion, or 1.3% in September. Exports of goods increased 2.9%, while imports rose 2.4%. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders increased 5.8%. Transportation equipment advanced 12.7% following two consecutive monthly decreases.
• New orders for manufactured durable goods increased 4.7% in September following two consecutive monthly decreases.
• The government budget for September, the last month of fiscal year 2023, had a deficit of $171.0 billion. Receipts totaled $467.0 billion, while government outlays equaled $638.0 billion. For fiscal year 2023, the total government deficit increased to $1.695 billion, up from $1.375 billion for the previous fiscal year. Government outlays totaled $6.134 billion for this fiscal year while receipts were $4.439 billion.
• The national average retail price for regular gasoline was $3.533 per gallon on October 23, $0.043 per gallon lower than the prior week’s price and $0.236 less than a year ago. Also, as of October 23, the East Coast price decreased $0.048 to $3.348 per gallon; the Midwest price fell $0.011 to $3.315 per gallon; the Gulf Coast price inched up $0.001 to $3.041 per gallon; the Rocky Mountain price declined $0.014 to $3.691 per gallon; and the West Coast price decreased $0.139 to $4.858 per gallon.
• For the week ended October 21, there were 210,000 new claims for unemployment insurance, an increase of 10,000 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 October 14 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 14 was 1,790,000, an increase of 63,000 from the previous week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates for the week ended October 7 were Hawaii (2.2%), California (2.0%), New Jersey (2.0%), Puerto Rico (1.8%), Massachusetts (1.5%), New York (1.5%), Rhode Island (1.5%), Washington (1.5%), Nevada (1.4%), and Oregon (1.4%). The largest increases in initial claims for unemployment insurance for the week ended October 14 were in Tennessee (+1,111), Kentucky (+374), Virginia (+277), Wisconsin (+90), and North Carolina (+22), while the largest decreases were in Texas (-3,108), California (-2,050), New York (-1,990), New Jersey (-1,460), and Georgia (-1,023).

Eye on the Week Ahead

November kicks off with a meeting of the Federal Open Market Committee. The FOMC projected one more 25-basis point increase by the end of the year. The Committee did not raise interest rates at its last meeting in September, so it is likely that another interest rate hike is in the offing following the November meeting or the last meeting of the year in December. Also out this week are the employment figures for October. Job hirings have been steady throughout the year, with September’s revised figure coming in at 336,000, well above the monthly average of 267,000.

The Markets (as of market close October 20, 2023)

Last week proved to be a rough one for the market as investors fled from equities following Federal Reserve Chair Jerome Powell’s indication that interest rates would remain higher for longer. The escalation of the Israel-Hamas war also weighed on Wall Street and global markets. Each of the benchmark indexes listed here declined by at least 1.6%, with the Nasdaq skidding over 3.0%. The S&P 500 dropped about 2.4%, suffering through its worst week in a month. Bond prices fell, pushing yields on 10-year Treasuries close to 5.00%. Crude oil prices advanced for the second straight week. The dollar declined, while gold prices gained for the second consecutive week.

Stocks climbed higher to kick off last week, while bond prices declined. Crude oil prices fell following the previous week’s rally. The Russell 2000 led the benchmark indexes listed here, gaining 1.6%, followed by the Nasdaq (1.2%), the S&P 500 (1.1%), the Dow (0.9%), and the Global Dow (0.8%). Ten-year Treasury yields settled at 4.71%, up 8.3 basis points. Crude oil prices dipped 0.8% to $86.97 per barrel. The dollar and gold prices declined.

Last Tuesday saw stocks close mostly flat as tech shares lagged. The Nasdaq slid 0.3%, while the Russell 2000 gained 1.1% and the Global Dow added 0.4%. The Dow and the S&P 500 moved less than 0.1%. Bond values declined, which pushed yields higher. Ten-year Treasury yields gained 13.5 basis points to close at 4.87%. Crude oil prices rose 0.7%, settling at $87.30 per barrel. The dollar and gold prices were flat. Despite predictions of an economic slowdown, consumers proved resilient, with the latest retail sales data for September (see below) exceeding Wall Street’s estimates.

Bond yields jumped higher, as bond values and stocks declined last Wednesday. Ten-year Treasury yields rose to 4.90% after climbing 5.7 basis points. The Russell 2000 lost 2.1%, followed by the Nasdaq (-1.6%), the S&P 500 (-1.3%), the Global Dow (-1.1%), and the Dow (-1.0%). Crude oil prices advanced for the second straight day, settling at $88.17 per barrel, up 1.7%. The dollar and gold prices rose higher. Tech stocks were impacted by rising long-term interest rates.

Market volatility increased last Thursday, with stocks experiencing big swings throughout the day, only to settle generally lower by the close of trading. Investors may have been somewhat disappointed in Federal Reserve Chair Jerome Powell’s hawkish comments, when he indicated that the strength of the economy and the labor market could allow for more “meaningful tightening in the pipeline.” Once again, the Russell 2000 fell the furthest, losing 1.4%, while the Nasdaq dropped 1.0%. The S&P 500 declined 0.9%, while the Dow and the Global Dow dipped 0.8%. The yield on 10-year Treasuries added another 8.4 basis points, to close the session at 4.98%. Crude oil prices continued to spike, settling at $90.50 per barrel, after increasing 2.5%. The dollar slid, while gold prices gained 1.0%.

Friday saw stocks continue to trend lower. Tech shares were hit hard for the fourth straight day last week, with the Nasdaq falling 1.5%. The S&P 500 and the Russell 2000 lost 1.3%. The Global Dow declined 1.0%, while the Dow dropped 0.9%. The yield on 10-year Treasuries dipped 6.4 basis points to close at 4.92%. Crude oil prices declined 0.4%, settling at $89.02. The dollar was flat on the day, while gold prices advanced 0.6%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 10/20	Weekly Change	YTD Change
DJIA	33,147.25	33,670.29	33,127.28	-1.61%	-0.06%
Nasdaq	10,466.48	13,407.23	12,983.81	-3.16%	24.05%
S&P 500	3,839.50	4,327.78	4,224.16	-2.39%	10.02%
Russell 2000	1,761.25	1,719.71	1,680.79	-2.26%	-4.57%
Global Dow	3,702.71	3,947.01	3,875.99	-1.80%	4.68%
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%	4.62%	4.92%	30 bps	105 bps
US Dollar-DXY	103.48	106.68	106.16	-0.49%	2.59%
Crude Oil-CL=F	$80.41	$87.76	$89.02	1.44%	10.71%
Gold-GC=F	$1,829.70	$1,942.00	$1,991.70	2.56%	8.85%

