Author: dredheadz

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 10/13	Weekly Change	YTD Change
DJIA	33,147.25	33,407.58	33,670.29	0.79%	1.58%
Nasdaq	10,466.48	13,431.34	13,407.23	-0.18%	28.10%
S&P 500	3,839.50	4,308.50	4,327.78	0.45%	12.72%
Russell 2000	1,761.25	1,745.56	1,719.71	-1.48%	-2.36%
Global Dow	3,702.71	3,923.43	3,947.01	0.60%	6.60%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.78%	4.62%	-16 bps	75 bps
US Dollar-DXY	103.48	106.11	106.68	0.54%	3.09%
Crude Oil-CL=F	$80.41	$82.83	$87.76	5.95%	9.14%
Gold-GC=F	$1,829.70	$1,844.20	$1,942.00	5.30%	6.14%

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

Last Week’s Economic News

• The Consumer Price Index rose 0.4% in September, after climbing 0.6% in August. Prices for shelter were the largest contributor to the monthly increase (+0.6%), accounting for over half of the increase. An increase in gasoline prices (+2.1%) was also a major contributor to the monthly rise. Prices for food ticked up 0.2% last month. Prices less food and energy rose 0.3% in September, the same increase as in August. Over the last 12 months, the CPI increased 3.7%, the same increase as the 12 months ended in August. The 12-month increase in prices less food and energy was 4.1%, down from 4.3% for the 12 months ended in August. Over the 12 months ended in September, energy prices decreased 0.5%, while food prices increased 3.7%.
• The prices producers received for goods and services rose 0.5% in September from the previous month. The September advance followed increases of 0.7% in August and 0.6% in July. Producer prices advanced 2.2% for the 12 months ended in September, the largest increase since moving up 2.3% for the 12 months ended in April. In September, prices for goods rose 0.9%, driven higher by a 3.3% rise in energy prices. Prices for services advanced 0.3%. Prices less foods, energy, and trade services increased 0.2% in September, the fourth consecutive advance. For the 12 months ended in September, prices less foods, energy, and trade services moved up 2.8%.
• Prices for U.S. imports ticked up 0.1% in September following a 0.6% advance the previous month. Higher fuel prices drove the September increase. Import fuel prices advanced 4.4% in September, after rising 8.8% in August. Import fuel prices have not recorded a one-month decline since May 2023. Prices for nonfuel imports decreased 0.2% for the second consecutive month in September. Despite the recent increases, prices for U.S. imports declined 1.7% for the year ended in September. U.S. export prices rose 0.7% in September after advancing 1.1% in August. Prices for agricultural exports fell 1.1% in September after decreasing 2.1% the previous month. Prices for nonagricultural exports rose 1.0% in September following a 1.5% increase the previous month. Prices for U.S. exports decreased 4.1% over the past year. The 12-month drop in September was the smallest 12-month decline since February 2023.
• The national average retail price for regular gasoline was $3.684 per gallon on October 9, $0.114 per gallon lower than the prior week’s price and $0.228 less than a year ago. Also, as of October 9, the East Coast price decreased $0.062 to $3.476 per gallon; the Midwest price fell $0.117 to $3.422 per gallon; the Gulf Coast price dropped $0.136 to $3.185 per gallon; the Rocky Mountain price declined $0.100 to $3.820 per gallon; and the West Coast price decreased $0.224 to $5.167 per gallon.
• For the week ended October 7, there were 209,000 new claims for unemployment insurance, unchanged from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 30 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 30 was 1,702,000, an increase of 30,000 from the previous week’s level, which was revised up by 8,000. States and territories with the highest insured unemployment rates for the week ended September 23 were Hawaii (2.4%), California (2.1%), New Jersey (2.1%), Puerto Rico (1.9%), Massachusetts (1.6%), New York (1.6%), Oregon (1.5%), Rhode Island (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended September 30 were in California (+1,202), Texas (+453), Michigan (+409), Virginia (+331), and Indiana (+306), while the largest decreases were in Ohio (-1,528), Alabama (-794), Illinois (-492), Missouri (-470), and Colorado (-456).

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 10/6	Weekly Change	YTD Change
DJIA	33,147.25	33,507.50	33,407.58	-0.30%	0.79%
Nasdaq	10,466.48	13,219.32	13,431.34	1.60%	28.33%
S&P 500	3,839.50	4,288.05	4,308.50	0.48%	12.22%
Russell 2000	1,761.25	1,785.10	1,745.56	-2.22%	-0.89%
Global Dow	3,702.71	3,982.95	3,923.43	-1.49%	5.96%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.57%	4.78%	21 bps	91 bps
US Dollar-DXY	103.48	106.19	106.11	-0.08%	2.54%
Crude Oil-CL=F	$80.41	$90.87	$82.83	-8.85%	3.01%
Gold-GC=F	$1,829.70	$1,864.90	$1,844.20	-1.11%	0.79%

