Author: dredheadz

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.

The Markets (as of market close August 18, 2023)

After another week of strong economic data, investors seemed to accept that the Fed may not be done lifting interest rates after all — and that Wall Street might have started celebrating the end of the rate-hike cycle too soon. Each of the benchmark indexes listed here dropped more than 2% by the end of the week, as did crude oil prices. Gold prices also fell, while the dollar advanced. Yields on 10-year Treasuries continued their upward march, reaching 15-year highs.

Tech stocks rebounded last Monday, pushing the Nasdaq up 1.1%. The S&P 500 advanced 0.6%, and the Dow inched up 0.1%. The Russell 2000 ticked down 0.2% while the Global Dow declined 0.4%, likely impacted by the growing level of concern about China’s troubled real estate market. The 10-year Treasury yield ended the day higher at 4.18%. Crude oil and gold prices dipped, but the U.S. dollar was little changed.

Equities fell across the board on Tuesday, with each of the benchmark indexes — and all 11 of the S&P market sectors — suffering losses. The Russell 2000 declined 1.3%, followed by the S&P 500 (-1.2%), the Nasdaq (-1.1%), the Dow (-1.0%), and the Global Dow (-1.0%). It was the first day since May that the Dow, S&P 500, and Nasdaq all fell more than 1%. A strong retail sales report helped drive up the 10-year Treasury yield to 4.22%. Crude oil and gold prices fell, and the dollar was flat.

Stock prices continued their retreat last Wednesday, after the minutes from the most recent Fed meeting revealed that committee members are divided on whether more interest rate hikes will be needed to knock down inflation. The Russell 2000 declined 1.3%, followed by the Nasdaq (-1.2%), the Global Dow (-1.0%), and the S&P 500 (-0.8%). The Dow dipped 0.5%. Wall Street also fretted over the rising 10-year Treasury yield, which ended the day at a 15-year high of 4.26%. Oil and gold prices fell again, but the dollar rose.

On Thursday, investors watched stock prices tumble for the third day in a row. The tech-heavy Nasdaq and small-cap stocks that make up the Russell 2000 dropped 1.2%, while the S&P 500 and the Dow declined 0.8%, and the Global Dow lost 0.7%. Energy was the only sector that did not post a loss. The government bond market extended its worrisome sell off, pushing up the yield on 10-year Treasuries by 5 basis points to 4.31%, the highest level since 2007. Crude oil prices advanced to $80.06 per barrel after a three-day drop, gold prices fell, and the dollar was unchanged.

Last Friday, stocks capped off a volatile week with mixed returns. Energy and defensive sectors such as utilities and consumer staples outperformed, while communication services saw the steepest declines. The Russell 2000 posted a modest gain of 0.5%, and the Dow edged up less than 0.1%. The Global Dow and the Nasdaq dipped 0.3% and 0.2%, respectively. The S&P 500 ended the day flat. The 10-year Treasury yield fell to 4.25%. Crude oil prices increased to $81.40 per barrel. Gold prices inched up, but the dollar pulled back slightly.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/18	Weekly Change	YTD Change
DJIA	33,147.25	35,281.40	34,500.66	-2.21%	4.08%
Nasdaq	10,466.48	13,644.85	13,290.78	-2.59%	26.98%
S&P 500	3,839.50	4,464.05	4,369.71	-2.11%	13.81%
Russell 2000	1,761.25	1,925.11	1,859.42	-3.41%	5.57%
Global Dow	3,702.71	4,152.39	4035.3	-2.82%	8.98%
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%	4.16%	4.25%	9 bps	38 bps
US Dollar-DXY	103.48	102.86	103.43	0.55%	-0.05%
Crude Oil-CL=F	$80.41	$83.14	$81.40	-2.09%	1.23%
Gold-GC=F	$1,829.70	$1,945.90	$1,918.40	-1.41%	4.85%