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

• Sales at the retail level rose 0.7% in September and 3.8% from September 2022. Retail trade sales also advanced 0.7% last month and 3.0% over the past 12 months. Sales for businesses that increased in September included motor vehicle and parts dealers (1.0%); food and beverage stores (0.4%); health and personal care stores (0.8%); gasoline stations (0.9%); general merchandise stores (0.4%); miscellaneous store retailers (3.0%); nonstore retailers (1.1%); and food services and drinking places (0.9%). Businesses not faring so well in September included clothing and clothing accessories stores (-0.8%); building material and garden equipment and supplies dealers (-0.2%); and electronics and appliance stores (0.8%).
• Industrial production increased 0.3% in September and advanced at an annual rate of 2.5% in the third quarter. Manufacturing output rose 0.4% in September but was 0.8% below its year-earlier level. Mining moved up 0.4% for the fourth consecutive monthly gain, while utilities decreased 0.3%. Total industrial production in September was 0.1% above its year-earlier level.
• The number of residential building permits issued in September was 4.4% below the estimate from the previous month and 7.2% below the September 2022 rate. However, permits for single-family home construction increased 1.8%. Housing starts in September were 7.0% above the August estimate but 7.2% below the September 2022 rate.  Single-family housing starts in September were 3.2% above the August estimate. Housing completions in September were 6.6% above the August estimate and 1.0% above the September 2022 total. Single-family housing completions in September were 5.3% above the August rate.
• Sales of existing homes fell 2.0% in September and 15.4% from September 2022. Limited inventory and rising prices have hampered home sales. The median existing-homes sales price in September was $394,300, down 2.5% from the August price ($404,100) but 2.8% above the September 2022 price of $383,500. Inventory sat at a 3.4-month supply, up slightly from the August pace of 3.3 months. Single-family home sales fell 1.9% in September and 15.8% from a year earlier. Inventory of single-family home sales sat at a 3.4-month supply, up from 3.2 months in August. The median single-family home price was $399,200 in September, 2.8% below the August median price but 2.5% above the September 2022 price.
• The national average retail price for regular gasoline was $3.576 per gallon on October 16, $0.108 per gallon lower than the prior week’s price and $0.295 less than a year ago. Also, as of October 16, the East Coast price decreased $0.080 to $3.396 per gallon; the Midwest price fell $0.096 to $3.326 per gallon; the Gulf Coast price dropped $0.145 to $3.040 per gallon; the Rocky Mountain price declined $0.115 to $3.705 per gallon; and the West Coast price decreased $0.170 to $4.997 per gallon.
• For the week ended October 14, there were 198,000 new claims for unemployment insurance, a decrease of 13,000 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 October 7 was 1.2%, unchanged from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended October 7 was 1,734,000, an increase of 29,000 from the previous week’s level, which was revised up by 3,000. States and territories with the highest insured unemployment rates for the week ended September 30 were Hawaii (2.3%), New Jersey (2.1%), California (2.0%), Puerto Rico (1.8%), Massachusetts (1.6%), New York (1.6%), Oregon (1.5%), Rhode Island (1.5%), Nevada (1.4%), and Washington (1.4%). The largest increases in initial claims for unemployment insurance for the week ended October 7 were in California (+3,849), Texas (+2,879), Michigan (+2,039), Illinois (+1,844), and New Jersey (+1,613), while the largest decreases were in Ohio (-846), Virginia (-370), Hawaii (-66), North Dakota (-33), and the Virgin Islands (-18).

Eye on the Week Ahead

This is a very busy week for important economic data. From the perspective of the economy, the initial estimate of third-quarter gross domestic product is out this week. The second quarter showed the economy expanded at an annualized rate of 2.1%. The September data on personal income, expenditures, and consumer prices is out at the end of this week. The personal consumption expenditures price index, the preferred inflation indicator of the Federal Reserve, showed prices increased 0.4% in August and 3.5% for the year.

The Markets (as of market close October 13, 2023)

Wall Street closed last week with mixed results. The Nasdaq and the Russell 2000 closed lower, while the Dow, the S&P 500, and the Global Dow edged higher. Several big banks kicked off third-quarter earnings season with upbeat returns, which helped quell concerns over the developments in the Middle East. Inflation continued to prove stubborn, with data from September showing prices rose more than expected. Ten-year Treasury yields declined, while crude oil prices jumped over concerns about the potential impact of the Middle East conflict and tightened sanctions by the United States on sales of crude to Russia. Some analysts fear that the escalating struggle between Israel and Hamas might lead to soaring crude oil prices topping $150 per barrel to the detriment of global economic growth — not a good environment for stocks.

Wall Street saw stocks close higher last Monday, despite the conflict in the Middle East. Crude oil prices jumped higher on fears that some oil-producing countries could be pulled into the conflict. Each of the benchmark indexes listed here posted gains with the S&P 500 and the Dow gaining 0.6%. The Russell 2000 and the Global Dow rose 0.5%, while the Nasdaq added 0.4%. Defense and energy stocks were solid gainers. Crude oil prices settled at about $86.37 per barrel after climbing 4.3%. The yield on 10-year Treasuries ticked up 1.3 basis points to 4.79%. Gold prices rose 1.7%, while the dollar was flat.

Stocks continued to trend higher last Tuesday with the Nasdaq and the S&P 500 reaching their highest levels in over three weeks. Bond prices also rose, sending yields lower. The Global Dow gained 1.5%, the small caps of the Russell 2000 climbed 1.1%, the Nasdaq advanced 0.6%, the S&P 500 increased 0.5%, and the Dow added 0.4%. Ten-year Treasury yields fell 14.2 basis points to 4.65%. The dollar dipped 0.3%, while gold prices advanced 0.5%. Crude oil prices declined 0.6%, settling at about $85.83 per barrel.

Last Wednesday saw stocks advance for the fourth straight session. Of the benchmark indexes listed here, only the Russell 2000 (-0.7%) declined. The Nasdaq increased 0.7%, the S&P 500 gained 0.4%, while the Dow and the Global Dow rose 0.2%. Ten-year Treasury yields dipped 6.0 basis points to close at 4.59%. Crude oil prices fell 2.3%, to settle at about $84.02 per barrel. The dollar was little changed, while gold prices rose 0.6%.