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

Last Week’s Economic News

• Employment rose by a higher-than-expected 336,000 in September, above the average monthly gain of 267,000 over the prior 12 months. In September, job gains occurred in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance. The change in job gains for July was revised up by 79,000, from 157,000 to 236,000, and the change for August was revised up by 40,000, from 187,000 to 227,000. With these revisions, employment in July and August combined was 119,000 higher than previously reported. The total number of unemployed in September, at 6.4 million, rose by 50,000 from the previous month’s total. The unemployment rate was unchanged at 3.8%. Both the labor force participation rate, at 62.8%, and the employment-population ratio, at 60.4%, were unchanged over the month. In September, average hourly earnings rose by $0.07, or 0.2%, to $33.88. Over the past 12 months, average hourly earnings have increased by 4.2%. The average workweek was unchanged at 34.4 hours in September.
• Manufacturing contracted for the third consecutive month in September but at a slower pace. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 49.8 last month, up from 47.9 in August. A reading of less than 50.0 indicates contraction. According to survey respondents, the slower pace of contraction stemmed from a renewed rise in output following increased hiring and a slight drop in new orders. Although buyer demand remained subdued, conditions declined at a much slower pace. In addition, purchasing managers’ expectations for future output increased, reaching their highest levels since April 2022.
• The services sector barely expanded in September, according to the S&P Global US Services PMI. The business activity index registered 50.1 in September, down from the August reading of 50.5. Overall, business activity in the services sector stagnated as demand conditions weakened with new orders dropping, while company costs rose at a marked pace. According to the S&P Global survey, respondents noted elevated inflation, high interest rates, and economic uncertainty, which led to stymied customer demand.
• According to the latest Job Openings and Labor Turnover report, the number of job openings increased by 690,000 to 9.6 million in August. Over the month, job openings increased in professional and business services, finance and insurance, state and local government education, nondurable goods manufacturing, and federal government. The number of hires was little changed at 5.9 million (+35,000). Total separations, which include quits, layoffs and discharges, and other separations, changed little in August, inching up 38,000 to 5.6 million. In August, the number of quits, which generally are voluntary separations, was 3.6 million, up 19,000 from July. The number of layoffs and discharges in August, at 1.7 million, was essentially unchanged from the previous month.
• The goods and services deficit declined $6.4 billion, or 9.9%, in August, according to the latest data from the Bureau of Economic Analysis. August exports were $256.0 billion, $4.1 billion, or 1.6%, more than July exports. August imports were $314.3 billion, $2.3 billion, or 0.7%, less than July imports. Year to date, the goods and services deficit decreased $137.6 billion, or 20.7%, from the same period in 2022. Exports increased $22.0 billion, or 1.1%. Imports decreased $115.6 billion, or 4.3%.
• The national average retail price for regular gasoline was $3.798 per gallon on October 2, $0.039 per gallon lower than the prior week’s price but $0.016 more than a year ago. Also, as of October 2, the East Coast price decreased $0.060 to $3.538 per gallon; the Midwest price fell $0.100 to $3.539 per gallon; the Gulf Coast price dropped $0.030 to $3.321 per gallon; the Rocky Mountain price declined $0.076 to $3.920 per gallon; and the West Coast price advanced $0.133 to $5.391 per gallon.
• For the week ended September 30, there were 207,000 new claims for unemployment insurance, an increase of 2,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 23 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 23 was 1,664,000, a decrease of 1,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended September 16 were Hawaii (2.4%), New Jersey (2.2%), California (2.1%), Puerto Rico (1.8%), Massachusetts (1.6%), New York (1.6%), Oregon (1.5%), Rhode Island (1.5%), Washington (1.5%), Illinois (1.4%), Nevada (1.4%), and Pennsylvania (1.4%). The largest increases in initial claims for unemployment insurance for the week ended September 23 were in California (+2,712), Ohio (+1,422), Michigan (+1,282), Alabama (+870), and Missouri (+532), while the largest decreases were in Georgia (-1,853), South Carolina (-1,199), New York (-1,149), Indiana (-705), and Florida (-485).

Eye on the Week Ahead

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

The Markets (third quarter through September 29, 2023)

