Investors finally heard what they had been waiting for after Federal Reserve Chair Jerome Powell gave clear indications that the central bank will lower interest rates in September. Powell noted that the labor market has cooled and inflation is slowing. In an up and down week for stocks, each of the benchmark indexes listed here ended up closing higher, led by the RUSSELL 2000. Crude oil prices rallied at the end of the week, but not enough to avoid closing in the red. Typically, falling interest rates stimulate economic growth, which includes rising demand for oil. However, worldwide energy demand, particularly in China, has waned, keeping oil prices somewhat muted. Ten of the 11 market sectors closed higher, led by materials, consumer discretionary, and financials. Energy ticked lower.
Last Monday saw stocks continue to build off of the prior week’s gains. The S&P 500 (1.4%) and the NASDAQ (1.0%) moved higher for the eighth straight session, the longest streak of the year. The small caps of the RUSSELL 2000 gained 1.2%, the GLOBAL DOW advanced 1.0%, and the DOW added 0.6%. The dollar fell 0.6% to a seven-month low, as signs of waning inflation furthered expectations of an interest rate cut next month. Ten-year Treasury yields dipped to 3.86%. Crude oil prices fell nearly 3.0% to $74.52 per barrel on weak Chinese demand. Gold prices rose 0.2%.
The winning streak for the S&P 500 and the NASDAQ ended at eight days following last Tuesday’s downturn. The RUSSELL 2000 declined 1.2%, the Nasdaq fell 0.3%, the S&P 500 dipped 0.2%, the Dow and the Global Dow slipped 0.1%. Investors pulled back from stocks ahead of the upcoming Jackson Hole symposium, highlighted by a speech from Fed Chair Jerome Powell. Among the market sectors, health care and consumer staples performed the best, while energy and materials were among the worst performers. Yields on 10-year Treasuries continued to decline, settling at 3.81%. Crude oil prices dropped to $73.82 per barrel. The dollar fell 0.5% against a basket of currencies. Gold prices rose 0.5%.
Stocks rallied modestly last Wednesday as minutes from the July Federal Reserve meeting indicated that policymakers would consider easing the restrictive economic policy in place (i.e., lower interest rates) in September. The RUSSELL 2000 recouped most of the prior day’s losses after gaining 1.3%. The NASDAQ rose 0.6%, while the S&P 500 and the GLOBAL DOW gained 0.4%. The DOW inched up 0.1%. Crude oil prices closed in the red, settling at $71.94 per barrel. Ten-year Treasury yields dipped to 3.77%. The dollar declined 0.3%, while gold prices were relatively unchanged.
Volatile continued to best describe the stock market last week. After moving higher last Monday, equities declined on Tuesday, rebounded on Wednesday, and fell on Thursday. Investors awaited Fed Chair Jerome Powell’s Jackson Hole speech with apprehension. While the minutes from the July meeting seemed to support an interest rate decrease, investors may be looking for a more definitive indication from Powell. A drop in tech shares pulled the NASDAQ down 1.7%. The RUSSELL 2000 fell 1.0%, the S&P 500 lost 0.9%, the DOW declined 0.4%, and the GLOBAL DOW dipped 0.3%. Ten-year Treasury yields rose to 3.86%. Crude oil prices climbed 1.4% to $72.94 per barrel. The dollar gained 0.5%, while gold prices edged lower.
Stocks posted solid gains following Fed Chair Powell’s speech. The RUSSELL 2000 gained 3.2% and the NASDAQ rose 1.5%. The S&P 500 and the GLOBAL DOW added 1.2%, while the DOW advanced 1.1%. Ten-year Treasury yields closed at 3.80%, as they approached their lowest level in 14 months. Crude oil prices rose 2.6%, the dollar fell 0.8%, and gold prices rose 1.2%.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 8/23
Weekly Change
YTD Change
DJIA
37,689.54
40,659.76
40,712.78
0.13%
8.02%
NASDAQ
15,011.35
17,631.72
17,877.79
1.40%
19.10%
S&P 500
4,769.83
5,554.25
5,634.61
1.45%
18.13%
RUSSELL 2000
2,027.07
2,141.92
2,218.70
3.58%
9.45%
GLOBAL DOW
4,355.28
4,806.79
4,847.19
0.84%
11.29%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
3.89%
3.80%
-9 bps
-6 bps
US Dollar-DXY
101.39
102.44
100.70
-1.70%
-0.68%
Crude Oil-CL=F
$71.30
$76.77
$74.90
-2.44%
5.05%
Gold-GC=F
$2,072.50
$2,547.20
$2,546.50
-0.03%
22.87%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Last Week’s Economic News
Sales of existing homes increased in July for the first time since February. Existing home sales rose 1.3% in July. Year over year, sales were down 2.5%. Total inventory sat at a 4.0-month supply. The median existing home price was $422,600 in July, down from June’s $426,900 but above the July 2023 price of $405,600. Sales of single-family homes advanced 1.4% in July but declined 1.4% from a year ago. The median existing single-family home price was $428,500 last month, down from the June estimate of $432,900 but above the July 2023 price of $411,200. As of August 15, the 30-year fixed-rate mortgage averaged 6.49%, according to Freddie Mac, which was up from 6.47% one week ago, but down from 7.09% from a year ago.
Sales of new single-family homes also picked up steam in July, climbing 10.6% for the month and 5.6% above the total from the previous year. The median sales price of new houses sold in July was $429,800. The average sales price was $514,800. The inventory of new single-family homes available for sale represented a 7.5-month supply at the current sales rate.