Wall Street snapped a four-day winning streak last Thursday as stock values and bond prices slipped lower. Investors may have reacted to a slightly hotter-than-expected Consumer Price Index (see below). The small caps of the Russell 2000 took the biggest drop, falling 2.2%, while the Nasdaq, the S&P 500, and the Global Dow lost 0.6%. The Dow declined 0.5%. Ten-year Treasury yields climbed 11.7 basis points to 4.71%. The dollar gained 0.7%. Gold prices slid 0.3%. Crude oil prices were relatively unchanged, closing at about $83.47 per barrel.

Stocks fell and bond prices rose as investors retreated from stocks in response to the widening conflict in the Middle East. Gold prices rose the most since March, while crude oil prices rallied. Only the Dow was able to eke out a 0.1% advance last Friday. The Nasdaq dropped 1.2%, followed by the Russell 2000 and the Global Dow (-0.8%), while the S&P 500 dipped 0.5%. Crude oil prices shot up nearly 6.0%, settling at $87.76 per barrel. Ten-year Treasury yields fell 8.3 basis points to close at 4.62%. The dollar advanced marginally.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 10/13	Weekly Change	YTD Change
DJIA	33,147.25	33,407.58	33,670.29	0.79%	1.58%
Nasdaq	10,466.48	13,431.34	13,407.23	-0.18%	28.10%
S&P 500	3,839.50	4,308.50	4,327.78	0.45%	12.72%
Russell 2000	1,761.25	1,745.56	1,719.71	-1.48%	-2.36%
Global Dow	3,702.71	3,923.43	3,947.01	0.60%	6.60%
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%	4.78%	4.62%	-16 bps	75 bps
US Dollar-DXY	103.48	106.11	106.68	0.54%	3.09%
Crude Oil-CL=F	$80.41	$82.83	$87.76	5.95%	9.14%
Gold-GC=F	$1,829.70	$1,844.20	$1,942.00	5.30%	6.14%

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 0.4% in September, after climbing 0.6% in August. Prices for shelter were the largest contributor to the monthly increase (+0.6%), accounting for over half of the increase. An increase in gasoline prices (+2.1%) was also a major contributor to the monthly rise. Prices for food ticked up 0.2% last month. Prices less food and energy rose 0.3% in September, the same increase as in August. Over the last 12 months, the CPI increased 3.7%, the same increase as the 12 months ended in August. The 12-month increase in prices less food and energy was 4.1%, down from 4.3% for the 12 months ended in August. Over the 12 months ended in September, energy prices decreased 0.5%, while food prices increased 3.7%.
• The prices producers received for goods and services rose 0.5% in September from the previous month. The September advance followed increases of 0.7% in August and 0.6% in July. Producer prices advanced 2.2% for the 12 months ended in September, the largest increase since moving up 2.3% for the 12 months ended in April. In September, prices for goods rose 0.9%, driven higher by a 3.3% rise in energy prices. Prices for services advanced 0.3%. Prices less foods, energy, and trade services increased 0.2% in September, the fourth consecutive advance. For the 12 months ended in September, prices less foods, energy, and trade services moved up 2.8%.
• Prices for U.S. imports ticked up 0.1% in September following a 0.6% advance the previous month. Higher fuel prices drove the September increase. Import fuel prices advanced 4.4% in September, after rising 8.8% in August. Import fuel prices have not recorded a one-month decline since May 2023. Prices for nonfuel imports decreased 0.2% for the second consecutive month in September. Despite the recent increases, prices for U.S. imports declined 1.7% for the year ended in September. U.S. export prices rose 0.7% in September after advancing 1.1% in August. Prices for agricultural exports fell 1.1% in September after decreasing 2.1% the previous month. Prices for nonagricultural exports rose 1.0% in September following a 1.5% increase the previous month. Prices for U.S. exports decreased 4.1% over the past year. The 12-month drop in September was the smallest 12-month decline since February 2023.
• The national average retail price for regular gasoline was $3.684 per gallon on October 9, $0.114 per gallon lower than the prior week’s price and $0.228 less than a year ago. Also, as of October 9, the East Coast price decreased $0.062 to $3.476 per gallon; the Midwest price fell $0.117 to $3.422 per gallon; the Gulf Coast price dropped $0.136 to $3.185 per gallon; the Rocky Mountain price declined $0.100 to $3.820 per gallon; and the West Coast price decreased $0.224 to $5.167 per gallon.
• For the week ended October 7, there were 209,000 new claims for unemployment insurance, unchanged 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 September 30 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 30 was 1,702,000, an increase of 30,000 from the previous week’s level, which was revised up by 8,000. States and territories with the highest insured unemployment rates for the week ended September 23 were Hawaii (2.4%), California (2.1%), New Jersey (2.1%), Puerto Rico (1.9%), Massachusetts (1.6%), New York (1.6%), Oregon (1.5%), Rhode Island (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended September 30 were in California (+1,202), Texas (+453), Michigan (+409), Virginia (+331), and Indiana (+306), while the largest decreases were in Ohio (-1,528), Alabama (-794), Illinois (-492), Missouri (-470), and Colorado (-456).

Eye on the Week Ahead

This week includes the release of data on retail sales for September. Consumer spending at the retail level has been steady so far this year, with sales increasing 0.6% in August. The Federal Reserve’s report on industrial production for September is available this week. August saw industrial production increase 0.4%, although manufacturing output only ticked up 0.1%. Housing data is out this week with the release of the report on housing starts and building permits. Building permits increased 6.9% in August, while housing starts dipped 11.3%. September data on existing home sales is released at the end of this week. Rising interest rates and a dearth of inventory have caused sales of existing homes to fall 15.3% from a year earlier.

The Markets (as of market close October 6, 2023)

The market ended last week with mixed results. The tech-heavy Nasdaq made it two straight weeks of gains, while the S&P 500 also ended the week in the black. The remaining benchmark indexes listed here ended last week lower despite a late-week rally. Wall Street tried to predict what the Federal Reserve would do after the latest jobs report showed employment accelerated by a whopping 336,000 in September. Strength in the labor sector, coupled with other favorable economic data, certainly supports the Federal Reserve’s restrictive monetary policy, which traders fear could lead to another interest-rate hike when the Fed meets again in November. In addition, the robust September hiring data may push long-term bond yields higher with bond prices sagging. Earlier in the week, 10-year Treasury yields touched highs not seen since 2007. Crude oil prices had their biggest weekly decline since March, falling to just under $83.00 per barrel after hitting $94.00 per barrel at the end of September. Crude oil prices have fluctuated despite foreign production cuts, largely because the U.S. and other non-OPEC+ countries increased production, which happened to coincide with a lag in demand.