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

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

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

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

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

Stock Market Indexes

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

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

Latest Economic Reports

• Employment: Employment rose by 187,000 in August from July following a downwardly revised July total of 157,000. Over the last 12 months ended in August, the average monthly job gain was 312,000. In August, employment trended upward in health care, leisure and hospitality, social assistance, and construction. The unemployment rate increased 0.3 percentage point for the second straight month to 3.8%. In August, the number of unemployed persons rose by 514,000 to 6.4 million. The employment-population ratio was unchanged at 60.4%, while the labor force participation rate advanced 0.2 percentage point to 62.8%. In August, average hourly earnings increased by $0.08, or 0.2%, to $33.82. Over the 12 months ended in August, average hourly earnings rose by 4.3%. In August, the average workweek edged up 0.1 hour to 34.4 hours.
• There were 204,000 initial claims for unemployment insurance for the week ended September 23, 2023. The total number of workers receiving unemployment insurance was 1,670,000. By comparison, over the same period last year, there were 182,000 initial claims for unemployment insurance, and the total number of claims paid was 1,290,000.
• FOMC/interest rates: The Federal Open Market Committee left the Federal Funds target rate unchanged following its meeting in September. However, it is anticipated that one more 25-basis point increase will occur before the end of the year. In addition, Fed Chair Jerome Powell indicated that inflation was still elevated and that interest rates would likely remain higher for a longer period than previously projected.
• GDP/budget: Economic growth remained steady in the second quarter, as gross domestic product increased 2.1%, compared with a 2.2% increase in the first quarter. The deceleration in second-quarter GDP compared to the previous quarter primarily reflected a smaller decrease in consumer spending, a downturn in exports, and a deceleration in federal government spending. These movements were partly offset by an increase in private inventory investment and in nonresidential fixed investment, coupled with a smaller decrease in residential investment. Imports turned down. Consumer spending, as measured by personal consumption expenditures, rose 0.8% in the second quarter compared to a 3.8% increase in the first quarter. Consumer spending on long-lasting durable goods inched down 0.3% in the second quarter after advancing 14.0% in the prior quarter. Spending on services rose 1.0% in the second quarter (3.1% in the first quarter). Nonresidential fixed investment increased 7.4% after rising 5.7% in the first quarter. Residential fixed investment fell 2.2% in the second quarter, lower than the decrease in the first quarter (-5.3%). Exports decreased 9.3% in the second quarter following an increase of 6.8% in the first quarter. Imports, which are a negative in the calculation of GDP, decreased 7.6% in the second quarter after advancing 1.3% in the previous quarter. Consumer prices increased 2.5% in the second quarter compared to a 4.2% advance in the first quarter. Excluding food and energy, consumer prices advanced 3.7% in the second quarter (5.0% in the first quarter).
• The federal budget had a surplus of $89.0 billion in August but a deficit of $1,524 billion through the first 11 months of fiscal year 2023. By comparison, the August 2022 monthly deficit was $220.0 billion and the total deficit through August 2022 was $946.0 billion. In August, government receipts totaled $283.0 billion, while outlays equaled $194.0 billion. Compared to the first 11 months of the prior fiscal year, government outlays increased by $142.0 billion, while receipts rose by $438.0 billion.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.4% in August, down from 0.9% (revised) in July. Personal income rose 0.4% in August, while disposable personal income inched up 0.2%. Rising prices at the pump pushed consumer prices higher in August. Consumer prices rose 0.4% in August, 0.2 percentage point above the July estimate. Consumer prices excluding food and energy (core prices), the preferred inflation indicator used by the Federal Reserve, edged up only 0.1% in August, down from the July increase of 0.2%. Over the 12 months ended in August, consumer prices increased 3.5%, 0.2 percentage point above the rate for the period ended in July. Core prices rose 3.9% for the year ended in August, down from 4.3% for the 12 months ended in July.
• The Consumer Price Index rose 0.6% in August compared to a 0.2% advance in July. Over the 12 months ended in August, the CPI advanced 3.7%, up 0.5 basis point from the annual rate for the period ended in July. Core prices, excluding food and energy, rose 0.3% in August and 4.3% over the last 12 months, which is the lowest 12-month rate since September 2021. Energy prices rose 5.6% in August with gasoline prices increasing 10.6%, which accounted for over half of the overall CPI increase. However, energy prices are down 3.6% since August 2022. Food prices advanced 0.2% in August, matching the July increase. Since August 2022, food prices rose 4.3%. Prices for shelter advanced 0.8% in August and 7.3% over the last 12 months.
• Prices that producers received for goods and services increased 0.7% in August after rising 0.3% in July. Producer prices increased 1.6% for the 12 months ended in August, double the 12-month increase from July 2022. The August advance was the largest monthly advance since June 2022. In August, 80.0% of the overall increase in producer prices was attributable to a 2.0% jump in prices for goods. Prices for services advanced 0.2%. Producer prices less foods, energy, and trade services increased 0.3% in August, the same as in July. For the 12 months ended in August, prices less foods, energy, and trade services rose 3.0%, the largest advance since moving up 3.4% for the 12 months ended in April.
• Housing: Sales of existing homes decreased 0.7% in August, marking the third consecutive month of declines. Since August 2022, existing-home sales dropped 15.3%. According to the report from the National Association of Realtors®, two factors have stifled sales activity: rising mortgage rates and limited inventory. In August, total existing-home inventory sat at a 3.3-month supply at the current sales pace, unchanged from the previous month. The median existing-home price was $407,100 in August, up from the July price of $405,700 and well above the August 2022 price of $391,700. Despite a drop in the number of sales, home prices continue to rise. Prices will likely remain elevated until inventory increases. Sales of existing single-family homes dropped 1.4% in August and 15.3% from a year ago. The median existing single-family home price was $413,500 in August, up from the July price of $411,200 and above the August 2022 price of $398,800.
• New single-family home sales declined in August, falling 8.7% from the July estimate. Overall, single-family home sales were up 5.8% from a year earlier. The median sales price of new single-family houses sold in August was $430,300 ($436,600 in July). The August average sales price was $514,000 ($507,900 in July). The inventory of new single-family homes for sale in August increased to 7.8 months, up from 7.0 months in July.
• Manufacturing: Industrial production advanced 0.4% in August after advancing 0.7% in July. Manufacturing inched up 0.1% in August, held back by a drop of 5.0% in the output of motor vehicles and parts. Excluding that sector, factory output rose 0.6%. In August, mining moved up 1.4%, while utilities increased 0.9%. Total industrial production in August was 0.2% above its year-earlier level. In August, the aforementioned drop in the output of motor vehicles and parts contributed to declines in the indexes for consumer durables and transit equipment. Most of the other major market groups posted increases in August. The index for consumer nondurables moved up 0.4%, and the index for materials advanced 0.7%. Within materials, energy materials rose 1.5%, while nonenergy materials edged up 0.1%.
• New orders for durable goods rose 0.2% in August, marking the fifth monthly increase in the last six months. Excluding defense, new orders decreased 0.7%. Excluding transportation, new orders increased 0.4%. Core capital goods orders, excluding defense and aircraft, advanced 0.9% in August following a 0.4% decline in July.
• Imports and exports: August saw both import and export prices increase for the second straight month. Import prices rose 0.5% following a 0.1% increase in July. The August increase in import prices was the third monthly advance of 2023. Imports declined 3.0% over the past year. Import fuel prices rose 6.7% in August, driven higher by production cuts. Nonfuel import prices edged down 0.1%. Export prices rose 1.3% in August after rising 0.5% in the previous month. The advance in August was the largest monthly increase since a 2.7% increase in May 2022. Higher nonagricultural prices in August more than offset lower agricultural prices. Despite the advance in August, export prices declined 5.5% over the past year.
• The international trade in goods deficit decreased $6.6 billion, or 7.3%, in August. Exports of goods increased 2.2% from July, while imports of goods decreased 1.2%.
• The latest information on international trade in goods and services, released September 6, was for July and revealed that the goods and services trade deficit increased $65.0 billion, or 2.0%, from June. Exports for July rose 1.6% from the previous month. Imports increased 1.7%. Year to date, the goods and services deficit decreased $128.3 billion, or 21.4%, from the same period in 2022. Exports increased 1.6%, while imports decreased 4.3%.
• International markets: Russia’s economy is expected to grow. Despite Western sanctions against Russia in response to the invasion of Ukraine, including a price cap on its oil exports, Moscow has apparently been able to offset that cap by increasing oil prices and exporting to new markets. Elsewhere, after 14 consecutive monthly increases, the Bank of England decided to leave the Bank Rate at its current 5.25%, counter to the anticipated 25.0-basis point increase that was widely expected. Price inflation remained steady in Japan as higher food and gasoline prices offset decreases in utilities. Japan’s Consumer Price Index rose 2.8% for the 12 months ended in September, a decrease of 0.1 percentage point from the August annual figure. China saw industrial profits fall 11.7% for the year ended in August, which was an upgrade from the 15.5% decline for the year ended in July. This is in line with China’s industrial production, which rose 4.5% for the year ended in August, higher than the 3.7% estimate for the year ended in July. Overall, China saw its economy stall somewhat in September with retail sales, pricing power, and loan growth weaker compared to August. For September, the STOXX Europe 600 Index decreased 0.9%; the United Kingdom’s FTSE rose 2.5%; Japan’s Nikkei 225 Index fell 2.6%; and China’s Shanghai Composite Index dipped 0.3%.
• Consumer confidence: Consumer confidence declined in September for the second straight month. The Conference Board Consumer Confidence Index® decreased in September to 103.0, down from 108.7 in August (revised). The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose marginally to 147.1 in September, up from 146.7 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 73.7 in September from 83.3 in August.