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

Last Week’s Economic News

• Retail sales surged 0.7% in July from the previous month — the fastest pace since January — and have increased 3.2% since July 2022. Retail trade sales advanced 0.6% from June and 2.0% from July 2022. Nonstore (online) retail sales increased 1.9% from June and 10.3% from July 2022, while sales at food services and drinking places were up 1.4% from June and 11.9% higher than last year. Other retailers that outperformed last month include sporting goods, hobby, musical instrument, and book stores (1.5%); clothing & clothing accessories stores (1.0%); and department stores (0.9%). Retailers that showed weakness in July (and tend to be sensitive to high interest rates) include furniture & home furnishing stores (-1.8%); electronics and appliance stores (-1.3%); and auto dealers (-0.4%).
• Prices for U.S. imports rose 0.4% in July after falling 0.1% the previous month. Despite the July increase, which was driven by higher fuel prices, U.S. import prices declined 4.4% over the past 12 months, after increasing 8.8% from July 2021 to July 2022. Export prices increased 0.7% in July, following a 0.7% decline in June. Even though July saw the largest monthly advance since June 2022, U.S. export prices have fallen 7.9% over the last 12 months.
• The number of residential building permits issued in July increased 0.1% from the June total and is 13.0% below the July 2022 figure. Issued building permits for single-family housing increased 0.6% in July to an annual rate of 930,000 units, the highest level in more than a year. Permits for housing projects with five units or more fell 0.2% last month and were 32.2% below the level in July 2022. Housing starts increased 3.9% last month and were 5.9% above the total from a year earlier. Single-family housing starts in July were 6.7% above the prior month’s rate. Home completions dropped 11.8% in July from June and were 5.4% below the July 2022 total. Single-family home completions in July were 1.3% higher than June’s figure.
• Industrial production rose 1.0% in July after falling in the two previous months. Manufacturing output and mining both climbed 0.5% in July after falling 0.5% and 0.9%, respectively, in June. Utilities shot up 5.4%, as hot weather spurred demand for cooling. Overall, total industrial production in July was 0.2% below last year’s level. Most major market groups recorded growth in July. Production of consumer goods led the pack with an increase of 1.4%, boosted by a 4.8% jump in the output of automotive products.
• The national average retail price for regular gasoline was $3.850 per gallon on August 14, $0.022 per gallon higher than the prior week’s price but $0.088 less than a year ago. Also, as of August 14, the East Coast price decreased $0.026 to $3.711 per gallon; the Midwest price climbed $0.090 to $3.768 per gallon; the Gulf Coast price fell $0.038 to $3.415 per gallon; the Rocky Mountain price ticked up $0.010 to $3.954 per gallon; and the West Coast price advanced $0.074 to $4.759 per gallon.
• For the week ended August 12, there were 239,000 new claims for unemployment insurance, a decrease of 11,000 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 5 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 5 was 1,716,000, an increase of 32,000 from the previous week’s unrevised level. States and territories with the highest insured unemployment rates for the week ended July 29 were Puerto Rico (2.6%), New Jersey (2.5%), California (2.2%), Rhode Island (2.0%), Massachusetts (2.0%), Connecticut (1.9%), New York (1.9%), Oregon (1.9%), Pennsylvania (1.8%), and Minnesota (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 5 were in Ohio (+5,416), California (+2,363), Texas (+2,237), New Jersey (+1,622), and Connecticut (+1,288), while the largest decreases were in Missouri (-2,644), Florida (-410), Iowa (-335), Arkansas (-198), and Kentucky (-79).

Eye on the Week Ahead

Data on the housing sector for July is available this week. Sales of both new and existing homes declined in June due to rising mortgage rates and dwindling inventory. However, home prices have remained strong. Investors will also be looking for insight from the Federal Reserve’s Economic Symposium in Jackson Hole, where central bankers from around the world will meet to discuss the health of the global economy.

The Markets (as of market close August 11, 2023)

The S&P 500 and the Nasdaq fell for the second straight week, while the Dow outperformed the benchmark indexes listed here. Stocks have been relatively soft so far in August, which is not out of the ordinary. A slightly hotter-than-expected uptick in producer prices (see below) likely pushed Treasury yields higher, while cooling mega-cap growth shares, which are generally sensitive to interest rate movements. Several market sectors ended the week lower, with information technology (-4.3%) and consumer discretionary (-2.3%) falling the furthest, while energy (+3.6%) and health care (+2.1%) advanced the most. Corporate earnings season for the second quarter is winding down. With roughly 85% of the S&P 500 companies reporting results, nearly 81% have beaten profit estimates. The dollar strengthened, while gold prices notched the worst weekly performance in over a month.