Ten-year Treasury yields jumped to a 16-year high last Monday, while stocks closed the session mixed. Stronger-than-expected manufacturing data (see below) and the weekend deal to avoid a government shutdown boosted sentiment that another interest-rate hike is forthcoming from the Federal Reserve. The Nasdaq gained 0.7% as tech and communication shares climbed higher, while the remaining market sectors slumped. The S&P 500 couldn’t maintain an early-day rally, ultimately ending the day flat. The Russell 2000 (-1.6%), the Global Dow (-1.1%), and the Dow (-0.2%) declined. Yields on 10-year Treasuries added 11.0 basis points to close at 4.68%. Crude oil prices dipped 2.2%, falling below $90.00 per barrel. The dollar rose 0.9%, while gold prices fell 1.2%.

The benchmark indexes listed here ended last Tuesday sharply lower as positive economic news seemed to favor the Fed keeping interest rates higher for longer. Job openings (see below) unexpectedly increased, which may lead to a tight labor market with the September employment figures out on Friday. Only utilities closed higher among the market sectors with consumer discretionary and information technology declining the most. Overall, the Nasdaq dropped 1.9%, the Russell 2000 lost 1.7%, the S&P 500 and the Global Dow declined 1.4%, and the Dow slipped 1.3%. Ten-year Treasury yields followed the previous day’s increase by adding nearly 12.0 basis points to end the day at 4.80%, reaching another 16-year high. The dollar inched higher, gold prices fell, and crude oil prices rose to $89.53 per barrel.

Stocks rallied last Wednesday as Treasury yields retreated. The Nasdaq jumped 1.4%, followed by the S&P 500 (0.8%), the Dow (0.4%), and the Russell 2000 (0.1%). The Global Dow slipped 0.3%. Ten-year Treasury yields dipped 6.7 basis points to 4.73%. Crude oil prices hit their lowest levels in over a month after falling 5.4% as weakening demand more than offset reduced oil production. The dollar and gold prices ended the session in the red.

The market closed marginally lower last Thursday. The Nasdaq and the S&P 500 dipped 0.1%, while the Dow fell less than 0.1%. The Global Dow rose 0.4%, while the Russell 2000 edged up 0.1%. Ten-year Treasury yields closed at 4.71%, a decline of 1.8 basis points. Crude oil prices continued to decline, falling 2.1% to $82.45 per barrel. The dollar fell for the second straight day, while gold prices decreased for the fourth straight session.

Stocks closed out last Friday higher with the Nasdaq climbing 1.6% to top the benchmark indexes listed here. The S&P 500 rose 1.2%, the Dow advanced 0.9%, while the Global Dow and the Russell 2000 gained 0.8%. Long-term bond prices declined, driving yields higher, with 10-year Treasury yields adding 6.7 basis points to reach 4.78%. Crude oil prices rose 0.6%, the dollar dipped lower, while gold prices advanced for the first time last week.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 10/6	Weekly Change	YTD Change
DJIA	33,147.25	33,507.50	33,407.58	-0.30%	0.79%
Nasdaq	10,466.48	13,219.32	13,431.34	1.60%	28.33%
S&P 500	3,839.50	4,288.05	4,308.50	0.48%	12.22%
Russell 2000	1,761.25	1,785.10	1,745.56	-2.22%	-0.89%
Global Dow	3,702.71	3,982.95	3,923.43	-1.49%	5.96%
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%	4.57%	4.78%	21 bps	91 bps
US Dollar-DXY	103.48	106.19	106.11	-0.08%	2.54%
Crude Oil-CL=F	$80.41	$90.87	$82.83	-8.85%	3.01%
Gold-GC=F	$1,829.70	$1,864.90	$1,844.20	-1.11%	0.79%

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 rose by a higher-than-expected 336,000 in September, above the average monthly gain of 267,000 over the prior 12 months. In September, job gains occurred in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance. The change in job gains for July was revised up by 79,000, from 157,000 to 236,000, and the change for August was revised up by 40,000, from 187,000 to 227,000. With these revisions, employment in July and August combined was 119,000 higher than previously reported. The total number of unemployed in September, at 6.4 million, rose by 50,000 from the previous month’s total. The unemployment rate was unchanged at 3.8%. Both the labor force participation rate, at 62.8%, and the employment-population ratio, at 60.4%, were unchanged over the month. In September, average hourly earnings rose by $0.07, or 0.2%, to $33.88. Over the past 12 months, average hourly earnings have increased by 4.2%. The average workweek was unchanged at 34.4 hours in September.
• Manufacturing contracted for the third consecutive month in September but at a slower pace. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 49.8 last month, up from 47.9 in August. A reading of less than 50.0 indicates contraction. According to survey respondents, the slower pace of contraction stemmed from a renewed rise in output following increased hiring and a slight drop in new orders. Although buyer demand remained subdued, conditions declined at a much slower pace. In addition, purchasing managers’ expectations for future output increased, reaching their highest levels since April 2022.
• The services sector barely expanded in September, according to the S&P Global US Services PMI. The business activity index registered 50.1 in September, down from the August reading of 50.5. Overall, business activity in the services sector stagnated as demand conditions weakened with new orders dropping, while company costs rose at a marked pace. According to the S&P Global survey, respondents noted elevated inflation, high interest rates, and economic uncertainty, which led to stymied customer demand.
• According to the latest Job Openings and Labor Turnover report, the number of job openings increased by 690,000 to 9.6 million in August. Over the month, job openings increased in professional and business services, finance and insurance, state and local government education, nondurable goods manufacturing, and federal government. The number of hires was little changed at 5.9 million (+35,000). Total separations, which include quits, layoffs and discharges, and other separations, changed little in August, inching up 38,000 to 5.6 million. In August, the number of quits, which generally are voluntary separations, was 3.6 million, up 19,000 from July. The number of layoffs and discharges in August, at 1.7 million, was essentially unchanged from the previous month.
• The goods and services deficit declined $6.4 billion, or 9.9%, in August, according to the latest data from the Bureau of Economic Analysis. August exports were $256.0 billion, $4.1 billion, or 1.6%, more than July exports. August imports were $314.3 billion, $2.3 billion, or 0.7%, less than July imports. Year to date, the goods and services deficit decreased $137.6 billion, or 20.7%, from the same period in 2022. Exports increased $22.0 billion, or 1.1%. Imports decreased $115.6 billion, or 4.3%.
• The national average retail price for regular gasoline was $3.798 per gallon on October 2, $0.039 per gallon lower than the prior week’s price but $0.016 more than a year ago. Also, as of October 2, the East Coast price decreased $0.060 to $3.538 per gallon; the Midwest price fell $0.100 to $3.539 per gallon; the Gulf Coast price dropped $0.030 to $3.321 per gallon; the Rocky Mountain price declined $0.076 to $3.920 per gallon; and the West Coast price advanced $0.133 to $5.391 per gallon.
• For the week ended September 30, there were 207,000 new claims for unemployment insurance, an increase of 2,000 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 23 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 23 was 1,664,000, a decrease of 1,000 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 16 were Hawaii (2.4%), New Jersey (2.2%), California (2.1%), Puerto Rico (1.8%), Massachusetts (1.6%), New York (1.6%), Oregon (1.5%), Rhode Island (1.5%), Washington (1.5%), Illinois (1.4%), Nevada (1.4%), and Pennsylvania (1.4%). The largest increases in initial claims for unemployment insurance for the week ended September 23 were in California (+2,712), Ohio (+1,422), Michigan (+1,282), Alabama (+870), and Missouri (+532), while the largest decreases were in Georgia (-1,853), South Carolina (-1,199), New York (-1,149), Indiana (-705), and Florida (-485).

