Month: November 2023

The Markets (as of market close November 17, 2023)

The market enjoyed a favorable week as each of the benchmark indexes listed here gained ground. Inflation data showed consumer prices moderated in October, while the Federal government avoided a shutdown. Over the last three weeks, the S&P 500, the Nasdaq, and the Dow had their best runs since June 2020, April 2020, and November 2022, respectively. Crude oil prices lost ground for the fourth straight week despite a rally last Friday. The dollar fell to a two-month low. Gold prices ended the week with solid gains.

Stocks opened last Monday with mixed results ahead of Tuesday’s Consumer Price Index report. The Global Dow (0.5%) and the Dow (0.2%) ticked higher, while the small caps of the Russell 2000 were unchanged. The Nasdaq fell 0.2% and the S&P 500 dipped 0.1%. Investors were pensive as they awaited the release of important inflation data over the next few days. Signs that inflation may be cooling could spur a rally in stocks, while a jump in consumer prices could move traders away from the market. Ten-year Treasury yields ticked slightly higher, closing at 4.63%. Crude oil prices rose 1.8% to $78.55 per barrel. The dollar dipped lower, while gold prices rose more than half a percent.

The stock market rallied last Tuesday after the latest inflation data showed price pressures cooled over the last 12 months. The Russell 2000 vaulted 5.4% as small-cap stocks surged, pushing that index into positive territory for the year. The Nasdaq gained 2.4%, the Global Dow added 2.0%, the S&P 500 advanced 1.9%, and the Dow increased 1.4%. The yield on 10-year Treasuries declined 19.1 basis points, falling to 4.44%. Crude oil prices were flat, closing at $78.27 per barrel. The dollar lost 1.5%, while gold prices rose 0.9%.

Last Wednesday produced another day of gains for Wall Street. Both the Producer Price Index and retail sales came in a little softer than expected (see below), which supported the belief that the Fed is done raising interest rates. The Global Dow (0.8%) led the benchmark indexes listed here, followed by the Dow (0.5%), while the Russell 2000 and the S&P 500 rose 0.2%. The Nasdaq edged up 0.1%. Bond prices slid, driving 10-year Treasury yields up 9.4 basis points to 4.53%. Crude oil prices dropped 2.2% to $76.55 per barrel. The dollar gained 0.3%, while gold prices dipped 0.2%.

The markets saw a late-day rally fizzle last Thursday. While the Nasdaq and the S&P 500 ticked up 0.1%, the remaining benchmark indexes listed here ended the day lower, with the small caps of the Russell 2000 (-1.5%) declining the furthest, followed by the Global Dow (-0.3%) and the Dow (-0.1%). Ten-year Treasury yields slipped 9.0 basis points to 4.44%. Crude oil prices plunged nearly 5.0%, settling at $72.93 per barrel, impacted by rising inventories and fears of a global economic slowdown. The dollar was flat, while gold prices jumped 1.0%.

Last Friday was a slow trading day, with stocks moving up and down, ultimately ending the day moderately higher. The Russell 2000 advanced the most after gaining 1.4%. The Global Dow rose 0.6%, while the Nasdaq and the S&P 500 ticked up 0.1%. The Dow ended the day flat. Ten-year Treasury yields moved minimally from the previous day, while crude oil prices recouped some losses after gaining nearly 4.0%. The dollar and gold prices settled lower.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 11/17	Weekly Change	YTD Change
DJIA	33,147.25	34,283.10	34,947.28	1.94%	5.43%
Nasdaq	10,466.48	13,798.11	14,125.48	2.37%	34.96%
S&P 500	3,839.50	4,415.24	4,514.02	2.24%	17.57%
Russell 2000	1,761.25	1,705.32	1,797.77	5.42%	2.07%
Global Dow	3,702.71	3,972.53	4,110.70	3.48%	11.02%
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%	4.44%	-18 bps	57 bps
US Dollar-DXY	103.48	105.79	103.87	-1.81%	0.38%
Crude Oil-CL=F	$80.41	$77.37	$75.78	-2.06%	-5.76%
Gold-GC=F	$1,829.70	$1,941.60	$1,982.80	2.12%	8.37%