The national average retail price for regular gasoline was $3.382 per gallon on August 19, $0.032 per gallon under the prior week’s price and $0.486 per gallon less than a year ago. Also, as of August 19, the East Coast price fell $0.027 to $3.299 per gallon; the Midwest price decreased $0.072 to $3.322 per gallon; the Gulf Coast price dipped $0.003 to $2.996 per gallon; the Rocky Mountain price increased $0.057 to $3.471 per gallon; and the West Coast price decreased $0.014 to $4.058 per gallon.
For the week ended August 17, there were 232,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 10 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 10 was 1,863,000, an increase of 4,000 from the previous week’s level, which was revised down by 5,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended August 3 were New Jersey (2.8%), Puerto Rico (2.6%), Rhode Island (2.6%), California (2.2%), Minnesota (2.0%), Pennsylvania (1.9%), Connecticut (1.8%), Massachusetts (1.7%), Nevada (1.7%), New York (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 10 were in Georgia (+693), Michigan (+584), Virginia (+357), New Jersey (+339), and Kansas (+233), while the largest decreases were in California (-2,585), Texas (-1,438), Massachusetts (-972), Pennsylvania (-604), and Iowa (-508).
Eye on the Week Ahead
The second release of gross domestic product for quarter two is out this week. The initial estimate showed the economy expanded at an annualized rate of 2.8%. Also out this week is the report on personal income and outlays for July, which is also a potential market mover. One of the most important parts of the report is the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve. In June, consumer prices ticked up 0.1% and rose 2.5% for the year ended in June.
Wall Street rebounded after a rough start to the month, to close out its best week of the year. Investors saw alot of economic data that did little to change the expectations of an interest rate reduction in September. Last week’s gains ended four straight weeks of losses, fueled by concerns that the Federal Reserve hadn’t lowered interest rates soon enough to prevent a major economic slowdown. However, favorable inflation data, robust retail sales, and fewer unemployment claims reassured investors’ confidence, leading to a market rally. Each of the benchmark indexes listed here closed the week higher. All 11 of the S&P 500 market sectors gained ground, with information technology climbing more than 8.0%. Ten-year Treasury yields dipped lower as bond values advanced. Crude oil prices inched lower. The dollar declined, while gold prices increased.
Last Monday stocks closed generally lower as investors awaited upcoming inflation data later in the week. The Nasdaq edged up 0.2% and the S&P 500 closed flat. The remaining benchmark indexes listed here closed in the red, led by the Russell 2000, which lost 0.9%, followed by the Dow (-0.4%) and the Global Dow (-0.1%). Information technology, energy, and utilities posted gains, while real estate and communication services fell the furthest. Ten-year Treasury yields opened the week at 3.90%. Crude oil prices rose 3.6% to settle at $79.62 per barrel. The dollar was muted, while gold prices rose 1.6%.
Wall Street closed higher last Tuesday as investors assessed a lower-than-expected Producer Price Index (see below). Tech shares led the market uptick, helping to drive the Nasdaq (2.4%) higher. The remaining benchmarks listed here also posted solid gains. The S&P 500 rose 1.7%, followed by the Russell 2000 (1.6%), the Global Dow (1.3%), and the Dow (1.0%). Ten-year Treasury yields dipped 5.7 basis points to 3.85%. Crude oil prices ended a mini rally, falling to $78.49 per barrel. The dollar fell 0.5%, while gold prices ticked up 0.1%.
Investors were encouraged by the latest Consumer Price Index (see below), which matched expectations for July, but unexpectedly declined to 2.9% for the 12 months ended in July, the lowest 12-month rate since March 2021. The favorable inflation data helped push stocks generally higher last Wednesday. The Global Dow and the Dow led the benchmarks, each gaining 0.6%, followed by the S&P 500, which climbed 0.4%. The Nasdaq eked out a minimal gain of less than 0.1%, while the Russell 2000 fell 0.5%. Crude oil prices continued to trend lower, ending the sessionn at $77.09 per barrel after OPEC+ cut its 2024 demand forecast. Yields on 10-year Treasuries fell to 3.82%. The dollar edged up 0.1%, while gold prices fell 0.9%.
Last Thursday saw the release of another round of favorable economic data. Retail sales advanced (see below), while unemployment claims declined, bolstering investor confidence in the economy. Each of the benchmark indexes listed here posted solid gains, led by the Russell 2000, which advanced 2.5%. The Nasdaq rose 2.3%, followed by the S&P 500 (1.6%), the Dow (1.4%), and the Global Dow (0.9%). Bond prices fell as stock values rose. Ten-year Treasury yields climbed over 10.0 basis points, settling at 3.92%. Crude oil prices rose 1.3% to $77.96 per barrel. The dollar gained 0.4% and gold prices rose 0.5%.
Stocks pushed higher last Friday, with each index listed here posting gains. The Global Dow advanced 1.0% and the Russell 2000 rose 0.3%, while the Dow, the S&P 500, and the Nasdaq each gained about 0.2%. Ten-year Treasury yields slipped to 3.89%. The dollar and crude oil prices declined 0.5% and 1.8%, respectively. Gold prices rose 2.2%.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 8/16
Weekly Change
YTD Change
DJIA
37,689.54
39,497.54
40,659.76
2.94%
7.88%
Nasdaq
15,011.35
16,745.30
17,631.72
5.29%
17.46%
S&P 500
4,769.83
5,344.16
5,554.25
3.93%
16.45%
Russell 2000
2,027.07
2,080.92
2,141.92
2.93%
5.67%
Global Dow
4,355.28
4,629.29
4,806.79
3.83%
10.37%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
3.94%
3.89%
-5 bps
3 bps
US Dollar-DXY
101.39
103.15
102.44
-0.69%
1.04%
Crude Oil-CL=F
$71.30
$76.97
$76.77
-0.26%
7.67%
Gold-GC=F
$2,072.50
$2,469.50
$2,547.20
3.15%
22.90%
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 0.2% in July, in line with expectations. The CPI rose 2.9% for the year ended in July, down 0.1 percentage point from the 12 months ended in June. Nearly 90.0% of the July increase was attributable to a 0.4% advance in shelter prices. Energy prices were unchanged, while food prices increased 0.2%. Prices less food and energy also increased 0.2% in July and 3.2% over the last 12 months.