Stocks jumped higher to begin the week last Monday. Each of the benchmark indexes listed here performed well enough to recoup losses from the previous week. Large caps outperformed, with the Dow gaining 1.2% and the S&P 500 adding 0.9%. The Nasdaq and the Global Dow rose 0.6%, while the Russell 2000 inched up 0.1%. Yields on 10-year Treasuries settled at 4.07%, after climbing 1.8 basis points. Crude oil prices fell 0.4% to end the day at about $82.52 per barrel. The dollar gained less than 0.1%, while gold prices fell 0.3%.

The benchmark indexes listed here declined last Tuesday as Wall Street couldn’t maintain the previous day’s momentum. The Nasdaq dropped 0.8%, followed by the Global Dow (-0.7%), the Russell 2000 (-0.6%), the Dow (-0.5%), and the S&P 500 (-0.4%). Ten-year Treasury yields declined 5.2 basis points, ending the day at 4.02%. Crude oil prices gained over 1.0% to close at about $82.80 per barrel. The dollar gained nearly 0.5%, while gold prices fell by about the same amount.

Stocks slid for the second straight day last Wednesday as investors may have been concerned that the upcoming Consumer Price Index would show prices rose in July. The Nasdaq declined 1.2%, falling the furthest among the benchmark indexes listed here. The Russell 2000 declined 0.9%, followed by the S&P 500 (-0.7%), the Dow (-0.5%), and the Global Dow (-0.1%). Crude oil prices rose 1.7% to $84.30 per barrel, the highest price per barrel in a year. Ten-year Treasury yields dipped 1.4 basis points to settle at 4.01%. The dollar and gold prices declined.

Wall Street saw a mini-bear run end last Thursday. Of the benchmark indexes listed here, only the Russell 2000 fell (-0.4%). While gains were not particularly noteworthy, the remaining indexes closed in the black, led by the Global Dow (0.3%), followed by the Dow (0.2%), and the Nasdaq (0.1%). The S&P 500 gained less than 0.1 percentage point. Investors seemed to react cautiously following the release of the latest Consumer Price Index (see below). Crude oil prices declined 1.8% to $82.86 per barrel after hitting a 12-month high the previous day. Ten-year Treasury yields rose 6.8 basis points to reach 4.08%. The dollar edged higher, while gold prices slid lower.

Stocks ended the week with mixed results last Friday. The Dow (+0.3%) and the Russell 2000 (+0.1%) ticked higher, while the Nasdaq (-0.7%), the Global Dow (-0.6%), and the S&P 500 (-0.1%) declined. Yields on 10-year Treasuries settled at 4.16% after climbing 8.8 basis points. Crude oil prices advanced 0.3%. The dollar had its best day in several sessions, closing up 0.3%. Gold prices fell 0.2%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/11	Weekly Change	YTD Change
DJIA	33,147.25	35,065.62	35,281.40	0.62%	6.44%
Nasdaq	10,466.48	13,909.24	13,644.85	-1.90%	30.37%
S&P 500	3,839.50	4,478.03	4,464.05	-0.31%	16.27%
Russell 2000	1,761.25	1,957.46	1,925.11	-1.65%	9.30%
Global Dow	3,702.71	4,164.25	4,152.39	-0.28%	12.14%
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%	4.06%	4.16%	10 bps	29 bps
US Dollar-DXY	103.48	102.02	102.86	0.82%	-0.60%
Crude Oil-CL=F	$80.41	$82.62	$83.14	0.63%	3.40%
Gold-GC=F	$1,829.70	$1,977.20	$1,945.90	-1.58%	6.35%