Eye on the Week Ahead

Inflation data for September is out this week with the releases of the Consumer Price Index and the Producer Price Index. The CPI rose 0.6% in August and 3.7% for the year. Producer prices increased 0.7% in August and 1.6% for the last 12 months.

The Markets (third quarter through September 29, 2023)

The positive momentum of the first two quarters of the year did not carry over to the third quarter. Inflation continued to prove stubborn throughout the third quarter, moderating somewhat, but not enough to curb the Federal Reserve’s hawkish monetary policy. Crude oil and gasoline prices soared during the summer. Job gains, while steady, declined throughout the third quarter. The housing sector slowed on rising mortgage rates and dwindling inventory. The third quarter saw most of the market sectors decline from the second quarter. Utilities, real estate, information technology, consumer staples, and consumer discretionary fell the furthest, while energy rose by more than 16.0%.

On the last day of the third quarter, each of the benchmark indexes lost value compared to their second-quarter performances. The small caps of the Russell 2000, sensitive to current economic changes, fell the furthest, followed by the Nasdaq, the S&P 500, the Global Dow, and the Dow. Rising interest rates have impacted bond prices, yields, and the U.S. dollar. Ten-year Government bond yields rose in the third quarter, reaching the highest level since 2007, as long-term bond prices slid lower. The U.S. dollar also rose in the third quarter, hitting its highest level since last November. With rising bond yields, foreign investors buy dollars to buy bonds, which helps contribute to the increasing dollar. The increase in the Federal Funds rate pushed mortgage rates to 7.31% on the benchmark 30-year home loan, the highest rate in 23 years. However, unlike 2000, house prices are generally rising alongside mortgage rates, as demand has outpaced available inventory. Oil prices, near $91.00 per barrel, rose nearly 30.0% since June, as Saudi Arabia and Russia, the world’s second and third largest oil exporters, extended voluntary restrictions on their production. The retail price for regular gasoline was $3.837 per gallon on September 25, $0.024 above the August 28 price, and $0.027 higher than the price on June 26. Regular retail gas prices increased $0.126 from a year ago. Gold prices declined in the third quarter, nearing a seven-month low.

July began the quarter with stocks posting notable gains from the previous month. Economic indicators offered signs that inflation was moderating, which helped equities advance. The S&P 500 notched its fifth consecutive monthly gain as all 11 market sectors finished the month higher. Overall, small caps outperformed large caps, with the Russell 2000 (6.1%) leading the benchmark indexes listed here. Energy stocks jumped higher on the heels of rising crude oil prices, which hit a three-month high. Ten-year Treasury yields rose above 4.00% during the month, only to retreat somewhat to 3.95% by the end of July. According to data released in July, both the Consumer Price Index (CPI) and the personal consumption expenditures (PCE) price index rose 0.2% in June compared to a 0.3% advance in May. Adding further evidence of potentially waning inflation, the PCE price index was up 4.1% from June 2022, the lowest 12-month reading since September 2021. Despite slowing inflation, the Federal Reserve opted to hike interest rate 25.0 basis points at the end of July, although there were expectations that the Fed may end interest rate increases. The initial estimate of gross domestic product showed the economy expanded at an annualized rate of 2.4% in the second quarter compared to a 2.0% advance in the first quarter. Consumer spending in the second quarter slowed to 1.6%, down from 4.2% in the first quarter. Employment began to show signs of slowing as job gains in July (157,000) were below the June total (187,000).

Stocks tumbled in August. Each of the benchmark indexes listed here lost value, with the S&P 500 suffering a losing month for the first time since February. The small caps of the Russell 2000 declined more than 5.0%, while the Nasdaq, the Dow, the Global Dow, and the S&P 500 slid more than 2.0%. Long-term bond prices declined, driving yields higher. Ten-year Treasury yields ended the month at 4.1%, up nearly 14.0 basis points from July. Several economic indicators released in August showed favorable results. Industrial production rose 1.0% in July after declining in both May and June. Consumer spending increased 0.8%, while retail sales jumped 0.7%. The PCE price index and the CPI rose 0.2%. While sales of existing homes declined, new home sales rose to their highest level since early 2022 despite soaring mortgage rates. Unfortunately, investors seemed to view August’s moderately favorable economic news as a sign that the Federal Reserve would maintain its aggressive monetary policy. The result was a move away from stocks. With the exception of energy, the remaining market sectors declined. Crude oil prices rose more than 2.0%, as production cuts from Saudi Arabia and Russia drove prices higher.