Eye on the Quarter Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/29	Weekly Change	YTD Change
DJIA	33,147.25	33,963.84	33,507.50	-1.34%	1.09%
Nasdaq	10,466.48	13,211.81	13,219.32	0.06%	26.30%
S&P 500	3,839.50	4,320.06	4,288.05	-0.74%	11.68%
Russell 2000	1,761.25	1,776.50	1,785.10	0.48%	1.35%
Global Dow	3,702.71	4,041.49	3,982.95	-1.45%	7.57%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.43%	4.57%	14 bps	70 bps
US Dollar-DXY	103.48	105.61	106.19	0.55%	2.62%
Crude Oil-CL=F	$80.41	$90.36	$90.87	0.56%	13.01%
Gold-GC=F	$1,829.70	$1,945.00	$1,864.90	-4.12%	1.92%

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/22	Weekly Change	YTD Change
DJIA	33,147.25	34,618.24	33,963.84	-1.89%	2.46%
Nasdaq	10,466.48	13,708.33	13,211.81	-3.62%	26.23%
S&P 500	3,839.50	4,450.32	4,320.06	-2.93%	12.52%
Russell 2000	1,761.25	1,847.03	1,776.50	-3.82%	0.87%
Global Dow	3,702.71	4,136.95	4,041.49	-2.31%	9.15%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.32%	4.43%	11 bps	56 bps
US Dollar-DXY	103.48	105.34	105.61	0.26%	2.06%
Crude Oil-CL=F	$80.41	$91.14	$90.36	-0.86%	12.37%
Gold-GC=F	$1,829.70	$1,944.50	$1,945.00	0.03%	6.30%