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

• Consumer prices rose 0.2% in July, the same increase as in June. For the 12 months ended in July, consumer prices have risen 3.2%, after increasing 3.0% for the 12 months ended in June. Consumer prices less food and energy also advanced 0.2%, matching the June increase. Year over year, consumer prices less food and energy dipped 0.1 percentage point to 4.7%. In July, prices for shelter (+0.4%) were by far the largest contributor to the monthly advance, accounting for over 90% of the increase. Food prices increased 0.2% in July after increasing 0.1% the previous month. Prices for energy rose 0.1% last month after rising 0.6% in June. Since July 2022, prices for shelter rose 7.7%, food prices increased 4.9%, while energy prices decreased 12.5%. Other indexes with notable increases over the last 12 months include motor vehicle insurance (+17.8%), recreation (+4.1%), new vehicles (+3.5%), and household furnishings and operations (+2.9%).
• Prices producers received for goods and services rose 0.3% in July after being flat in June and declining 0.3% in May. In July, prices for services increased 0.5% (the largest monthly increase since August), while prices for goods inched up 0.1%. Since July 2022, producer prices advanced 0.8%. Prices less foods, energy, and trade services (core prices) moved up 0.2% last month, the largest increase since February. For the 12 months ended in July, core prices advanced 2.7%.
• The goods and services trade deficit was $65.5 billion in June, down $2.8 billion, or 4.1%, from May. June exports dipped $0.3 billion, or 0.1%, while imports fell $3.1 billion, or 1.0%. 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%.
• The Federal Treasury budget deficit was $220.8 billion in July, marginally lower than the June deficit, but about $10.0 billion over the July 2022 deficit. Through 11 months of fiscal year 2023, the deficit sits at $1,613.4 trillion. Over the same period in fiscal year 2022, the deficit was $726.1 billion. In July, total government expenditures exceeded receipts by $220.7 billion.
• The national average retail price for regular gasoline was $3.828 per gallon on August 7, $0.071 per gallon higher than the prior week’s price but $0.210 less than a year ago. Also, as of August 7, the East Coast price increased $0.091 to $3.737 per gallon; the Midwest price climbed $0.066 to $3.678 per gallon; the Gulf Coast price rose $0.037 to $3.453 per gallon; the Rocky Mountain price increased $0.071 to $3.944 per gallon; and the West Coast price advanced $0.069 to $4.685 per gallon.
• For the week ended August 5, there were 248,000 new claims for unemployment insurance, an increase of 21,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 29 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 29 was 1,684,000, a decrease of 8,000 from the previous week’s level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended July 22 were New Jersey (2.6%), California (2.3%), Puerto Rico (2.2%), Rhode Island (2.1%), Massachusetts (2.0%), Connecticut (1.9%), New York (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 July 29 were in Missouri (+2,644), New Jersey (+730), Illinois (+723), Florida (+533), and Tennessee (+365), while the largest decreases were in California (-3,108), Ohio (-2,952), Georgia (-1,373), Texas (-1,102), and New York (-1,001).

Eye on the Week Ahead

The latest data on retail sales for July is released this week. June saw retail sales inch up 0.2%. Retail sales have increased between 0.1% and 0.4% since May after dropping 0.8% in April. The Federal Reserve’s report on industrial production is also out this week. Industrial production has declined each month since May, when it rose 0.5%.

The Markets (as of market close August 4, 2023)

Stocks endured a losing week for the first time since early July. Each of the benchmark indexes listed here lost value, with the S&P 500 and the Nasdaq suffering the steepest weekly declines since March. Investors dealt with the downgrade of the U.S. government’s credit rating and evidence that job growth may be slowing (see below). Corporate earnings have generally matched or beaten expectations, but a couple of bellwether tech and communications companies proffered disappointing earnings. Bond prices fell, pushing yields higher. The dollar rose higher, while gold prices slid lower. Crude oil prices increased for the sixth straight week, the longest streak in more than a year.

Wall Street closed out the month of July on an uptick, with each of the benchmark indexes listed here posting gains by the close of trading last Monday. The Russell 2000 advanced 1.1% to lead the indexes, followed by the Global Dow and the Dow (0.3%). The Nasdaq and the S&P 500 rose 0.2%. Ten-year Treasury yields closed the day where they began at 3.95%. Crude oil prices dipped marginally to settle at $81.65 per barrel. The dollar was flat, while gold prices fell 0.4%.

Stocks closed generally lower last Tuesday, with only the Dow (0.2%) advancing among the benchmark indexes listed here. The Global Dow fell 0.7%, followed by the Russell 2000 (-0.5%), the Nasdaq (-0.4%), and the S&P 500 (-0.3%). Most of the market sectors lost value, with only industrials and information technology gaining ground. Crude oil prices declined for the second straight session, falling 0.1% to $81.73 per barrel. The yield on 10-year Treasuries rose 9.2 basis points to 4.05%. The dollar gained traction, climbing 0.4%, while gold prices slid 1.4%.