September continued the bear run for stocks. Each of the benchmark indexes listed here fell between 3.0% and more than 6.0%. Inflationary pressures showed signs of cooling, with core prices for the PCE price index and the CPI decreasing for the 12-months ended in August. The Federal Reserve elected not to increase interest rates in June, opting, instead, to step back and assess additional information and its implications for monetary policy. Gross domestic product advanced at an annualized rate of 2.1%, according to the third and final estimate. Crude oil prices continued to increase as did the yield on 10-year Treasuries. Gold prices declined more than 5.0%.

Stock Market Indexes

Market/Index	2022 Close	As of September 29	Monthly Change	Quarterly Change	YTD Change
DJIA	33,147.25	33,507.50	-3.50%	-2.62%	1.09%
Nasdaq	10,466.48	13,219.32	-5.81%	-4.12%	26.30%
S&P 500	3,839.50	4,288.05	-4.87%	-3.65%	11.68%
Russell 2000	1,761.25	1,785.10	-6.03%	-5.49%	1.35%
Global Dow	3,702.71	3,982.95	-3.56%	-2.94%	7.57%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	0 bps	25 bps	100 bps
10-year Treasuries	3.87%	4.57%	48 bps	76 bps	70 bps
US Dollar-DXY	103.48	106.19	2.46%	3.17%	2.62%
Crude Oil-CL=F	$80.41	$90.87	8.79%	28.95%	13.01%
Gold-GC=F	$1,829.70	$1,864.90	-5.15%	-3.18%	1.92%

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

Latest Economic Reports

• Employment: Employment rose by 187,000 in August from July following a downwardly revised July total of 157,000. Over the last 12 months ended in August, the average monthly job gain was 312,000. In August, employment trended upward in health care, leisure and hospitality, social assistance, and construction. The unemployment rate increased 0.3 percentage point for the second straight month to 3.8%. In August, the number of unemployed persons rose by 514,000 to 6.4 million. The employment-population ratio was unchanged at 60.4%, while the labor force participation rate advanced 0.2 percentage point to 62.8%. In August, average hourly earnings increased by $0.08, or 0.2%, to $33.82. Over the 12 months ended in August, average hourly earnings rose by 4.3%. In August, the average workweek edged up 0.1 hour to 34.4 hours.
• There were 204,000 initial claims for unemployment insurance for the week ended September 23, 2023. The total number of workers receiving unemployment insurance was 1,670,000. By comparison, over the same period last year, there were 182,000 initial claims for unemployment insurance, and the total number of claims paid was 1,290,000.
• FOMC/interest rates: The Federal Open Market Committee left the Federal Funds target rate unchanged following its meeting in September. However, it is anticipated that one more 25-basis point increase will occur before the end of the year. In addition, Fed Chair Jerome Powell indicated that inflation was still elevated and that interest rates would likely remain higher for a longer period than previously projected.
• GDP/budget: Economic growth remained steady in the second quarter, as gross domestic product increased 2.1%, compared with a 2.2% increase in the first quarter. The deceleration in second-quarter GDP compared to the previous quarter primarily reflected a smaller decrease in consumer spending, a downturn in exports, and a deceleration in federal government spending. These movements were partly offset by an increase in private inventory investment and in nonresidential fixed investment, coupled with a smaller decrease in residential investment. Imports turned down. Consumer spending, as measured by personal consumption expenditures, rose 0.8% in the second quarter compared to a 3.8% increase in the first quarter. Consumer spending on long-lasting durable goods inched down 0.3% in the second quarter after advancing 14.0% in the prior quarter. Spending on services rose 1.0% in the second quarter (3.1% in the first quarter). Nonresidential fixed investment increased 7.4% after rising 5.7% in the first quarter. Residential fixed investment fell 2.2% in the second quarter, lower than the decrease in the first quarter (-5.3%). Exports decreased 9.3% in the second quarter following an increase of 6.8% in the first quarter. Imports, which are a negative in the calculation of GDP, decreased 7.6% in the second quarter after advancing 1.3% in the previous quarter. Consumer prices increased 2.5% in the second quarter compared to a 4.2% advance in the first quarter. Excluding food and energy, consumer prices advanced 3.7% in the second quarter (5.0% in the first quarter).
• The federal budget had a surplus of $89.0 billion in August but a deficit of $1,524 billion through the first 11 months of fiscal year 2023. By comparison, the August 2022 monthly deficit was $220.0 billion and the total deficit through August 2022 was $946.0 billion. In August, government receipts totaled $283.0 billion, while outlays equaled $194.0 billion. Compared to the first 11 months of the prior fiscal year, government outlays increased by $142.0 billion, while receipts rose by $438.0 billion.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.4% in August, down from 0.9% (revised) in July. Personal income rose 0.4% in August, while disposable personal income inched up 0.2%. Rising prices at the pump pushed consumer prices higher in August. Consumer prices rose 0.4% in August, 0.2 percentage point above the July estimate. Consumer prices excluding food and energy (core prices), the preferred inflation indicator used by the Federal Reserve, edged up only 0.1% in August, down from the July increase of 0.2%. Over the 12 months ended in August, consumer prices increased 3.5%, 0.2 percentage point above the rate for the period ended in July. Core prices rose 3.9% for the year ended in August, down from 4.3% for the 12 months ended in July.
• The Consumer Price Index rose 0.6% in August compared to a 0.2% advance in July. Over the 12 months ended in August, the CPI advanced 3.7%, up 0.5 basis point from the annual rate for the period ended in July. Core prices, excluding food and energy, rose 0.3% in August and 4.3% over the last 12 months, which is the lowest 12-month rate since September 2021. Energy prices rose 5.6% in August with gasoline prices increasing 10.6%, which accounted for over half of the overall CPI increase. However, energy prices are down 3.6% since August 2022. Food prices advanced 0.2% in August, matching the July increase. Since August 2022, food prices rose 4.3%. Prices for shelter advanced 0.8% in August and 7.3% over the last 12 months.
• Prices that producers received for goods and services increased 0.7% in August after rising 0.3% in July. Producer prices increased 1.6% for the 12 months ended in August, double the 12-month increase from July 2022. The August advance was the largest monthly advance since June 2022. In August, 80.0% of the overall increase in producer prices was attributable to a 2.0% jump in prices for goods. Prices for services advanced 0.2%. 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.
• Housing: Sales of existing homes decreased 0.7% in August, marking the third consecutive month of declines. Since August 2022, existing-home sales dropped 15.3%. According to the report from the National Association of Realtors®, two factors have stifled sales activity: rising mortgage rates and limited inventory. In August, total existing-home inventory sat at a 3.3-month supply at the current sales pace, unchanged from the previous month. The median existing-home price was $407,100 in August, up from the July price of $405,700 and well above the August 2022 price of $391,700. Despite a drop in the number of sales, home prices continue to rise. Prices will likely remain elevated until inventory increases. Sales of existing single-family homes dropped 1.4% in August and 15.3% from a year ago. The median existing single-family home price was $413,500 in August, up from the July price of $411,200 and above the August 2022 price of $398,800.
• New single-family home sales declined in August, falling 8.7% from the July estimate. Overall, single-family home sales were up 5.8% from a year earlier. The median sales price of new single-family houses sold in August was $430,300 ($436,600 in July). The August average sales price was $514,000 ($507,900 in July). The inventory of new single-family homes for sale in August increased to 7.8 months, up from 7.0 months in July.
• Manufacturing: Industrial production advanced 0.4% in August after advancing 0.7% in July. Manufacturing inched up 0.1% in August, held back by a drop of 5.0% in the output of motor vehicles and parts. Excluding that sector, factory output rose 0.6%. In August, mining moved up 1.4%, while utilities increased 0.9%. Total industrial production in August was 0.2% above its year-earlier level. In August, the aforementioned drop in the output of motor vehicles and parts contributed to declines in the indexes for consumer durables and transit equipment. Most of the other major market groups posted increases in August. The index for consumer nondurables moved up 0.4%, and the index for materials advanced 0.7%. Within materials, energy materials rose 1.5%, while nonenergy materials edged up 0.1%.
• New orders for durable goods rose 0.2% in August, marking the fifth monthly increase in the last six months. Excluding defense, new orders decreased 0.7%. Excluding transportation, new orders increased 0.4%. Core capital goods orders, excluding defense and aircraft, advanced 0.9% in August following a 0.4% decline in July.
• Imports and exports: August saw both import and export prices increase for the second straight month. Import prices rose 0.5% following a 0.1% increase in July. The August increase in import prices was the third monthly advance of 2023. Imports declined 3.0% over the past year. Import fuel prices rose 6.7% in August, driven higher by production cuts. Nonfuel import prices edged down 0.1%. Export prices rose 1.3% in August after rising 0.5% in the previous month. The advance in August was the largest monthly increase since a 2.7% increase in May 2022. Higher nonagricultural prices in August more than offset lower agricultural prices. Despite the advance in August, export prices declined 5.5% over the past year.
• The international trade in goods deficit decreased $6.6 billion, or 7.3%, in August. Exports of goods increased 2.2% from July, while imports of goods decreased 1.2%.
• The latest information on international trade in goods and services, released September 6, was for July and revealed that the goods and services trade deficit increased $65.0 billion, or 2.0%, from June. Exports for July rose 1.6% from the previous month. Imports increased 1.7%. Year to date, the goods and services deficit decreased $128.3 billion, or 21.4%, from the same period in 2022. Exports increased 1.6%, while imports decreased 4.3%.
• International markets: Russia’s economy is expected to grow. Despite Western sanctions against Russia in response to the invasion of Ukraine, including a price cap on its oil exports, Moscow has apparently been able to offset that cap by increasing oil prices and exporting to new markets. Elsewhere, after 14 consecutive monthly increases, the Bank of England decided to leave the Bank Rate at its current 5.25%, counter to the anticipated 25.0-basis point increase that was widely expected. Price inflation remained steady in Japan as higher food and gasoline prices offset decreases in utilities. Japan’s Consumer Price Index rose 2.8% for the 12 months ended in September, a decrease of 0.1 percentage point from the August annual figure. China saw industrial profits fall 11.7% for the year ended in August, which was an upgrade from the 15.5% decline for the year ended in July. This is in line with China’s industrial production, which rose 4.5% for the year ended in August, higher than the 3.7% estimate for the year ended in July. Overall, China saw its economy stall somewhat in September with retail sales, pricing power, and loan growth weaker compared to August. For September, the STOXX Europe 600 Index decreased 0.9%; the United Kingdom’s FTSE rose 2.5%; Japan’s Nikkei 225 Index fell 2.6%; and China’s Shanghai Composite Index dipped 0.3%.
• Consumer confidence: Consumer confidence declined in September for the second straight month. The Conference Board Consumer Confidence Index® decreased in September to 103.0, down from 108.7 in August (revised). The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose marginally to 147.1 in September, up from 146.7 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 73.7 in September from 83.3 in August.