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 for October exceeded expectations after rising 0.4%, the same increase as in September. However, over the last 12 months, the CPI increased 3.2%, down from 3.7% for the year ended in September. Consumer prices excluding food and energy rose 0.2% in October and 4.0% over the last 12 months. These figures are down from September, which registered increases of 0.3% and 4.1%, respectively. In October, prices for shelter rose 0.3%, less than the September increase of 0.6%, but high enough to offset a 5.0% decline in gasoline prices. Food prices increased 0.3% in October after rising 0.2% in September.
• The Producer Price Index fell 0.5% in October after rising 0.4% in September. The October decline is the largest decrease in producer prices since a 1.2% drop in April 2020. Producer prices rose 1.3% for the 12 months ended in October. A 1.4% decline in prices for goods accounted for much of the overall decrease in the PPI. Over 80.0% of the October drop in prices for goods was attributable to a 15.3% decrease in prices for gasoline. Prices for services were unchanged in October. Prices less foods, energy, and trade services advanced 0.1% in October, the fifth consecutive rise. For the 12 months ended in October, prices less foods, energy, and trade services moved up 2.9%.
• Retail sales slipped 0.1% in October but increased 2.5% since October 2022. Retail trade sales were down 0.2% last month but up 1.6% over the past 12 months. Most businesses saw sales decrease in October, with the largest declines occurring for furniture and home furnishing stores (-2.0%); online stores (-1.7%); and motor vehicle and parts dealers (-1.0%). Gasoline station sales declined 0.3% in October and 7.5% over the last 12 months.
• Both import and export prices declined in October. Import prices declined 0.8% in October after increasing 0.4% in September. This is the first monthly drop in import prices since June 2023, and was the largest decrease since March 2023. Prices for U.S. imports decreased 2.0% for the year ended October 2023. A decrease in both fuel and nonfuel prices contributed to the overall decline in import prices. Fuel prices fell 6.3% in October, after advancing 6.3% the previous month. The October drop was the first monthly decrease since May 2023 and the largest monthly decline since September 2022. Nonfuel import prices declined 0.2% for the third consecutive month in October. Export prices dropped 1.1% in October after declining 0.5% in the previous month. The decline in October was the largest monthly drop since a 2.1% decrease in May 2023. Lower prices for nonagricultural and agricultural exports each contributed to the October decline. Export prices fell 4.9% for the year ended in October.
• Industrial production declined 0.6% in October. Manufacturing output fell 0.7%, primarily due to a 10% drop in the output of motor vehicles and parts related to strikes at several major manufacturers of motor vehicles. Excluding motor vehicles and parts, manufacturing edged up 0.1%. Utilities fell 1.6% and mining dipped 0.4%. Total industrial production in October was 0.7% below its level from a year earlier.
• October saw the number of residential construction building permits increase by 1.1% over September’s total, although October’s rate is 4.4% below the October 2022 mark. Building permits for single-family home construction also increased 0.5% in October. The number of housing starts rose 1.9% in October but is 4.2% below the prior year’s total. Single-family housing starts in October were 0.2% above the September figure. Home completions declined 4.6% in October but were 4.6% above the October 2022 rate. Single-family home completions dipped 0.9% last month.
• October, the first month of fiscal year 2024, saw the monthly federal government deficit sit at $67.0 billion, down from $171.0 billion in September and below the October 2022 budget deficit of $87.9 billion. In October, of the $403.0 billion in receipts, individual income taxes accounted for $220.0 billion. October outlays were $470.0 billion, with Social Security payments of $117.0 billion exceeding all other outlays.
• The national average retail price for regular gasoline was $3.349 per gallon on November 13, $0.047 per gallon lower than the prior week’s price and $0.413 less than a year ago. Also, as of November 13, the East Coast price decreased $0.040 to $3.212 per gallon; the Midwest price fell $0.025 to $3.185 per gallon; the Gulf Coast price declined $0.062 to $2.809 per gallon; the Rocky Mountain price dropped $0.118 to $3.338 per gallon; and the West Coast price decreased $0.077 to $4.520 per gallon.
• For the week ended November 11, there were 231,000 new claims for unemployment insurance, an increase 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 November 4 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 4 was 1,865,000, an increase of 32,000 from the previous week’s level, which was revised down by 1,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,964,000. States and territories with the highest insured unemployment rates for the week ended October 28 were New Jersey (2.1%), California (2.0%), Hawaii (2.0%), Puerto Rico (1.9%), Alaska (1.7%), Massachusetts (1.6%), New York (1.6%), Washington (1.6%), Oregon (1.5%), and Rhode Island (1.5%). The largest increases in initial claims for unemployment insurance for the week ended November 4 were in California (+2,910), New York (+2,245), Pennsylvania (+1,704), New Jersey (+1,689), and Texas (+1,522), while the largest decreases were in Oregon (-2,529), Kentucky (-788), North Carolina (-522), Oklahoma (-108), and Mississippi (-107).

Eye on the Week Ahead

Thanksgiving week includes the release of the October figures on existing home sales. September saw sales decline 2.0%. Also out this week is the latest data on durable goods orders for October. Durable goods orders rose 4.7% in September after declining in each of the previous two months.