The stock market took a tumble last Wednesday, with the Nasdaq experiencing its worst day in nearly five months. Investors may have been rattled after the credit rating firm Fitch downgraded the U.S. government’s credit rating, which prompted an angry response from the White House and the Treasury Department. Fitch based its rating decision, in part, on the federal government’s growing levels of debt and political instability, including the January 6, 2021 attack on the Capitol. The Nasdaq slid 2.2%, followed by the Global Dow (-1.6%), the Russell 2000 and the S&P 500 (-1.4%), and the Dow (-1.0%). Yields on 10-year Treasuries rose 2.7 basis points to 4.07%. Crude oil prices continued to decline, dropping nearly 2.0% to $79.79 per barrel. The dollar rose 0.3%, while gold prices fell 0.4%.

Stocks declined for a third straight session last Thursday as investors continued to react to Fitch’s downgrade of U.S. bonds. Ten-year Treasury yields spiked 11.1 basis points to 4.18%, the highest yield in nine months, while the dollar slipped lower, impacted by the credit downgrade. The Global Dow fell the furthest, down 0.4%, followed by the Russell 2000 and the S&P 500, which dipped 0.3%. The Dow lost 0.2%, while the Nasdaq essentially broke even, down 0.1%. Crude oil prices reversed course, gaining 2.8% to $81.71 per barrel. Gold prices declined 0.3%.

Wall Street closed lower last Friday to end a disappointing week for stocks. Only the Global Dow (0.4%) advanced among the benchmark indexes listed here. The S&P 500 slid 0.5%, followed by the Dow and the Nasdaq, which fell 0.4%. The small caps of the Russell 2000 dipped 0.2%. Ten-year Treasury yields, which had climbed for most of the week, fell nearly 13.0 basis points on the day. Crude oil prices rose 1.3%. The dollar declined 0.5%. Gold prices ended the day up 0.4%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 8/4	Weekly Change	YTD Change
DJIA	33,147.25	35,459.29	35,065.62	-1.11%	5.79%
Nasdaq	10,466.48	14,316.66	13,909.24	-2.85%	32.89%
S&P 500	3,839.50	4,582.23	4,478.03	-2.27%	16.63%
Russell 2000	1,761.25	1,981.54	1,957.46	-1.22%	11.14%
Global Dow	3,702.71	4,245.17	4,164.25	-1.91%	12.46%
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%	3.96%	4.06%	10 bps	19 bps
US Dollar-DXY	103.48	101.64	102.02	0.37%	-1.41%
Crude Oil-CL=F	$80.41	$80.60	$82.62	2.51%	2.75%
Gold-GC=F	$1,829.70	$1,997.70	$1,977.20	-1.03%	8.06%

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 slowed in July, with the addition of 187,000 new jobs, well below the average monthly gain of 312,000 over the prior 12 months. In July, job gains occurred in health care, social assistance, financial activities, and wholesale trade. The unemployment rate ticked down 0.1 percentage point to 3.5%. The labor force participation rate and the employment-population ratio, at 62.6% and 60.4% respectively, were virtually unchanged from the previous month. The total number of unemployed declined by 116,000 to 5.8 million. In July, average hourly earnings rose by $0.14, or 0.4%, to $33.74. Over the past 12 months, average hourly earnings have increased by 4.4%. The average workweek edged down by 0.1 hour to 34.3 hours in July. Employment gains for May and June were revised down by 25,000 and 24,000, respectively. With these revisions, employment in May and June combined was 49,000 lower than previously reported. The revisions for May and June, coupled with July’s figures, indicated job growth decelerated since the first quarter.
• While the overall economy seems to be holding up despite rising interest rates, one sector that apparently has been impacted is manufacturing. According to the latest survey by S&P Global, U.S. manufacturing declined further in July following a downturn in June. New orders contracted, leading firms to scale back their input buying, which caused a depletion in inventories. Purchasing managers also reported a rise in raw material costs, although selling prices remained stable as manufacturers tried to stay competitive and drive sales.
• Unlike manufacturing, the services sector continued to expand in July, but at a slower pace than in the previous month. Business activity and new orders increased, although rising interest rates weighed on customer spending. Nevertheless, exports rose at a faster pace. Meanwhile, cost pressures for service providers softened, with prices rising at the slowest pace since December 2022.
• According to the latest Job Openings and Labor Turnover report, the number of job openings in June, at 9.6 million, was little changed from the previous month. The number of hires decreased by 326,000 in June from May, while total separations fell by 288,000. Within separations, the number of quits (voluntary separations initiated by the employee) decreased by 295,000 in June, while the number of layoffs and discharges changed minimally from May.
• The national average retail price for regular gasoline was $3.757 per gallon on July 31, $0.161 per gallon higher than the prior week’s price but $0.435 less than a year ago. Also, as of July 31, the East Coast price increased $0.158 to $3.646 per gallon; the Midwest price climbed $0.208 to $3.612 per gallon; the Gulf Coast price rose $0.173 to $3.416 per gallon; the Rocky Mountain price increased $0.118 to $3.873 per gallon; and the West Coast price advanced $0.077 to $4.616 per gallon.
• For the week ended July 29, there were 227,000 new claims for unemployment insurance, an increase of 6,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 22 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 22 was 1,700,000, an increase of 21,000 from the previous week’s level, which was revised down by 11,000. States and territories with the highest insured unemployment rates for the week ended July 15 were Puerto Rico (2.6%), New Jersey (2.5%), California (2.3%), Rhode Island (2.2%), Connecticut (2.1%), Massachusetts (2.0%), New York (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 July 22 were in Vermont (+239), Oklahoma (+93), West Virginia (+41), the Virgin Islands (+23), and South Dakota (+8), while the largest decreases were in New York (-9,526), California (-5,310), Georgia (-2,853), Pennsylvania (-2,816), and South Carolina (-2,545).