Producer prices edged up 0.1% in July after increasing 0.2% in June. Over the last 12 months, producer prices rose 2.2%, which is the lowest 12-month increase since May. Producer prices excluding foods, energy, and trade services increased 0.2% in July and 3.3% for the year ended in July. The increase in producer prices last month is largely attributable to a 0.6% increase in prices for goods, the largest increase since February. Prices for services decreased 0.2%, which marked the first monthly decline since December 2023.
Retail sales rose 1.0% in July after declining 0.2% in June. Retail sales advanced 2.7% for the 12 months ended in July. Retail trade sales were up 1.1% last month and 2.6% from last year. Sales, excluding motor vehicles and parts, rose 0.4% in July. Sales at motor vehicle and parts dealers climbed 3.6% in July. Nonstore (on line) sales ticked up 0.2% last month, while food services and drinking places sales edged up 0.3%.
Prices for imports ticked up 0.1% in July, after being unchanged the previous month. Prices for imports rose 1.6% for the year ended in July, the largest 12 month increase since the index advanced 3.2% for the 12 months ended in December 2022. Export prices increased 0.7% in July following a 0.3% decline in June. Higher nonagricultural prices in July more than offset lower prices for agricultural exports. The prices index for exports increased 1.4% over the past year, the largest 12-month advance since prices rose 2.0% for the 12 months ended in January 2023.
Industrial production fell 0.6% in July after increasing 0.3% in June. Early July shutdowns in petrochemical and related industries due to Hurricane Beryl held down the growth of industrial production by an estimated 0.3 percentage point. Manufacturing output stepped down 0.3% as the index for motor vehicles and parts fell nearly 8.0%. Manufacturing excluding motor vehicles and parts rose 0.3%. The index for mining was unchanged, while the index for utilities decreased 3.7%. Total industrial production in July was 0.2% below its year-earlier level.
The Treasury budget deficit for July was $243.7 billion, well above the June deficit of 71.0 billion. July receipts were $236.0 billion, while total outlays wee $574.1 billion. For the current fiscal year, the total deficit is $1,517.0 trillion. The deficit over the same period in the last fiscal year was $1,613.8 trillion.
In July, the number of issued building permits for residential construction decreased 4.0% from the June estimate, and 7.0% below the July 2023 rate. The number of building permits for single-family houses dipped 0.1% in July. Housing starts declined 6.8% in July and 16.0% below the rate from a year earlier. Single-family housing starts in July were 14.1% under the June figure. Housing completions decreased 9.8% in July, but were 13.8% above the July 2023 rate. Single-family housing completions in July were 0.5% above the June estimate.
The national average retail price for regular gasoline was $3.414 per gallon on August 12, $0.034 per gallon under the prior week’s price and $0.436 per gallon less than a year ago. Also, as of August 12, the East Coast price fell $0.049 to $3.326 per gallon; the Midwest price decreased $0.034 to $3.394 per gallon; the Gulf Coast price dipped $0.011 to $2.999 per gallon; the Rocky Mountain price declined $0.021 to $3.414 per gallon; and the West Coast price decreased $0.008 to $4.072 per gallon.
For the week ended August 10, there were 227,000 new claims for unemployment insurance, a decrease of 7,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 3 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 3 was 1,864,000, a decrease of 7,000 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 July 27 were New Jersey (2.8%), Rhode Island (2.6%), Puerto Rico (2.5%), California (2.3%), Minnesota (2.0%), Connecticut (1.9%), Pennsylvania (1.9%), Massachusetts (1.8%), Illinois (1.7%), Nevada (1.7%), New York (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 3 were in New Jersey (+1,080), California (+694), Wisconsin (+672), New York (+607), and Illinois (+579), while the largest decreases were in Michigan (-7,430), Texas (-5,180), Missouri (-3,716), Virginia (-745), and Georgia (-493).
Eye on the Week Ahead
The real estate sector dominates the economic data released this week. Sales of both existing and new homes will look to rebound from a period of declining sales.
Market volatility continued last week as stocks tumbled Monday and Wednesday, only to rebound at the end of last week, but not enough to avoid closing in the red for the second week in a row. Each of the benchmark indexes listed here lost value, with the small caps of the Russell 2000 falling the furthest. Despite the recent downturn, the indexes remain ahead year to date. Among the market sectors, only industrials and communication services closed higher, while materials and utilities shed the most value. Crude oil prices ended a losing streak, gaining nearly 4.0% last week. The dollar was flat, while gold prices slipped lower. Bond prices fluctuated throughout the week, ultimately settling lower, which drove yields higher.
The stock sell-off continued last Monday on increasing worries over a U.S. economic slowdown. Markets worldwide took a hit as investors feared that weak economic data and mediocre corporate earnings could be signs of a recession. The S&P 500 (-3.0%) and the Dow (-2.6%) had their worst day in over two years. The Nasdaq (-3.4%) endured its worst start to a month since 2008. The Global Dow (-3.4%) and the Russell 2000 (-3.3%) also slid lower. Ten-year Treasury yields headed to their lowest levels in a year after settling at 3.78%. Crude oil prices closed at $72.94 per barrel. The dollar slid 0.4%, while gold prices fell 0.8%.