The Markets (as of market close November 10, 2023)

Stocks closed generally higher last week on continued hopes that the Federal Reserve is done raising interest rates despite more hawkish comments from Fed Chair Jerome Powell. Tech and growth stocks carried the market for much of the week as investors looked ahead to this week’s inflation reports. Ten-year Treasury yields eased somewhat from recent 16-year highs. Crude oil prices fell for the third straight week. The dollar edged higher, while gold prices couldn’t maintain momentum, declining nearly 3.0% last week.

Last Monday saw stocks close moderately higher to extend the prior week’s winning streak. Each of the benchmark indexes posted gains, with the exception of the small caps of the Russell 2000, which fell 1.3%. The Nasdaq gained 0.3%, the S&P 500 advanced 0.2%, while the Dow and the Global Dow edged up 0.1%. Stocks began the day on an upswing, only to be dragged lower after a rebound in 10-year Treasury yields, which closed the session at 4.66%, up 10.4 basis points. Crude oil prices (0.5%) and the dollar (0.2%) ended the day up, while gold prices slid 0.7%.

The three major benchmark indexes, the Nasdaq (0.9%), the S&P 500 (0.3%), and the Dow (0.2%), extended their rally last Tuesday, while the Global Dow (-0.5%) and the Russell 2000 (-0.3%) declined. Bond prices advanced with yields on 10-year Treasuries falling 9.1 basis points to 4.57%. Crude oil prices fell 4.2% to $77.45 per barrel, marking the lowest closing price since August. China, the world’s largest consumer of oil, saw it’s exports fall for the sixth straight month in October, highlighting a slowdown in global demand. The dollar inched up 0.3%, while gold prices fell 0.7%.

The Nasdaq and the S&P 500 ticked up 0.1% last Wednesday, barely enough to keep their respective winning streaks alive. The Global Dow fell 0.2%, while the Dow and the Russell 2000 dipped 0.1%. Yields on 10-year Treasuries continued to slide, falling 4.8 basis points to 4.52%. Crude oil prices slumped to $75.46 per barrel, the lowest price since July. The dollar was unchanged, while gold prices declined 0.9%.

Stocks lost value last Thursday, ending the longest winning streak since 2021. Each of the benchmark indexes listed here declined, led by the Russell 2000 (-1.6%), followed by the Nasdaq (-0.9%), the S&P 500 (-0.8%), the Dow (-0.7%), and the Global Dow (-0.4%). Yields for 10-year Treasuries jumped 10.7 basis points to 4.63%. Crude oil prices inched up 0.3%, closing at about $75.54 per barrel. Both the dollar and gold prices edged up 0.3%.

Wall Street saw stocks rebound last Friday, with each of the benchmark indexes closing the session up. The Nasdaq jumped 2.1% as large tech companies pushed that index higher. The S&P 500 hit its highest value since September after gaining 1.6%. The Dow rose 1.2%, the Russell 2000 advanced 1.1%, and the Global Dow gained 0.1%. Among the market sectors, information technology (2.5%), consumer discretionary (1.5%), and communication services (1.4%) performed the best. Ten-year Treasury yields slipped 0.2 basis points, while the dollar and gold prices fell. Crude oil prices rose 2.0%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 11/10	Weekly Change	YTD Change
DJIA	33,147.25	34,061.32	34,283.10	0.65%	3.43%
Nasdaq	10,466.48	13,478.28	13,798.11	2.37%	31.83%
S&P 500	3,839.50	4,358.34	4,415.24	1.31%	15.00%
Russell 2000	1,761.25	1,760.70	1,705.32	-3.15%	-3.18%
Global Dow	3,702.71	3,995.14	3,972.53	-0.57%	7.29%
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%	4.55%	4.62%	7 bps	75 bps
US Dollar-DXY	103.48	105.09	105.79	0.67%	2.23%
Crude Oil-CL=F	$80.41	$80.85	$77.37	-4.30%	-3.78%
Gold-GC=F	$1,829.70	$1,999.50	$1,941.60	-2.90%	6.12%