Eye on the Quarter Ahead

It appeared that the start of the fourth quarter might be marred by a government shutdown. However, U.S. lawmakers reached a short-term resolution right before the October 1 deadline. October will begin with autoworkers on strike and student loan payments resuming after a pandemic-related pause. Otherwise, investors will continue to focus on inflation data and the Federal Reserve’s response during the last three months of the year. Concerns over slowing economic activity, both here and globally, also will influence the market going forward.

The Markets (as of market close September 29, 2023)

The market returned mixed results last week, with the Russell 2000 and the Nasdaq advancing, while the Global Dow, the Dow, and the S&P 500 shed value. Bond prices fell, pushing 10-year Treasury yields up for the fourth straight week. The dollar advanced, while gold prices dropped. Crude oil prices ticked higher after slipping the prior week. Overall, another lackluster September came to a close with the Federal Reserve projecting higher interest rates for longer despite data that shows inflation is cooling.

Stocks rebounded last Monday following the prior week’s slump. Other than the Global Dow (-0.3%), each of the benchmark indexes listed here gained ground, led by the Nasdaq (0.5%), followed by the S&P 500 and the Russell 2000 (0.4%), and the Dow (0.1%). Energy, materials, and consumer discretionary led the sectors. Ten-year Treasury yields added 10.4 basis points to close at 4.54%, the highest level since 2007. Crude oil prices were flat, settling at about $89.95 per barrel. The dollar rose 0.4%, while gold prices fell 0.6%.

Wall Street couldn’t maintain momentum from the day before as stocks tumbled last Tuesday. The Nasdaq slid 1.6%, the S&P 500 lost 1.5%, the Russell 2000 declined 1.3%, the Dow dipped 1.1%, and the Global Dow fell 1.0%. For perspective, the S&P 500 closed at its lowest level since early June, while the Dow had its largest single-day percentage decline since March. Ten-year Treasury yields, on the other hand, reached new highs after closing at 4.55%. Crude oil prices, which hovered around $90.59 per barrel, remain near 10-month highs. The stock market downturn extended to a fourth week, impacted by the continued hawkish Fed monetary policy, rising crude oil and gasoline prices, and stubborn inflation. September’s decline in consumer confidence has not helped matters. And to add to investor angst, the Federal Government is facing a shutdown.