The markets moved higher last Tuesday as investors took advantage of equities that had fallen in value. The Russell 2000 led the benchmark indexes, gaining 1.2%, followed by the Global Dow (1.1%), the Nasdaq (1.0%), and the Dow (0.8%). Bond prices fell, driving yields higher, with 10-year Treasuries gaining 10.3 basis points to close at 3.88%. Crude oil prices settled at $73.09 per barrel. The dollar edged higher, while gold prices fell 0.6%.
Tuesday’s market rebound proved to be short-lived as stocks trended lower by the close of trading last Wednesday. The Russell 2000 lost about 1.4% and the Nasdaq fell 1.1%. The S&P 500 declined 0.8% and the Dow dipped 0.6%. The Global Dow rose 0.5%. Ten-year Treasury yields marched toward 4.00%, ending the session just short at 3.96%. Crude oil prices advanced nearly 3.0% to $75.37 per barrel. The dollar gained 0.2%, while gold prices fell 0.2%.
In what turned into a roller coaster of a week, stocks jumped higher last Thursday, led by a 2.9% increase by the Nasdaq. The Russell 2000 advanced 2.4%, the S&P 500 gained 2.3%, the Dow rose 1.8%, and the Global Dow increased 1.0%. Weekly jobless claims unexpectedly fell 17,000 (see below), which brightened the mood of investors. Yields on 10-year Treasuries settled at 3.99% after gaining 0.3 basis points. Crude oil prices rose 1.1% to $76.04 per barrel. The dollar was unchanged. Gold prices gained 1.3%.
Large caps and tech shares rose higher, while small caps lagged to close out last week. There was no economic data released last Friday, so investors could focus on inflation data set to be released this week. The Global Dow led the indexes, gaining 0.6%, followed by the Nasdaq and the S&P 500, which both advanced 0.5%. The Dow inched up 0.1%, while the Russell 2000 fell 0.2%. The market sectors mostly advanced, with only industrials and materials falling lower. Ten-year Treasury yields fell to 3.94% as bond prices climbed higher. Crude oil prices advanced 1.0% to $76.97 per barrel. Gold prices edged up 0.3%, while the dollar inched lower.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 8/9
Weekly Change
YTD Change
DJIA
37,689.54
39,737.26
39,497.54
-0.60%
4.80%
Nasdaq
15,011.35
16,776.16
16,745.30
-0.18%
11.55%
S&P 500
4,769.83
5,346.56
5,344.16
-0.04%
12.04%
Russell 2000
2,027.07
2,109.31
2,080.92
-1.35%
2.66%
Global Dow
4,355.28
4,639.08
4,629.29
-0.21%
6.29%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
3.79%
3.94%
15 bps
8 bps
US Dollar-DXY
101.39
103.22
103.15
-0.07%
1.74%
Crude Oil-CL=F
$71.30
$74.11
$76.97
3.86%
7.95%
Gold-GC=F
$2,072.50
$2,480.00
$2,469.50
-0.42%
19.16%
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
While the manufacturing sector may have slowed in July, the services sector saw an expansion of business activity last month. A rise in new orders has encouraged companies to take on extra staff. Input cost inflation accelerated, but the increased costs were passed on to consumers. The S&P Global US Services PMI® business Activity Index posted a reading of 55.0, signaling monthly expansion in services activity, which has continued for 18 months.
The goods and services trade deficit was $73.1 billion in June (the most recent data available), down $1.9 billion, or 2.5%, from the previous month. Exports, at $265.9 billion, increased by 1.5%, while imports, at $339.0 billion, advanced 0.6%. The June decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.5 billion to $97.4 billion and a decrease in the services surplus of $0.6 billion to $24.2 billion. Year to date, the goods and services deficit increased $22.7 billion, or 5.6%, from the same period in 2023. Exports increased $58.0 billion, or 3.8%. Imports increased $80.7 billion, or 4.2%.
The national average retail price for regular gasoline was $3.448 per gallon on August 5, $0.036 per gallon under the prior week’s price and $0.380 per gallon less than a year ago. Also, as of August 5, the East Coast price fell $0.020 to $3.375 per gallon; the Midwest price decreased $0.048 to $3.428 per gallon; the Gulf Coast price dipped $0.084 to $3.010 per gallon; the Rocky Mountain price advanced $0.040 to $3.435 per gallon; and the West Coast price decreased $0.026 to $4.080 per gallon.
For the week ended August 3, there were 233,000 new claims for unemployment insurance, a decrease of 17,000 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 July 27 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 27 was 1,875,000, an increase of 6,000 from the previous week’s level, which was revised down by 8,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended July 20 were New Jersey (2.8%), Rhode Island (2.6%), Puerto Rico (2.4%), California (2.3%), Minnesota (2.0%), Pennsylvania (1.9%), Connecticut (1.8%), Illinois (1.7%), Massachusetts (1.7%), New York (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended July 27 were in Michigan (+4,027), Missouri (+3,410), Massachusetts (+2,127), Virginia (+637), and Minnesota (+487), while the largest decreases were in Texas (-6,607), New York (-2,396), Ohio (-2,377), Florida (-1,587), and Tennessee (-1,488).
Eye on the Week Ahead
Inflation data for July is released this week. The Consumer Price Index dipped 0.1% in June, and investors will be looking for similar results in July. Prices producers paid, on the other hand, rose 0.2% in June.