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

Last Week’s Economic News

• According to the latest report from the Bureau of Economic Analysis, the goods and services trade deficit for September was $61.5 billion, $2.9 billion, or 4.9%, above the August deficit. September exports were $261.1 billion, $5.7 billion, or 2.2%, more than August exports. September imports were $322.7 billion, $8.6 billion, or 2.7%, more than August imports. Year to date, the goods and services deficit decreased $147.4 billion, or 20.0%, from the same period in 2022. Exports increased $22.7 billion, or 1.0%. Imports decreased $124.8 billion, or 4.2%.
• Information on prices for regular gasoline is limited as the U.S. Energy Information Administration delayed its scheduled data releases to complete a planned systems upgrade. It will resume its regular publishing schedule on November 13. In lieu thereof, the national average retail price for regular gasoline was $3.396 per gallon on November 6, $0.077 per gallon lower than the prior week’s price and $0.400 less than a year ago.
• For the week ended November 4, there were 217,000 new claims for unemployment insurance, a decrease of 3,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 28 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 28 was 1,834,000, an increase of 22,000 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 October 21 were California (2.0%), Hawaii (2.0%), New Jersey (2.0%), Puerto Rico (1.9%), New York (1.6%), Oregon (1.6%), Alaska (1.5%), Massachusetts (1.5%), Rhode Island (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended October 28 were in Michigan (+2,227), North Carolina (+1,303), California (+842), Minnesota (+767), and Iowa (+613), while the largest decreases were in New York (-1,942), Oregon (-405), Georgia (-348), Florida (-302), and Ohio (-299).

Eye on the Week Ahead

The focus is on inflation this week. The latest data of the Consumer Price Index for October is available. September saw consumer prices increase by 0.4% and 3.7% for the 12 months ended in September. Producer prices also edged higher in September, climbing 0.5%. However, import prices slowed more than anticipated in September after ticking up 0.1%. Conversely, export prices beat expectations, climbing 0.7%.

The Markets (as of market close November 3, 2023)

Wall Street ended a two-week bear run as stocks enjoyed their best week of the year. Each of the benchmark indexes listed here posted solid gains, while bond yields declined, dragged lower by escalating bond prices. Investors may have seen slowing job growth (see below) as more reason for the Federal Reserve to maintain, if not lower, interest rates in the near future. The Fed kept interest rates at their current levels following last week’s meeting (see below). Third-quarter corporate earnings have been mixed, with about 49% of the companies of the S&P 500 reporting earnings that are 7.7% above estimates, which is below the five-year average of 8.5% but above the 10-year average of 6.6%. Crude oil prices fell for the second straight week as supply concerns driven by tensions in the Middle East waned. The dollar declined to a six-week low, while gold prices advanced.

Stocks rallied last Monday as investors awaited the outcome of Wednesday’s Federal Reserve meeting. The S&P 500 and the Nasdaq, both in correction territory, gained 1.2%. The Dow rose 1.6%, while the Global Dow and the Russell 2000 advanced 0.7% and 0.6%, respectively. Crude oil prices dropped 3.6% to $82.47, as Israel’s measured approach to its war in Gaza eased concerns of that other countries, particularly oil-producing nations, would get involved and use oil as a tool of retaliation. Ten-year Treasury yields inched up 3.0 basis points to 4.87%. The dollar fell 0.4%, while gold prices rose 0.4%.

Wall Street continued to trend higher on Tuesday to salvage the final day of October. Investors continued to look ahead to the Fed’s interest rate decision on Wednesday and Apple’s earnings report on Thursday. The Russell 2000 led the benchmark indexes, gaining 0.9%, followed by the S&P 500 (0.7%), the Nasdaq (0.5%), the Dow (0.4%), and the Global Dow (-0.1%). Ten-year Treasury yields ended the session unchanged from the prior day’s value. Crude oil prices fell 1.3% to $81.28 per barrel. The dollar rose 0.5%, while gold prices slipped below $2,000.00 per ounce after declining 0.6%.

Stocks trended higher last Wednesday, helped by a drop in bond yields. The Federal Reserve left interest rates unchanged, as expected. Fed Chair Jerome Powell noted that the surge in bond yields has had a tightening effect on financial conditions. Ten-year Treasury yields fell 8.6 basis points to settle at 4.78%. While each of the S&P 500 market sectors ended the day up, information technology was the best performing, which helped drive the Nasdaq up 1.6%. The S&P 500 gained 1.1%, the Global Dow rose 0.8%, the Dow advanced 0.7%, and the Russell 2000 climbed 0.5%. Crude oil prices slipped 0.2% to $80.90 per barrel. The dollar was unchanged, while gold prices fell 0.4%.

The markets continued to move upward last Thursday as investors may have seen the latest policy announcement from the Federal Reserve as an indication that no more interest rate hikes are likely. Bond prices also advanced, dragging yields on 10-year Treasuries down 12.0 basis points to 4.66%. The Russell 2000 vaulted 2.7%, followed by the S&P 500 and the Global Dow, which advanced 1.9%. The Nasdaq rose 1.8% and the Dow climbed 1.7%. Crude oil prices inched up 0.2%, settling at $82.63 per barrel. Both the dollar and gold prices closed in the red.