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

Last Week’s Economic News

• The Federal Open Market Committee decided to maintain the current target range for the federal funds rate at 5.25%-5.50%. Striving to achieve maximum employment and inflation at the rate of 2.0%, the Committee suggested that it would continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2.0% over time, the Committee said it would take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. Nevertheless, the Committee projected interest rates would end the year at 5.50%-5.75%, implying another rate hike before the end of 2023. However, the FOMC stated that it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. At Fed Chair Jerome Powell’s press conference following the meeting, he indicated inflation had moderated somewhat since last year but had a long way to go before reaching the 2.0% target.
• August saw a spike in the number of issued residential building permits, after climbing 6.9% above the July estimate. However, compared to August 2022, building permits were down 2.7%. The number of single-family building permits issued in August was 2.0% above the previous month’s total. Housing starts declined 11.3% in August and 14.8% below the August 2022 rate. The decline in housing starts may have been attributable to the increase in housing completions, which rose 5.3% in August from July, and 3.8% above the August 2022 rate. However, single-family completions were down 6.6% last month.
• Sales of existing homes declined for the third consecutive month after retreating 0.7% in August. Existing home sales were down 15.3% from August 2022. The median existing home sales price was $407,100, up from July’s price of $405,700 and well above the August 2022 price of $391,700. The August median sales price has surpassed $400,000 for the third straight month. The number of existing homes for sale in August sat at a 3.3-month supply at the current sales pace, unchanged from the July estimate. Sales of existing single-family homes decreased in August, down 1.4% from July and 15.3% from August 2022. The median existing single-family home price in August was $413,500, up from the July price of $411,200 and higher than the August 2022 price of $398,800.
• The national average retail price for regular gasoline was $3.878 per gallon on September 18, $0.056 per gallon higher than the prior week’s price and $0.224 more than a year ago. Also, as of September 18, the East Coast price increased $0.021 to $3.654 per gallon; the Midwest price rose $0.027 to $3.710 per gallon; the Gulf Coast price climbed $0.065 to $3.431 per gallon; the Rocky Mountain price increased $0.058 to $4.071 per gallon; and the West Coast price advanced $0.194 to $5.163 per gallon.
• For the week ended September 16, there were 201,000 new claims for unemployment insurance, a decrease of 20,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 9 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 9 was 1,662,000, a decrease of 21,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended September 2 were in New Jersey (2.5%), Hawaii (2.3%), California (2.0%), New York (1.9%), Puerto Rico (1.9%), Rhode Island (1.8%), Massachusetts (1.7%), Oregon (1.6%), and Pennsylvania (1.5%). The largest increases in initial claims for unemployment insurance for the week ended September 9 were in Indiana (+2,627), Florida (+783), Kentucky (+308), Nebraska (+273), and Iowa (+162), while the largest decreases were in Ohio (-3,425), Missouri (-3,196), New York (-3,051), California (-1,880), and Texas (-1,393).

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/15	Weekly Change	YTD Change
DJIA	33,147.25	34,576.59	34,618.24	0.12%	4.44%
Nasdaq	10,466.48	13,761.53	13,708.33	-0.39%	30.97%
S&P 500	3,839.50	4,457.49	4,450.32	-0.16%	15.91%
Russell 2000	1,761.25	1,851.54	1,847.03	-0.24%	4.87%
Global Dow	3,702.71	4,074.16	4,136.95	1.54%	11.73%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.25%	4.32%	7 bps	45 bps
US Dollar-DXY	103.48	105.05	105.34	0.28%	1.80%
Crude Oil-CL=F	$80.41	$87.30	$91.14	4.40%	13.34%
Gold-GC=F	$1,829.70	$1,942.80	$1,944.50	0.09%	6.27%

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/8	Weekly Change	YTD Change
DJIA	33,147.25	34,837.71	34,576.59	-0.75%	4.31%
Nasdaq	10,466.48	14,031.81	13,761.53	-1.93%	31.48%
S&P 500	3,839.50	4,515.77	4,457.49	-1.29%	16.10%
Russell 2000	1,761.25	1,920.83	1,851.54	-3.61%	5.13%
Global Dow	3,702.71	4,136.77	4,074.16	-1.51%	10.03%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.17%	4.25%	8 bps	38 bps
US Dollar-DXY	103.48	104.25	105.06	0.77%	1.52%
Crude Oil-CL=F	$80.41	$85.89	$87.30	1.64%	8.57%
Gold-GC=F	$1,829.70	$1,966.90	$1,942.80	-1.23%	6.18%

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 9/1	Weekly Change	YTD Change
DJIA	33,147.25	34,346.90	34,837.71	1.43%	5.10%
Nasdaq	10,466.48	13,590.65	14,031.81	3.25%	34.06%
S&P 500	3,839.50	4,405.71	4,515.77	2.50%	17.61%
Russell 2000	1,761.25	1,853.63	1,920.83	3.63%	9.06%
Global Dow	3,702.71	4,047.26	4,136.77	2.21%	11.72%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.23%	4.17%	-6 bps	30 bps
US Dollar-DXY	103.48	104.17	104.25	0.08%	0.74%
Crude Oil-CL=F	$80.41	$79.97	$85.89	7.40%	6.82%
Gold-GC=F	$1,829.70	$1,941.70	$1,966.90	1.30%	7.50%