Wall Street experienced a notable downturn last week, with each of the benchmark indexes closing sharply in the red. A weaker-than-expected jobs report, rising unemployment claims, disappointing corporate earnings from major tech firms, and falling manufacturing data prompted the major sell-off last week. Evidence of a slowing economy may prompt the Federal Reserve to cut interest rates in September, but many analysts and investors believe the Fed is behind the curve in cutting rates, especially when other central banks have already done so. There was a huge swing in the market sectors last week, where utilities (4.5%) and real estate (3.9%) turned sharply higher, while information technology (-4.1%), consumer discretionary (-3.8%), and energy (-3.4%) turned sharply lower. Bond prices jumped higher as demand increased, pulling yields lower. Ten-year Treasury yields fell to their lowest level since December 2023. Crude oil prices dropped by more than 3.5%, while gold prices climbed higher.
The week kicked off with the Nasdaq, the S&P 500, and the Global Dow ticking up minimally, while the Dow dipped 0.1% and the Russell 2000 fell 1.1%. Investors awaited the release of quarterly earnings from several tech companies, the outcome of the Federal Reserve’s latest meeting, and labor data for July. Bond prices held steady, with yields on 10-year Treasuries slipping to 4.17%. Crude oil prices continued to fade, down 1.7% to $75.83 per barrel. The dollar gained 0.2%, while gold prices were essentially unchanged.
Last Tuesday saw investors flee stocks, particularly tech shares, and move to bonds after an acceleration of the unrest in the Middle East and ahead of the Fed’s meeting on Wednesday. The tech-heavy Nasdaq lost 1.3%, while the S&P 500 fell 0.5% behind weakness in technology, consumer discretionary, and consumer staples. However, the Dow (0.5%), the Russell 2000 (0.4%), and the Global Dow (0.2%) moved higher. Demand for bonds drove prices up and pulled yields lower. Ten-year Treasury yields fell to 4.14%. Crude oil prices declined to $75.08 per barrel. The dollar was unchanged, while gold prices gained 1.2%.
Stocks closed up last Wednesday as investors were encouraged that interest rates may be reduced in September following statements from the Federal Open Market Committee and its chair, Jerome Powell. Each of the benchmark indexes listed here climbed higher, led by the Nasdaq (2.6%), followed by the S&P 500 (1.6%), the Global Dow (1.2%), the Russell 2000 (0.5%), and the Dow (0.2%). Tech stocks, which had been trending lower, reversed course, helping to drive the indexes higher. Ten-year Treasury yields dipped to 4.10%. The dollar fell nearly 0.5%, while gold prices rose 1.7%. Crude oil prices, which had been sinking, jumped 5.1% to $78.53 per barrel.
A sharp sell-off in chip stocks sent the markets reeling last Thursday. Each of the benchmark indexes ended the session firmly in the red, led by the Russell 2000 (-3.0%) and the Nasdaq (-2.3%). The remaining benchmarks fell between 1.2% and 1.6%. Ten-year Treasury yields declined 3.2%, or 13.3 basis points, settling at 3.97%, moving below the 4.00% level for the first time since February. Crude oil prices dropped to $76.90 per barrel. The dollar and gold prices gained 0.3% and 0.6%, respectively. Investors reacted to contraction in the manufacturing sector (see below) and jobless claims rising to an 11-month high.
Stocks plunged lower last Friday as investors saw unemployment claims rise and job gains fall. The interest-sensitive Russell 2000 lost 3.5%, followed by the Nasdaq (-2.4%), Global Dow (-2.1%), the S&P 500 (-1.8%), and the Dow (-1.5%). Ten-year Treasury yields dropped over 18.0 basis points, crude oil prices fell 2.9%, the dollar slipped 1.1%, while gold prices were unchanged.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 8/2
Weekly Change
YTD Change
DJIA
37,689.54
40,589.34
39,737.26
-2.10%
5.43%
Nasdaq
15,011.35
17,357.88
16,776.16
-3.35%
11.76%
S&P 500
4,769.83
5,459.10
5,346.56
-2.06%
12.09%
Russell 2000
2,027.07
2,260.07
2,109.31
-6.67%
4.06%
Global Dow
4,355.28
4,753.88
4,639.08
-2.41%
6.52%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
4.20%
3.79%
-41 bps
-7 bps
US Dollar-DXY
101.39
104.31
103.22
-1.04%
1.80%
Crude Oil-CL=F
$71.30
$76.81
$74.11
-3.52%
3.94%
Gold-GC=F
$2,072.50
$2,385.40
$2,480.00
3.97%
19.66%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Last Week’s Economic News
The Federal Open Market Committee met last week and decided to keep the target range at its current 5.25%-5.50%. However, it appears that if inflation continues to stabilize, the FOMC may lend more consideration to reducing interest rates when it next meets in September.
Employment slowed in July, according to the latest data from the Bureau of Labor Statistics. Employment rose by only 114,000 last month, well below the 12-month average of 215,000. In July, employment continued to trend up in health care, in construction, and in transportation and warehousing, while information lost jobs. The number of unemployed, at 7.2 million, increased by 352,000 over June’s estimate. The unemployment rate increased for the second straight month in July, ticking up 0.2 percentage point to 4.3%. Both the number of unemployed and the unemployment rate are above the July 2023 estimates, at 5.9 million and 3.5%, respectively. The number of long-term unemployed (those jobless for 27 weeks or more) changed little at 1.5 million in July. This measure is up from 1.2 million a year earlier. The long-term unemployed accounted for 21.6% of all unemployed people in July. The labor force participation rate increased 0.1 percentage point to 62.7%, while the employment-population ratio dipped 0.1 percentage point to 60.0%. The May estimate was revised down by 2,000, from 218,000 to 216,000, and the change for June was revised down by 27,000, from 206,000 to 179,000. With these revisions, employment in May and June combined was 29,000 lower than previously reported. In July, average hourly earnings increased by $0.08, or 0.2%, to $35.07. Over the past 12 months, average hourly earnings have increased by 3.6%. The average workweek edged down by 0.1 hour to 34.2 hours in July.