Eye on the Week Ahead

Inflation data for July is available this week. The most recent Consumer Price Index showed prices rose 0.2% in June, while the 12-month increase was 3.0%. The Producer Price Index revealed prices inched up 0.1% in June and 0.1% over the last 12 months. Inflationary pressures are clearly waning, while the economy has shown resilience.

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

Stocks closed higher in July, with each of the benchmark indexes listed here posting notable gains. Both the stock market in particular, and the economy in general, have proven to be resilient in 2023, despite rising interest rates.

The Federal Reserve, in its endeavor to bring inflation down to the government’s 2.0% target, hiked interest rates another 25.0 basis points in July, to the highest level in 22 years (see below). However, there are clear signs that inflation is finally receding. The Consumer Price Index and the personal consumption expenditures price index saw their respective 12-month rates fall to the lowest levels in nearly two years. Import and export prices dipped lower in July, as did producer prices.

The battle to reign in rising prices has also been waged throughout much of the world. While several countries in Europe and Canada have seen inflationary pressures begin to slide, they remain above preferred target rates.

Consumer spending, the bellwether of economic growth, continued to increase, although not quite at the pace set earlier in the year. The same can be said for gross domestic product, which accelerated in the second quarter and has continued to advance since the second quarter of 2022.

Employment also remained strong, with more than 200,000 new jobs added, while the unemployment rate sat at 3.6%. Wages continued to rise, however, increasing nearly 4.5% over the last 12 months. Unemployment claims are up from a year ago (see below) but remain well under the ballooning figures seen during the height of the COVID pandemic.

While many economic indicators showed strength last month, several sectors retreated. The housing market has retreated, primarily due to lack of inventory and advancing mortgage rates. Sales of new and existing homes floundered, although home prices remained strong.

Industrial production declined (see below), having fallen for two straight months. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, purchasing managers also noted a retraction in manufacturing.

While the economy remained relatively strong, the stock market proved equally robust. The S&P 500 and the Nasdaq enjoyed five straight months of gains, closing out their best seven-month stretch to start the year since 1997. Year to date, the Nasdaq is up more than 37.0%, while the S&P 500 exceeded 19.0%. In July, the Dow saw a run of 13 consecutive sessions with gains.

Last month, all of the market sectors advanced. Some notable performers included energy (8.0%), communication services (7.8%), financials (5.7%), and materials (4.0%). Information technology rose 4.5%, driven higher by rising artificial intelligence stocks.