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

Last Week’s Economic News

• According to the latest Personal Income and Outlays report from the Bureau of Economic Analysis, July saw personal income increase 0.2%, although disposable (after-tax) income was unchanged from the previous month. The personal consumption expenditures price index, the preferred inflation indicator of the Federal Reserve, advanced 0.2% in July. Excluding food and energy (core prices), the PCE price index also increased 0.2%. However, over the past 12 months ended in July, consumer prices increased 3.3%, an increase of 0.3 percentage point over the comparable period ended in June. Core prices rose 4.2% since July 2022, up 0.1 percentage point from the 12-month period ended in June, but well below the percentage changes for the 12-month periods ended in March, April, and May. In July, consumer spending rose 0.8%, following an increase of 0.6% in June.
• There were 187,000 new jobs added in August, less than the average monthly gain of 271,000 over the prior 12 months. The August total, coupled with a net downward revision of 110,000 over the previous two months, suggests that hiring has slowed considerably since the spring. In August, job gains occurred in health care, leisure and hospitality, social assistance, and construction. The unemployment rate rose by 0.3 percentage point to 3.8% in August, and the number of unemployed persons increased by 514,000 to 6.4 million. Both measures are similar to a year earlier, when the unemployment rate was 3.7% and the number of unemployed persons was 6.0 million. Among the unemployed, the number of workers who lost jobs and persons who completed temporary jobs increased by 294,000 to 2.9 million in August, offsetting a decrease of 280,000 in July. In August, the labor force participation rate rose by 0.2 percentage point to 62.8% after being flat since March. The employment-population ratio was unchanged over the month at 60.4%. In August, average hourly earnings rose by $0.08, or 0.2%, to $33.82. Over the past 12 months, average hourly earnings have increased by 4.3%. The average workweek edged up by 0.1 hour to 34.4 hours in August.
• The second estimate of gross domestic product for the second quarter revealed that the economy expanded at an annualized rate of 2.1%, comparable to the 2.0% increase in the first quarter. Consumer prices, as measured by the personal consumption expenditures price index, rose 2.5% and 3.7%, excluding food and energy. Consumer spending increased 1.7%, down from 4.2% in the first quarter. Fixed investment advanced 3.9%, driven higher by a 6.1% increase in nonresidential fixed investment. Residential investment dipped 3.6%. Both exports (-10.6%) and imports (-7.0%) declined in the second quarter. Federal government spending increased 1.2%, while state and local government spending advanced 4.7%.
• In July, the number of job openings edged down 338,000 to 8.8 million. Over the month, job openings decreased in professional and business services (-198,000); health care and social assistance (-130,000); state and local government, excluding education (-67,000); state and local government education (-62,000); and federal government (-27,000). By contrast, job openings increased in information (+101,000) and in transportation, warehousing, and utilities (+75,000). The number of hires also declined in July, falling 167,000 to 5.8 million. Total separations decreased 208,000 to 5.5 million. Within separations, the number of quits decreased to 3.5 million (-253,000), while the number of layoffs and discharges changed little.
• The advance report on international trade in goods showed the trade deficit expanded by $2.3 billion, or 2.6%, in July. Exports of goods rose 1.5%, while imports advanced 1.9%.
• Manufacturing contracted further in August. The S&P Global US Manufacturing PMI fell to 47.9 in August, down from 49.0 in July. A reading of less than 50.0 indicates contraction in the manufacturing sector. Manufacturing has trended lower every month since November 2022, expect for a brief uptick in April. The reduction in business conditions were driven by a decline in new orders, which survey respondents blamed on a weakening economy. Demand for goods produced in the U.S. has fallen 13 times in the past 15 months. In addition, export orders decreased for the 15th straight month in August.
• The national average retail price for regular gasoline was $3.813 per gallon on August 28, $0.055 per gallon lower than the prior week’s price and $0.014 less than a year ago. Also, as of August 28, the East Coast price decreased $0.050 to $3.678 per gallon; the Midwest price fell $0.083 to $3.637 per gallon; the Gulf Coast price dropped $0.080 to $3.378 per gallon; the Rocky Mountain price fell $0.064 to $3.075 per gallon; and the West Coast price advanced $0.014 to $4.880 per gallon. According to the U.S. Energy Information Administration, Hurricane Idalia impacted U.S. Gulf Coast production and pipeline facilities. In addition, over the past several weeks, a combination of crude oil production cuts by Saudi Arabia, low U.S. gasoline inventories, and announced refinery maintenance in the Northeast have increased the regular gasoline retail price by 6.0% ($0.22/gal).
• For the week ended August 26, there were 228,000 new claims for unemployment insurance, a decrease of 4,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 19 was 1.2%, an increase of 0.1% from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 19 was 1,725,000, an increase of 28,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended August 12 were New Jersey (2.5%), California (2.2%), Puerto Rico (2.2%), Massachusetts (2.0%), Rhode Island (2.0%), New York (1.9%), Connecticut (1.8%), Oregon (1.8%), Pennsylvania (1.8%), and Minnesota (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 19 were in Hawaii (+3,553), South Carolina (+113), Vermont (+105), New Mexico (+62), and Idaho (+51), while the largest decreases were in Ohio (-5,905), Illinois (-1,266), New Jersey (-1,182), Virginia (-1,149), and California (-1,083).