According to the latest Job Openings and Labor Turnover Summary, the number of job openings, at 8.2 million, was unchanged in June from May but was 941,000 less than the estimate from a year earlier. The number of hires (5.3 million) fell by 314,000, and 554,000 over the year. The number of total separations (5.1 million) declined by 302,000 and 544,000 from a year earlier.
Manufacturing regressed in July as new orders declined for the first time in three months. The S&P Global US Manufacturing Purchasing Managers’ Index™ fell to 49.6 in July from 51.6 in June. A reading below 50.0 indicates contraction, which occurred for the first time in seven months. New orders decreased at the fastest pace in 2024. Some costs to manufacturers increased markedly in July as survey respondents noted increases in costs for energy, freight, labor, and raw materials. Nevertheless, the rate of overall cost inflation eased to a four-month low.
The national average retail price for regular gasoline was $3.484 per gallon on July 29, $0.013 per gallon over the prior week’s price but $0.273 per gallon less than a year ago. Also, as of July 29, the East Coast price fell $0.014 to $3.395 per gallon; the Midwest price increased $0.050 to $3.476 per gallon; the Gulf Coast price rose $0.047 to $3.094 per gallon; the Rocky Mountain price advanced $0.072 to $3.395 per gallon; and the West Coast price decreased $0.031 to $4.106 per gallon.
For the week ended July 27, there were 249,000 new claims for unemployment insurance, an increase of 14,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 20 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 20 was 1,877,000, an increase of 33,000 from the previous week’s level, which was revised down by 7,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended July 13 were New Jersey (2.7%), Rhode Island (2.6%), Puerto Rico (2.4%), California (2.2%), Minnesota (2.0%), Connecticut (1.8%), Massachusetts (1.8%), Pennsylvania (1.8%), Illinois (1.7%), Nevada (1.7%), New York (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended July 20 were in Texas (+5,962), Tennessee (+769), Delaware (+259), and the Virgin Islands (+7), while the largest decreases were in New York (-8,091), Michigan (-6,941), California (-5,326), Missouri (-3,610), and Kentucky (-3,301).
Eye on the Week Ahead
There isn’t much in terms of economic reports available this week. Of some interest is the S&P Global’s survey of service providers for July. The services sector has shown marked resilience during the period of restrictive economic policy and has steadily expanded.
Stocks closed mostly higher in July. Tech shares, including AI stocks, which had been a bellwether for much of the year, retreated in July, dragging the Nasdaq to its worst July performance since 2014. The remaining indexes fared better, with the Russell 2000 enjoying its best month since December 2023 and its best July since 2022. The Dow also had its best month of the year. Most of the market sectors advanced in July, with the notable exceptions of communication services (-4.5%) and information technology (-2.4%). Real estate (7.5%), financials (6.0%), and utilities (5.9%) outpaced the remaining sectors.
Inflationary data showed price pressures stabilized in June. The 12-month interest rates of the Consumer Price Index and the Personal Consumption Expenditures (PCE) Price Index declined. Prices for commodities that are prevalent for most households, such as food at home, gasoline, new and used motor vehicles, and apparel, changed very little over the year. The PCE price index, the preferred barometer of the Federal Reserve, slowed to 2.5% for the year ended in June (see below) as it inches closer to the Fed’s 2.0% target inflation rate.
Growth of the U.S. economy continued at a modest pace, despite the Fed’s restrictive monetary policy. The gross domestic product (GDP) exceeded expectations after increasing 2.8% in the second quarter, following a 1.4% increase in the first quarter (see below). Consumer spending, the largest contributor in the calculation of GDP, rose 2.8%, with spending rising in durable goods, nondurable goods, and services. Private investments, another key component of GDP, also increased. Consumer confidence (see below) grew in July after trending lower in May.
Job growth notably slowed over the past several months. Although job gains exceeded expectations in June (see below), downward revisions to estimates for April and May clearly show that average monthly gains in the second quarter of the year (177,000) are well below the average gains in the first quarter (267,000). Wage growth has changed little throughout the year. The 12-month rate for the period ended in June (3.9%) was only 0.2 percentage points lower than the rate for the period ended in May. New weekly unemployment claims decreased from a year ago, while total claims paid increased (see below).
Nearing the midpoint of Q2 corporate earnings season, S&P 500 companies are reporting mixed results. About 41% of the S&P 500 companies have reported results. Of those companies, 78% reported earnings per share (EPS) above estimates, which is in line with the five-year average of 77% and higher than the 10-year average of 74%. Overall, as of July 26, the index reported an earnings growth rate of 9.8%, which is above the 8.9% growth rate for the three months ended in June. Eight of the 11 sectors are reporting year-over-year growth, with four of these eight sectors reporting double-digit growth: communication services, information technology, financials, and health care. On the other hand, three sectors are reporting a year-over-year decline in earnings, led by the Materials sector.
Sales of both existing homes and new homes declined in July (see below). Higher mortgage rates have slowed sales, with inventory expanding and the sales process lengthening. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.77% as of July 18. That’s down from 6.89% one week ago and 6.78% one year ago.