Stocks closed higher last Friday, while bond yields fell as recent economic data reinforced the idea that the Fed policy of interest rate hikes may be over. The Russell 2000 capped a banner week after gaining 2.7% for the second straight day. The Nasdaq added 1.4%, the Global Dow advanced 1.1%, the S&P 500 climbed 0.9%, and the Dow increased 0.7%. Ten-year Treasury yields dropped 11.1 basis points to 4.55%. Crude oil prices dipped 1.8%. The dollar lost 1.0%, while gold prices rose 0.3%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 11/3	Weekly Change	YTD Change
DJIA	33,147.25	32,417.59	34,061.32	5.07%	2.76%
Nasdaq	10,466.48	12,643.01	13,478.28	6.61%	28.78%
S&P 500	3,839.50	4,117.37	4,358.34	5.85%	13.51%
Russell 2000	1,761.25	1,636.94	1,760.70	7.56%	-0.03%
Global Dow	3,702.71	3,820.27	3,995.14	4.58%	7.90%
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%	4.84%	4.55%	-29 bps	68 bps
US Dollar-DXY	103.48	106.56	105.09	-1.38%	1.56%
Crude Oil-CL=F	$80.41	$85.10	$80.85	-4.99%	0.55%
Gold-GC=F	$1,829.70	$2,016.50	$1,999.50	-0.84%	9.28%

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 cooled in October, according to the latest report from the Bureau of Labor Statistics. There were 150,000 new jobs added last month, well below the average monthly gain of 258,000. Job gains occurred in health care, government, and social assistance. Employment in manufacturing declined due to strike activity. The number of unemployed persons increased by 146,000 to 6.5 million, and the unemployment rate ticked up 0.1 percentage point to 3.9%. Since April, the unemployment rate and the number of unemployed persons are up 0.5 percentage point and 849,000, respectively. Both the labor force participation rate, at 62.7%, and the employment-population ratio, at 60.2%, edged up 0.2 percentage point from the previous month. In October, average hourly earnings rose by $0.07, or 0.2%, to $34.00. Over the past 12 months, average hourly earnings have increased by 4.1%. The average workweek edged down by 0.1 hour to 34.3 hours. According to the report, the change in employment for August was revised down by 62,000, and the change for September was revised down by 39,000. With these revisions, employment in August and September combined was 101,000 lower than previously reported.
• Last week, the Federal Open Market Committee voted unanimously to keep the Federal Funds target rate at its current range of 5.25%-5.50%. The Committee noted that economic activity expanded at a strong pace in the third quarter and, while job gains moderated since earlier in the year, they remained strong. Inflation continued to be elevated. Moving forward, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee 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 (full employment and inflation at a rate of 2.0% over the longer run). Following the meeting, Federal Reserve Chair Jerome Powell maintained a hawkish tone, noting that further policy tightening may be necessary despite signs that price pressures may be waning. Powell stated that, “a few months of good data are only the beginning to build confidence that inflation is moving sustainably to our goal,”
• According to the latest Job Openings and Labor Turnover survey, there were 9.6 million job openings in September, an increase of less than 57,000 from the previous month’s total. Job openings increased in accommodation and food services (+141,000) and in arts, entertainment, and recreation (+39,000). Job openings decreased in other services (-124,000), federal government (-43,000), and information (-41,000). The number of hires was essentially unchanged at 5.9 million. Total separations, which include quits, layoffs and discharges, and other separations, decreased by about 150,000 to 5.5 million. Within separations, the number of quits (voluntary separations) was unchanged at 3.7 million.
• Manufacturing expanded in October, ending a five-month period of declines. The S&P Global US Manufacturing Purchasing Managers’ Index™ rose to 50.0, up from September’s 49.8, driven by an increase in new orders. All the news was not favorable, however, as survey respondents noted that inflationary pressures picked up, pushing input costs and output charges higher at the fastest rate since April.
• October saw growth in the services sector as business activity rose marginally. Despite a decline in new orders, survey respondents noted a slower rise in costs. The S&P Global US Services PMI Business Activity Index posted 50.6 in October, up from 50.1 in September, signaling expansion in output in the services sector.
• The national average retail price for regular gasoline was $3.473 per gallon on October 30, $0.060 per gallon lower than the prior week’s price and $0.269 less than a year ago. Also, as of October 30, the East Coast price decreased $0.021 to $3.327 per gallon; the Midwest price fell $0.062 to $3.253 per gallon; the Gulf Coast price declined $0.076 to $2.965 per gallon; the Rocky Mountain price dropped $0.112 to $3.579 per gallon; and the West Coast price decreased $0.135 to $4.723 per gallon.
• For the week ended October 28, there were 217,000 new claims for unemployment insurance, an increase of 5,000 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 21 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 21 was 1,818,000, an increase of 35,000 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 14 were Hawaii (2.1%), New Jersey (2.1%), California (2.0%), Puerto Rico (1.9%), New York (1.6%), Massachusetts (1.5%), Oregon (1.5%), Rhode Island (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended October 21 were in Oregon (+3,797), New York (+1,969), Pennsylvania (+1,293), Georgia (+1,252), and Texas (+1,144), while the largest decreases were in Tennessee (-1,092), Michigan (-740), North Carolina (-487), Mississippi (-199), and Arkansas (-174).