The Dow (-0.2%) and the Global Dow (-0.3%) slid lower last Wednesday, while the Russell 2000 (1.0%) and the Nasdaq (0.2%) advanced. The large caps of the S&P 500 ended the day where they began. Ten-year Treasury yields, pushed higher by sagging bond prices, added 6.8 basis points to close at 4.62%, the highest level since 2007. Crude oil prices jumped 3.6%, settling at $93.63 per barrel. The dollar rallied to its highest level in nearly a year, while gold prices dipped lower.

Stocks maintained momentum from the previous day, climbing higher last Thursday. Each of the benchmark indexes listed here posted gains, led by the Russell 2000 (0.9%), followed by the Nasdaq (0.8%), the S&P 500 (0.6%), and the Dow and the Global Dow (0.4%). Ten-year Treasury yields declined 2.9 basis points as bond prices inched higher. The 10-year Treasury yield settled at 4.59% on Thursday. Crude oil prices gave back some of last Wednesday’s gains, falling 2.1% to $91.76 per barrel. The dollar and gold prices dipped lower.

Equities ended mostly lower last Friday, with a push from megacaps lifting the Nasdaq up 0.1%. The Russell 2000 and the Dow lost 0.5%, while the Global Dow and the S&P 500 slid 0.3%. Ten-year Treasury yields dipped 2.4 basis points to 4.57%. Crude oil prices fell nearly 1.0% to settle at $90.87 per barrel. The dollar and gold prices declined.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/29	Weekly Change	YTD Change
DJIA	33,147.25	33,963.84	33,507.50	-1.34%	1.09%
Nasdaq	10,466.48	13,211.81	13,219.32	0.06%	26.30%
S&P 500	3,839.50	4,320.06	4,288.05	-0.74%	11.68%
Russell 2000	1,761.25	1,776.50	1,785.10	0.48%	1.35%
Global Dow	3,702.71	4,041.49	3,982.95	-1.45%	7.57%
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%	4.43%	4.57%	14 bps	70 bps
US Dollar-DXY	103.48	105.61	106.19	0.55%	2.62%
Crude Oil-CL=F	$80.41	$90.36	$90.87	0.56%	13.01%
Gold-GC=F	$1,829.70	$1,945.00	$1,864.90	-4.12%	1.92%

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 economy grew at an annualized rate of 2.1% in the second quarter according to the third and final estimate of gross domestic product. GDP accelerated at a rate of 2.2% in the first quarter. The personal consumption expenditures (PCE) price index increased 2.5%. Excluding food and energy prices, the PCE price index increased 3.7%. Consumer spending, as measured by the personal consumption expenditures index, rose 0.8%. Spending on goods increased 0.5%, while spending on services climbed 1.0%. Residential fixed investment declined 2.2%, while nonresidential (business) fixed investment jumped 7.4%. Exports fell 9.3%. Imports, which are a negative in the calculation of GDP, declined 7.6%.
• Prices consumers paid for goods and services, as measured by the personal consumption expenditures (PCE) price index, rose 0.4% in August following a 0.2% increase in July. Excluding food and energy, prices inched up 0.1%. Energy prices advanced 6.1% in August, accounting for a significant portion of the overall increase in consumer prices. Over the 12 months ended in August, the PCE price index rose 3.5%, 0.1 percentage point higher than the 12-month estimate for the period ended in July. The August 12-month increase in prices excluding food and energy increased 3.9%, down from 4.3% for the 12 months ended in July. Also in August, personal income increased 0.4%, while disposable personal income advanced 0.2%. Consumer spending, as measured by the personal consumption expenditures (PCE) index, increased 0.4% in August, down from the July estimate of 0.9%.
• Sales of single-family homes in August fell 8.7% from the previous month but were 5.8% above the August 2022 estimate. The median sales price of new houses sold in August was $430,300, down from $436,600 in July. The average sales price was $514,000, up from the July estimate of $507,900. The estimate of new homes for sale at the end of August sat at a 7.8-month supply at the current sales pace.
• Durable goods orders increased 0.2% in August after falling 5.6% in July. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders decreased 0.7%. Machinery, up four of the last five months, led the increase after advancing 0.5%. New orders for defense capital goods played a large part in the overall increase in August. New orders for nondefense capital goods in August decreased 2.9%. New orders for defense capital goods in August increased 18.6%.
• The advance report on the international trade in goods (excluding services) deficit for August was $6.6 billion, or 7.3%, lower than the July estimate. Exports increased $3.6 billion, or 2.2%, while imports decreased $3.1 billion, or 1.2%. Since August 2022, exports declined 5.9%, while imports dropped 5.2%.
• The national average retail price for regular gasoline was $3.837 per gallon on September 25, $0.041 per gallon lower than the prior week’s price but $0.126 more than a year ago. Also, as of September 25, the East Coast price decreased $0.056 to $3.598 per gallon; the Midwest price fell $0.071 to $3.639 per gallon; the Gulf Coast price dropped $0.080 to $3.351 per gallon; the Rocky Mountain price declined $0.075 to $3.996 per gallon; and the West Coast price advanced $0.095 to $5.258 per gallon.
• For the week ended September 23, there were 204,000 new claims for unemployment insurance, an increase of 2,000 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 16 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 16 was 1,670,000, an increase of 12,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended September 9 were Hawaii (2.5%), New Jersey (2.3%), California (2.1%), New York (1.8%), Puerto Rico (1.8%), Massachusetts (1.6%), Rhode Island (1.6%), Nevada (1.5%), Oregon (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended September 16 were in Georgia (+1,539), New York (+1,332), South Carolina (+1,103), Texas (+987), and Oregon (+557), while the largest decreases were in Indiana (-2,761), California (-1,498), Virginia (-631), Iowa (-558), and Kentucky (-375).

Eye on the Week Ahead

The employment figures for September are out this week. The labor sector has been strong throughout the year, although the pace of new jobs added has slowed somewhat over the past few months. Hourly earnings continued to increase, rising 4.3% since August 2022.