Industrial production expanded in June for the second straight month (see below). Manufacturing output increased in June and was 1.1% above its year-earlier level. Within manufacturing, durable manufacturing was unchanged in June, while nondurable manufacturing increased 0.8%. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, the manufacturing sector perked up in June, while the services sector saw business accelerate at a quicker pace than in May.
Bond yields gained as bond prices declined in July. Ten-year Treasury yields generally closed the month lower. The two-year Treasury yield fell nearly 50 basis points to about 4.26% on the last day of July. The dollar slipped lower against a basket of world currencies. Gold prices climbed higher. Crude oil prices declined, influenced by ongoing unrest in the Middle East and waning Chinese demand. The retail price of regular gasoline was $3.484 per gallon on July 29, $0.046 above the price a month earlier but $0.273 less than the price a year ago.
Stock Market Indexes
Market/Index
2023 Close
Prior Month
As of July 31
Monthly Change
YTD Change
DJIA
37,689.54
39,118.86
40,842.79
4.41%
8.37%
Nasdaq
15,011.35
17,732.60
17,599.40
-0.75%
17.24%
S&P 500
4,769.83
5,460.48
5,522.30
1.13%
15.78%
Russell 2000
2,027.07
2,047.69
2,254.48
10.10%
11.22%
Global Dow
4,355.28
4,677.14
4,811.50
2.87%
10.48%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
4.34%
4.10%
-24 bps
24 bps
US Dollar-DXY
101.39
105.88
104.09
-1.69%
2.66%
Crude Oil-CL=F
$71.30
$81.51
$78.53
-3.66%
10.14%
Gold-GC=F
$2,072.50
$2,335.00
$2,494.20
6.82%
20.35%
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: June jobs data came in above expectations. Total employment increased by 206,000 in June, similar to the average monthly gain of 220,000 over the prior 12 months. The June increase followed downward revisions in both April and May, which totaled 111,000. In June, job gains occurred in government, health care, social assistance, and construction. In June, the unemployment rate increased 0.1 percentage point to 4.0% and was 0.3 percentage point above the rate from a year earlier (3.7%). The number of unemployed persons was relatively unchanged at 6.6 million. In June, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.5 million, rose by 166,000 and accounted for 22.2% of all unemployed people. The labor force participation rate, at 62.6%, was 0.1 percentage point above the prior month’s estimate, while the employment-population ratio, at 60.1%, was unchanged from the previous month. In June, average hourly earnings increased by $0.10, or 0.3%, to $35.00. Since June 2023, average hourly earnings rose by 3.9%, which is down from the May figure of 4.1%. The average workweek was unchanged at 34.3 hours in June for the third straight month.
There were 235,000 initial claims for unemployment insurance for the week ended July 20, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,851,000. A year ago, there were 231,000 initial claims, while the total number of workers receiving unemployment insurance was 1,765,000.
FOMC/interest rates: The Federal Open Market Committee met at the end of July. Following that meeting, the Committee kept interest rates at their current levels. However, the meeting statement indicated that, although economic activity continued to expand at a solid pace, job gains had moderated, and the unemployment rate had moved up but remained low. In addition, inflation had eased but remained somewhat elevated. The FOMC noted that while some further progress had been made toward achieving the Committee’s 2.0% target, they are still looking for further evidence that inflation is moving sustainably toward 2.0%. Nevertheless, it appears that, unless inflationary pressures spike, the Committee is likely to consider reducing interest rates following its September meeting.
GDP/budget: The economy, as measured by gross domestic product, accelerated at an annualized rate of 2.8% in the second quarter of 2024, according to the initial estimate from the Bureau of Economic Analysis. GDP increased 1.4% in the first quarter. While the second-quarter estimate is based on incomplete data, it, nevertheless, rose by more than expected. Personal consumption expenditures rose 2.3% in the second quarter compared to a 1.5% increase in the previous quarter. Consumer spending on goods increased 2.5%, while spending on services rose 2.2%. Gross domestic investment advanced 8.4% in the second quarter, well above the 4.4% increase in the first quarter. Nonresidential (business) fixed investment advanced 5.2% in the second quarter (4.4% in the first quarter), while residential fixed investment decreased 1.4% compared to a 16.0% increase in the first quarter. Exports climbed 2.0%, while imports, which are a negative in the calculation of GDP, increased 6.9%. Consumer prices rose 2.6% in the second quarter, compared with an increase of 3.4% in the previous quarter. Excluding food and energy prices, the PCE price index increased 2.9% compared with an increase of 3.7% in the first quarter.
The federal budget deficit in June was $66.0 billion following May’s surplus of $347.0 billion. In June, government receipts totaled $466.0 billion, while government outlays were $532.0 billion. Through the first nine months of fiscal year 2024, the total deficit sits at $1,268.0 trillion, which is roughly $125.0 billion lower than the deficit through the first nine months of the previous fiscal year.
Inflation/consumer spending: Personal income increased 0.2% in June (0.4% in May). Disposable personal income (less taxes) also rose 0.2% (0.4% in May). Personal spending, as measured by personal consumption expenditures, rose 0.3% in June (0.4% in May). The PCE price index, a measure of inflation, increased 0.1% in June after registering no gain in May. Excluding food and energy, the PCE price index increased 0.2% (0.1% in May). From a year ago, the PCE price index rose 2.5% (0.1% less than the May estimate) and 2.6% when excluding food and energy.
The Consumer Price Index (CPI) declined 0.1% in June after being unchanged in May. Over the 12 months ended in June, the CPI rose 3.0%, down 0.3 percentage point from the 12-month period ended in May. Excluding food and energy, the CPI rose 0.1% in June, (0.2% in May), and 3.3% from June 2023, which is the smallest 12-month increase since April 2021. In June, prices for food rose 0.2% (2.2% for the year), while prices for shelter increased 0.2% (the smallest monthly increase since August 2021) and 5.2% over the past 12 months, which is the lowest year-over-year increase since the period ended in April 2022. Energy prices declined 2.0% in June, while gasoline prices decreased 3.8%. The Fed should pay particular attention to the decline in shelter costs, which compose about one-third of the CPI basket of goods and services.