Eye on the Week Ahead

This week is a very slow one for economic data. The trade in goods and services deficit report out this week is for September. The Treasury statement is for October, the first month of fiscal year 2024.

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

Stocks declined for the third straight month in October, with each of the benchmark indexes listed here ending the month notably lower. The Nasdaq and the S&P 500 endured their worst October since 2018. The S&P 500, down for three straight months, had its worst three-month performance since the period ended June 2022. The Nasdaq also had its worst October since 2018, down about 11.0% over the past three months, marking its poorest three-month performance since the August-October period in 2022. This was not a good month for the Dow, which suffered its worst October since 2020.

The most recent inflation data demonstrated the challenges the Federal Reserve faces in trying to bring down rising prices, with annual core prices for the Consumer Price Index (CPI) and the personal consumption expenditures price index remaining well above the 2.0% target set by the Fed. Prices for shelter and food climbed higher, while energy prices dipped lower.

Speaking of the Federal Reserve, it did not meet in September: its next meeting concludes on November 1. However, Fed Chair Jerome Powell has indicated on several occasions that inflation has remained elevated, while the economy has shown overall strength and is likely able to withstand higher interest rates for a longer period of time.

The economy has proven resilient despite the threat of a government shutdown, an autoworkers strike, the ongoing war in Ukraine, and the Israel-Hamas conflict. Third-quarter gross domestic product expanded at an annualized rate of 4.9%, according to the advance estimate. While subsequent iterations for the third quarter could see a reduction in growth as more complete data is made available, the economy clearly expanded above expectations in the third quarter. Consumer spending, which makes up about 70.0% of the economy, rose, with increased spending in durable goods, nondurable goods, and services. However, that trend may not last, as consumers may have to tighten their purse strings in light of high interest rates, while the resumption of student loan payments and dwindling pandemic-era savings might eat into their budgets.

Job growth was robust in September, with the addition of nearly 340,000 new jobs. Wages continued to rise, increasing 4.2% over the last 12 months. Despite job growth, unemployment claims increased from a year ago (see below).

Third-quarter corporate earnings have been mixed thus far. Roughly 25.0% of companies in the S&P 500 have reported third-quarter results. While nearly 77.0% of those companies have reported earnings better than expected, S&P companies are on target to see profits decline by 0.2% compared to last year’s third-quarter earnings.

The secondary housing market retreated for the fourth straight month in September, primarily due to lack of inventory, high prices, and advancing mortgage rates. However, while existing home sales declined, sales of new single-family homes advanced (see below).

Industrial production expanded for the second month in a row in September (see below). According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, purchasing managers reported that manufacturing contracted in September. However, the services sector expanded, but at a slower pace than in August.

Each of the market sectors ended September lower, with the exception of utilities, which eked out a 0.4% gain. Energy fell 6.3%, while consumer discretionary dropped over 5.0%. Information technology recouped losses from early in the month, but not enough to avoid slipping 0.6% by the end of October.

Bond prices fell in October, with yields increasing over the previous month. Ten-year Treasury yields rose, while the 2-year Treasury yield fell nearly 10.0 basis points in October. The dollar inched higher against a basket of world currencies. Gold prices ended October on an upswing. Crude oil prices declined in October despite the turmoil in the Middle East. The retail price of regular gasoline was $3.533 per gallon on October 23, $0.345 lower than the price a month earlier and $0.236 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of October 31	Monthly Change	YTD Change
DJIA	33,147.25	33,507.50	33,052.87	-1.36%	-0.28%
Nasdaq	10,466.48	13,219.32	12,851.24	-2.78%	22.78%
S&P 500	3,839.50	4,288.05	4,193.80	-2.20%	9.23%
Russell 2000	1,761.25	1,785.10	1,662.28	-6.88%	-5.62%
Global Dow	3,702.71	3,982.95	3,852.70	-3.27%	4.05%
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%	4.87%	30 bps	100 bps
US Dollar-DXY	103.48	106.19	106.70	0.48%	3.11%
Crude Oil-CL=F	$80.41	$90.87	$81.31	-10.52%	1.12%
Gold-GC=F	$1,829.70	$1,864.90	$1,992.80	6.86%	8.91%