Eye on the Week Ahead

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

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

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

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

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

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

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

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

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

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

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

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

Bond prices fell in August, with yields increasing over the previous month. Ten-year Treasury yields rose 18.0 basis points from July. The 2-year Treasury yield ended August at 4.86%, down 5.0 basis points from a month earlier. The dollar climbed higher against a basket of world currencies. Gold prices ended August lower. Crude oil prices climbed in August for the third straight month. After falling for much of the year, a cutback in crude oil production has driven prices higher. Rising oil prices also impacted prices at the pump. The retail price of regular gasoline was $3.813 per gallon on August 28, $0.056 higher than the price a month earlier but $0.014 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of August 31	Monthly Change	YTD Change
DJIA	33,147.25	35,559.53	34,721.91	-2.36%	4.75%
Nasdaq	10,466.48	14,346.02	14,034.97	-2.17%	34.09%
S&P 500	3,839.50	4,588.96	4,507.66	-1.77%	17.40%
Russell 2000	1,761.25	2,003.18	1,899.68	-5.17%	7.86%
Global Dow	3,702.71	4,257.15	4,130.12	-2.98%	11.54%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	3.95%	4.09%	14 bps	22 bps
US Dollar-DXY	103.48	101.89	103.64	1.72%	0.15%
Crude Oil-CL=F	$80.41	$81.76	$83.53	2.16%	3.88%
Gold-GC=F	$1,829.70	$2,003.70	$1,966.10	-1.88%	7.45%