While prices paid by consumers may have moderated in June, prices that producers received for goods and services increased 0.2% in June after being unchanged in May. The June increase was attributable to a 0.6% jump in prices for services. Prices for goods fell 0.5% in June after declining 0.8% in May. Nearly all of the June increase in prices for services was attributable to a 1.9% increase in margins for trade services, which measure changes in margins received by wholesalers and retailers. Prices for gasoline declined 5.8% in June. Over the last 12 months, producer prices have increased 2.6%, up from 2.4% for the 12 months ended in May. Excluding food and energy, producer prices increased 3.0% for the year ended in June, which is the highest 12-month increase since April 2023.
Housing: Sales of existing homes fell 5.4% in June and 5.4% over the last 12 months. According to the National Association of Realtors® (NAR), the market for existing homes is slowly shifting from a seller’s market to a buyer’s market. The pace of sales is waning slightly and sellers are receiving fewer offers. Inventory is rising on a national basis. Unsold inventory of existing homes in June represented a 4.1-month supply at the current sales pace, up from 3.7 months in May. The median existing-home price was at an all-time high of $426,900 in June, up from the May estimate of $417,200, and 4.1% above the June 2023 price of $410,100. Sales of existing single-family homes decreased 5.1% in June and 4.3% from the prior year. The median existing single-family home price was $432,700 in June, up from $422,400 in May and well above the June 2023 estimate of $415,700.
New single-family home sales also declined in June, falling 0.6% below the May estimate and 7.4% under the June 2023 rate. The median sales price of new single-family houses sold in June was $417,300 ($407,100 in May). The June average sales price was $487,200 ($504,500 in May). The inventory of new single-family homes for sale in June represented a supply of 9.3 months at the current sales pace, up from 9.1 months in May.
Manufacturing: Industrial production rose 0.6% in June, following a 0.9% advance in May. Manufacturing output increased 0.4% in June after climbing 1.0% in May. Mining increased 0.3% in June, while utilities advanced 2.8%. For the 12 months ended in June, total industrial production advanced 1.6% from its year-earlier level. Over the same period, manufacturing increased 1.1%, mining decreased 0.6%, while utilities increased 7.9%.
New orders for durable goods declined 6.6% in June, following four consecutive monthly increases. Excluding transportation, new orders increased 0.5% in June. Excluding defense, new orders fell 7.0%. Transportation equipment, down 20.5%, drove the overall decrease in new orders. Cancellations of new orders for private aircraft largely contributed to the drop in transportation equipment. In fact, new orders for nondefense aircraft and parts fell 127.2% in June.
Imports and exports: U.S. import prices were unchanged in June after decreasing 0.2% in May. Lower import fuel prices (-1.0%) in June offset higher nonfuel prices (0.2%). Import prices advanced 1.6% over the last 12 months, the largest 12-month increase since December 2022. Export prices decreased 0.5% in June after declining 0.7% the previous month. The June and May drops were the first one-month decreases since December 2023. Lower prices for nonagricultural exports in both months more than offset higher agricultural prices. Despite the recent declines, prices for exports advanced 0.7% over the past 12 months.
The international trade in goods deficit was $96.8 billion in June, down $2.5 billion, or 2.5%, from May. Exports of goods were $172.3 billion in June, $4.3 billion, or 2.5%, more than in May. Imports of goods were $269.2 billion in June, $1.7 billion, or 0.7%, above the May estimate. Since June 2023, exports increased 5.7%, while imports increased 6.9%.
The latest information on international trade in goods and services, released July 3, is for May and revealed that the goods and services trade deficit was $75.1 billion, up $0.6 billion, or 0.8%, from the April deficit. May exports were $261.7 billion, 0.7% less than April exports. May imports were $336.7 billion, 0.3% below April’s estimate. Year to date, the goods and services deficit increased $14.4 billion, or 4.2%, from the same period in 2023. Exports increased $42.8 billion, or 3.4%. Imports increased $57.2 billion, or 3.6%.
International markets: Global inflation seems to be trending lower and some central banks are beginning to ease interest rate restrictions in response. The national banks of China and Canada cut interest rates in July, while there’s an increasing likelihood that the Bank of England will follow suit in early August. On the other hand, the Bank of Japan raised its benchmark interest rate, but not in response to growing inflationary concerns. Instead, the decision to hike rates was due to concerns over the historically weak yen. Japanese officials are hopeful that raising interest rates could push up the yen and spur economic growth. For July, the STOXX Europe 600 Index rose 0.72%; the United Kingdom’s FTSE gained 2.3%; Japan’s Nikkei 225 Index fell 3.6%; and China’s Shanghai Composite Index declined 1.5%.
Consumer confidence: Consumer confidence rose in July to 100.3, from a downwardly revised 97.8 in June, according to the Conference Board Consumer Confidence Index®. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 133.6 in June, down from 135.3 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, increased to 78.2 in July, up from 72.8 in June. The Expectations Index has been below 80 (the threshold which usually signals a recession ahead) for six consecutive months.
Eye on the Month Ahead
All eyes will be on the inflation data released in August for July. Inflationary pressures resumed a downward trend, and if it continues, the Fed, which does not meet in August, may be more inclined to lower interest rates when it meets next in September.
What I'm Watching This Week 