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 336,000 in September from August following upwardly revised totals for July (157,000 to 236,000) and August (187,000 to 227,000). Over the last 12 months ended in September, the average monthly job gain was 267,000. Employment trended upward in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance. The unemployment rate and the number of unemployed persons were unchanged at 3.8% and 6.4 million, respectively. The employment-population ratio and the labor force participation rate were unchanged at 60.4% and 62.8%, respectively. In September, average hourly earnings increased by $0.07, or 0.2%, to $33.88. Over the 12 months ended in September, average hourly earnings rose by 4.2%. In September, the average workweek was unchanged at 34.4 hours.
• There were 210,000 initial claims for unemployment insurance for the week ended October 21, 2023. The total number of workers receiving unemployment insurance was 1,790,000. By comparison, over the same period last year, there were 201,000 initial claims for unemployment insurance, and the total number of claims paid was 1,391,000.
• FOMC/interest rates: The Federal Open Market Committee left the Federal Funds target rate unchanged following its meeting in September. However, the October meeting ended later in the afternoon on November 1, after the publication of this report. However, most expect interest rates to remain unchanged at their current 5.25%-5.50% range.
• GDP/budget: The economy accelerated at a notable pace in the third quarter, as gross domestic product increased 4.9%, according to the initial, or advance, estimate. GDP increased 2.1% in the second quarter. The increase in third-quarter GDP compared to the previous quarter primarily reflected a rise in consumer spending, private inventory investment, exports, federal, state, and local government spending, and residential fixed investment. Nonresidential fixed investment declined, while imports, which are a negative in the calculation of GDP, increased. Consumer spending, as measured by personal consumption expenditures, rose 4.0% in the third quarter, compared to a 0.8% increase in the second quarter. The increase in personal consumption expenditures reflected increases in goods (4.8%) and services (3.6%). The increase in fixed investment (0.8%) included a 3.9% advance in residential fixed investment (-2.2% in the second quarter). Nonresidential fixed investment ticked down 0.1% after increasing 7.4% in the previous quarter. Exports increased 6.2% in the third quarter after falling 9.3% in the second quarter. Imports increased 5.7% in the third quarter, significantly higher than the 7.6% decrease in the second quarter. Consumer prices increased 2.9% in the third quarter compared to a 2.5% advance in the second quarter. Excluding food and energy, consumer prices advanced 2.4% in the third quarter (3.7% in the second quarter).
• The federal budget had a deficit of $171.0 billion in September, the last month of fiscal year 2023. The total deficit for the fiscal year was $1.695 billion, comprised of $6.134 billion of total outlays and $4.439 billion of total receipts. By comparison, the FY23 total deficit was more than 23.0% greater than the total deficit for FY22 ($1.375 billion). For FY23, individual income tax receipts totaled $2.176 billion, well below the $2.632 billion collected in the prior fiscal year. Corporate income tax receipts were also lower in FY23, at $420.0 billion, compared to $425.0 billion collected in FY22.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.7% in September, up from 0.4% in August. Personal income and disposable personal income rose 0.3% in September. Consumer prices rose 0.4% in September, the same increase as in the previous month. Consumer prices excluding food and energy (core prices), the preferred inflation indicator used by the Federal Reserve, increased 0.3% in September, up from the August increase of 0.1%. Over the 12 months ended in September, consumer prices increased 3.4%, the same increase as for the 12 months ended in August. Core prices rose 3.7% for the year ended in September, down from 3.8% for the 12 months ended in August. Over the last 12 months, prices for goods increased 0.9% and prices for services increased 4.7%. Food prices increased 2.7%, and energy prices decreased by less than 0.1%.
• The Consumer Price Index rose 0.4% in September compared to a 0.6% advance in August. Over the 12 months ended in September, the CPI advanced 3.7%, unchanged from the annual rate for the period ended in August. Core prices, excluding food and energy, rose 0.3% in September and 4.1% over the last 12 months. Prices for shelter were the largest contributors to the monthly all items increase, accounting for over half of the September gain. An increase in gasoline prices was also a major contributor to the all items monthly rise. While the major energy components were mixed in September, energy prices rose 1.5% over the month. Food prices increased 0.2% in September, as they did in the previous two months. For the 12 months ended in September, food prices rose 3.7%; shelter prices increased 7.2%; energy prices dipped 0.5%; gasoline prices rose 3.0%; new vehicle prices advanced 2.5%; and used vehicle prices fell 8.0%.
• Prices that producers received for goods and services increased 0.5% in September after rising 0.7% in August. Producer prices increased 2.2% for the 12 months ended in September, the largest increase since moving up 2.3% for the 12 months ended in April. Prices for goods rose 0.9% in September, the third consecutive monthly increase. Nearly three-quarters of the broad-based September advance in prices for goods was attributable to a 3.3% rise in prices for energy, with gasoline prices increasing 5.4%. Prices for foods increased 0.9% in September and 1.2% for the year. In September, prices for services advanced 0.3%, and 2.9% since September 2022.