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

Latest Economic Reports

• Employment: Employment rose by 187,000 in July from June, less than the average monthly gain of 312,000 over the prior 12 months. In July, employment trended upward in health care, social assistance, financial activities, and wholesale trade. The unemployment rate edged down 0.1 percentage point for the second straight month to 3.5%. In July, the number of unemployed persons fell by 116,000 to 5.8 million. The employment-population ratio, at 60.4%, ticked up 0.1 percentage point, while the labor force participation rate, at 62.6%, was unchanged. In July, average hourly earnings increased by $0.14 to $33.74. Over the 12 months ended in July, average hourly earnings rose by 4.4%. In July, the average workweek edged down 0.1 hour to 34.3 hours.
• There were 228,000 initial claims for unemployment insurance for the week ended August 26, 2023. The total number of workers receiving unemployment insurance was 1,725,000. By comparison, over the same period last year, there were 206,000 initial claims for unemployment insurance, and the total number of claims paid was 1,343,000.
• FOMC/interest rates: The Federal Open Market Committee did not meet in August. However, Federal Reserve Chair Jerome Powell spoke before the 2023 Jackson Hole Economic Symposium. His remarks reinforced the Fed’s intent to bring inflation down to its 2.0% target. The Fed Chair noted that, although inflation has moved down from its peak, it remains too high. Powell reiterated the Fed’s stance that it is prepared to raise rates further and to maintain its restrictive economic policy until the 2.0% target rate has been achieved. The Federal Reserve is scheduled to meet next in September.
• GDP/budget: Economic growth remained steady in the second quarter, as gross domestic product increased 2.1%, compared with a 2.0% increase in the first quarter. The acceleration in second-quarter GDP compared to the previous quarter primarily reflected a smaller decrease in private inventory investment and an acceleration in nonresidential fixed investment. These movements were partly offset by a downturn in exports, and decelerations in consumer spending and federal government spending. Imports turned down. Consumer spending, as measured by personal consumption expenditures, rose 1.7% in the second quarter compared to a 4.2% increase in the first quarter. Consumer spending on long-lasting durable goods inched down 0.3% in the second quarter after advancing 16.3% in the prior quarter. Spending on services rose 2.2% in the second quarter (3.2% in the first quarter). Nonresidential fixed investment increased 6.1% after rising 0.6% in the first quarter. Residential fixed investment fell 3.6% in the second quarter, little changed from the first quarter (-4.0%). Exports decreased 10.6% in the second quarter, following an increase of 7.8% in the first quarter. Imports, which are a negative in the calculation of GDP, decreased 7.0% in the second quarter after advancing 2.0% in the previous quarter. Consumer prices increased 2.5% in the second quarter compared to a 4.1% advance in the first quarter. Excluding food and energy, consumer prices advanced 3.7% in the second quarter (4.9% in the first quarter).
• The federal budget had a $220.8 billion deficit in July, nearly $10.0 billion above the July 2022 budget deficit. Through the first 10 months of fiscal year 2023, the deficit was $1.613 trillion compared to $726.1 billion through the comparable period of the previous fiscal year. In July, government receipts totaled $276.2 billion for the month and $3.689 trillion for the current fiscal year. Government outlays were $496.9 billion in July and $5.302 trillion through the first 10 months of fiscal year 2023. By comparison, receipts in July 2022 were $269.3 billion and $4.105 trillion through the first 10 months of the previous fiscal year. Expenditures were $480.4 billion in July 2022 and $4.831 trillion through the comparable period in FY22.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.8% in July and 9.1% since July 2022. Personal income rose 0.2% in July, while disposable personal income was unchanged from June. Consumer prices rose 0.2% in July, matching the June increase. Consumer prices excluding food and energy (core prices) also rose 0.2% in July. However, over the 12 months ended in July, consumer prices increased 3.3%, 0.3 percentage point above the rate for the period ended in June.
• The Consumer Price Index rose 0.2% in July, the same increase as in June. Over the 12 months ended in July, the CPI advanced 3.2%, up from 3.0% for the year ended in June. Core prices, excluding food and energy, rose 0.2% in July and 4.7% over the last 12 months, marking the lowest 12-month rate since October 2021. Prices for shelter, which rose 0.4%, contributed more than 90.0% of the overall increase in the June CPI. Also advancing in July were prices for food (0.2%), energy (0.1%), and medical care commodities (0.5%). For the 12 months ended in July, food prices have increased 4.9%, while energy prices have fallen 12.5%.
• Prices that producers received for goods and services increased 0.3% in July after being unchanged in June. Producer prices increased 0.8% for the 12 months ended in July. Driving the overall increase in producer prices was a 0.5% jump in prices for services. Goods prices inched up 0.1%. Producer prices excluding food, energy, and trade services rose 0.2% in July and 2.7% for the year. Energy prices were unchanged in July but were down 16.8% since July 2022. Food prices advanced 0.5% in July but were down 0.2% for the 12 months ended in July.
• Housing: Sales of existing homes decreased 2.2% in July following a 3.4% decline in June. Since July 2022, existing-home sales dropped 16.6%. According to the report from the National Association of Realtors®, two factors have stifled sales activity: rising mortgage rates and limited inventory. In July, total existing-home inventory sat at a 3.3-month supply at the current sales pace, up from 3.1 months in June. The median existing-home price was $406,700 in July, down from the June price of $410,000. Sales of existing single-family homes dropped 1.9% in July and 16.3% from July 2022. The median existing single-family home price was $412,300 in July, down from the June price of $415,700 but above the July 2022 price of $405,800.
• New single-family home sales increased in July, advancing 4.4% after falling 2.9% in June. Overall, single-family home sales were up 31.5% from a year earlier. The median sales price of new single-family houses sold in July was $436,700 ($416,700 in June). The July average sales price was $513,000 ($507,300 in June). The inventory of new single-family homes for sale in July decreased to 7.3 months, down from 7.5 months in June.
• Manufacturing: Industrial production advanced 0.1% in July after declining in both May and June. Manufacturing rose 0.5% in July, driven higher, in part, by a 5.2% increase in motor vehicles and parts. Factory output edged up 0.1%. In July, mining moved up 0.5%, while utilities increased 5.4%. Total industrial production in July was 0.2% below its year-earlier level. Most major market groups recorded growth in July. The production of consumer durables was boosted by a jump of 4.8% in the output of automotive products. Similarly, the abnormally hot weather in July lifted the indexes of energy consumer goods and energy materials, which advanced 3.7% and 2.1%, respectively.
• New orders for durable goods fell for the first time in the last five months in July, after declining 5.2%. This followed a 4.4% June increase. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders decreased 5.4%. Transportation equipment, also down following four consecutive monthly increases, drove the decrease, falling 14.3%.
• Imports and exports: July saw both import and export prices increase. Import prices rose 0.4%, following a 0.1% decline in June. The July increase in import prices was only the second monthly advance of 2023. Imports declined 4.4% over the past year. Import fuel prices rose 3.6% in July, while nonfuel import prices were unchanged. Export prices rose 0.7% in July after declining 0.7% in the previous month. The advance in July was the largest monthly increase since a 1.1% rise in June 2022. Higher prices in July for both agricultural and nonagricultural exports contributed to the overall advance. Despite the July increase, U.S. export prices fell 7.9% for the 12 months ended in July 2023.
• The international trade in goods deficit increased $2.3 billion, or 2.6%, in July. Exports of goods increased 1.5% from June, while imports of goods decreased 1.9%.
• The latest information on international trade in goods and services, released August 8, was for June and revealed that the goods and services trade deficit fell $2.8 billion, or 4.1%, from May. Exports for June were $0.3 billion, or 0.1%, below May exports. Imports were $3.1 billion, or 1.0%, less than May imports. Year to date, the goods and services deficit decreased $117.7 billion, or 22.3%, from the same period in 2022. Exports increased $37.6 billion, or 2.5%. Imports decreased $80.1 billion, or 4.0%.
• International markets: While inflationary pressures may have eased somewhat over the last few months, current data shows that several European nations still face inflated prices, indicating that central banks still have more work to do. The Eurozone harmonised index of consumer prices (HICP) came in at 5.3% for the 12 months ended in August, unchanged from the annual rate for July. The United Kingdom’s Consumer Price Index dipped lower to 6.8% in July, still well above the 2.0% target rate. Elsewhere, China’s economy showed further signs of weakening in August. The Chinese real estate market continued to slump, factories saw exports decline, while consumer spending waned. For August, the STOXX Europe 600 Index increased 0.4%; the United Kingdom’s FTSE fell 0.6%; Japan’s Nikkei 225 Index rose 1.4%; and China’s Shanghai Composite Index dropped 4.9%.
• Consumer confidence: Consumer confidence declined in August, reversing monthly increases in June and July. The Conference Board Consumer Confidence Index® decreased in August to 106.1, down from 114.0 in July (revised). The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 144.8 in August, down from 153.0 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 80.2 in August from 88.0 in July.

Eye on the Month Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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