• Housing: Sales of existing homes decreased 2.0% in September, marking the fourth consecutive month of declines. Since September 2022, existing-home sales dropped 15.4%. According to the report from the National Association of Realtors®, limited inventory and housing affordability continued to hamper home sales. In September, total existing-home inventory sat at a 3.4-month supply at the current sales pace, up from 3.3 months in August. The median existing-home price was $394,300 in September, down from the August price of $404,100 but well above the September 2022 price of $383,500. Sales of existing single-family homes dropped 1.9% in September and 15.8% from a year ago. The median existing single-family home price was $399,200 in September, down from the August price of $410,200 but above the September 2022 price of $389,600.
• New single-family home sales jumped higher in September, climbing 12.3% above the August estimate. Overall, single-family home sales were up 33.9% from a year earlier. The median sales price of new single-family houses sold in September was $418,800 ($433,100 in August). The September average sales price was $503,900 ($522,700 in August). The inventory of new single-family homes for sale in September decreased to 6.9 months, down from 7.7 months in August.
• Manufacturing: Industrial production advanced 0.3% in September after advancing 0.4% in August. Manufacturing output rose 0.4% in September but was 0.8% below its year-earlier level. The output of motor vehicles and parts moved up only 0.3%, as motor vehicle assemblies were held down by the strike against three automakers. In September, mining increased 0.4%, while utilities decreased 0.3%. Total industrial production in September was 0.1% above its year-earlier level.
• New orders for durable goods rose 4.7% in September after declining in each of the previous two months. Excluding defense, new orders increased 5.8%. Excluding transportation, new orders increased 0.5%. Orders for transportation equipment increased 12.7% following a 1.1% decline in August. Core capital goods orders, excluding defense and aircraft, advanced 0.6% in September following a 1.1% advance in August.
• Imports and exports: September saw both import and export prices increase for the third straight month. Import prices ticked up 0.1% following a 0.6% increase in August. Higher fuel prices drove the September increase. Despite the recent increases, prices for imports declined 1.7% for the year ended in September. 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. Export prices rose 0.7% in September after advancing 1.1% in August. Higher prices for nonagricultural exports in September more than offset lower agricultural prices. Despite the recent advances, prices for exports decreased 4.1% over the past year. The 12-month drop in September was the smallest over-the-year decline since February 2023.
• According to the advance report, the international trade in goods deficit increased $1.1 billion, or 1.3%, in September. Exports of goods increased 2.9% from August, while imports of goods rose 2.4%.
• The latest information on international trade in goods and services, released October 5, was for August and revealed that the goods and services trade deficit decreased $6.4 billion, or 9.9%, from July. Exports for August rose 1.6% from the previous month. Imports decreased 0.7%. Year to date, the goods and services deficit decreased $137.6 billion, or 20.7%, from the same period in 2022. Exports increased 1.1%, while imports decreased 4.3%.
• International markets: The war in Ukraine has weighed on European economies. The combined gross domestic product for the eurozone’s 20 member countries fell 0.4% in the third quarter. The Russia-Ukraine war pushed energy and food prices higher at the outset of Russia’s invasion, weakening household spending. On the other hand, consumer prices eased in October, with core prices (excluding food and energy) dipping from 4.5% in September to 4.2% in October. In addition, prices rose 2.9% for the year ended in October, the lowest 12-month rate of inflation since the period ended July 2021. All of which prompted the European Central Bank to maintain interest rates at their current levels for the first time in the last 11 meetings. China’s economy showed new signs of slowing as factory orders declined and construction activity waned. A slowdown in growth overseas and a decline in real estate has hampered Chinese economic growth. For October, the STOXX Europe 600 Index decreased 1.8%; the United Kingdom’s FTSE 100 fell 1.90%; Japan’s Nikkei 225 Index dropped 1.2%; and China’s Shanghai Composite Index lost 3.0%.
• Consumer confidence: Consumer confidence declined for the third straight month in October. The Conference Board Consumer Confidence Index® decreased to 102.6, down from 104.3 in September (revised). The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined to 143.1 in October, down from 146.2 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell slightly to 75.6 in October from 76.4 in September.

Eye on the Month Ahead

The Federal Open Market Committee concludes its two-day meeting on November 1. Another interest-rate increase will likely come out of that meeting or when they next meet in December. The markets will look to rebound from three consecutive monthly downturns.