Bond prices fell lower in July, with yields increasing over the previous month. Ten-year Treasury yields rose 14.0 basis points from June. The 2-year Treasury yield ended July at 4.85%, down 7.0 basis points from a month earlier. The dollar dipped lower against a basket of world currencies. Gold prices ended July higher. Crude oil prices climbed in July for the second 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 $3.596 per gallon on July 24, $0.025 higher than the price a month earlier but $0.734 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of July 31	Monthly Change	YTD Change
DJIA	33,147.25	34,407.60	35,559.53	3.35%	7.28%
Nasdaq	10,466.48	13,787.92	14,346.02	4.05%	37.07%
S&P 500	3,839.50	4,450.38	4,588.96	3.11%	19.52%
Russell 2000	1,761.25	1,888.73	2,003.18	6.06%	13.74%
Global Dow	3,702.71	4,103.46	4,257.15	3.75%	14.97%
Fed. Funds target rate	4.25%-4.50%	5.00%-5.25%	5.25%-5.50%	25 bps	100 bps
10-year Treasuries	3.87%	3.81%	3.95%	14 bps	8 bps
US Dollar-DXY	103.48	102.93	101.89	-1.01%	-1.54%
Crude Oil-CL=F	$80.41	$70.47	$81.76	16.02%	1.68%
Gold-GC=F	$1,829.70	$1,926.20	$2,003.70	4.02%	9.51%

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 209,000 in June from May compared with an average monthly gain of 278,000 so far this year. In June, employment trended upward in government, health care, social assistance, and construction. The unemployment rate edged down 0.1 percentage point to 3.6%. In June, the number of unemployed persons fell by 140,000 to 5.9 million. The employment-population ratio, at 60.3%, and the labor force participation rate, at 62.6%, were unchanged in June from the previous month. Both measures have shown little net change since early 2022. In June, average hourly earnings increased by $0.12 to $33.58. Over the 12 months ended in June, average hourly earnings rose by 4.4%. The average workweek in June, at 34.4 hours, edged up 0.1 hour from May.
• There were 221,000 initial claims for unemployment insurance for the week ended July 22, 2023. The total number of workers receiving unemployment insurance was 1,690,000. By comparison, over the same period last year, there were 211,000 initial claims for unemployment insurance, and the total number of claims paid was 1,317,000.
• FOMC/interest rates: The Federal Open Market Committee raised the federal funds target range rate by 25.0 basis points in July, bringing the target range for the federal funds rate to its highest level since 2001. The Committee noted that inflation remained elevated, while economic activity expanded at a moderate pace. Job gains have been robust, and the unemployment rate remained low. The FOMC statement indicated that the U.S. banking system was sound and resilient. Overall, the FOMC will base its decisions on available data and “will 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.”
• GDP/budget: Economic growth remained steady in the second quarter, as gross domestic product increased 2.4%, compared with a 2.0% increase in the first quarter. The acceleration in second-quarter GDP compared to the previous quarter primarily reflected increases in private inventory investment and nonresidential fixed investment. Consumer spending, as measured by personal consumption expenditures, rose 1.6% in the second quarter compared to a 4.2% increase in the first quarter. Consumer spending on long-lasting durable goods inched up 0.4% in the second quarter after advancing 16.3% in the prior quarter. Spending on services rose 2.1% in the second quarter (3.2% in the first quarter). Nonresidential fixed investment increased 7.7% after rising 0.6% in the first quarter. Residential fixed investment fell 4.2% in the second quarter, little changed from the first quarter (-4.0%). Exports decreased 10.8% 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 7.8% in the second quarter after advancing 2.0% in the previous quarter. Consumer prices increased 2.6% in the second quarter compared to a 4.1% advance in the first quarter. Excluding food and energy, consumer prices advanced 4.8% in the second quarter (4.9% in the first quarter).
• The federal budget had a $227.8 billion deficit in June, well above the year-earlier deficit of $88.8 billion. The deficit for the first nine months of fiscal year 2023 was $1.393 trillion compared to $515.1 billion through the comparable period of the previous fiscal year. In June, government receipts totaled $418.3 billion for the month and $3.413 trillion for the current fiscal year. Government outlays were $646.1 billion in June and $4.805 trillion through the first nine months of fiscal year 2023. By comparison, receipts in June 2022 were $460.8 billion and $3.835 trillion through the first nine months of the previous fiscal year. Expenditures were $549.6 billion in June 2022 and $4.350 trillion through the comparable period in FY22.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, consumer spending increased 0.5% in June and 9.1% since June 2022. Personal income and disposable personal income rose 0.3% in June, following a 0.5% increase in May. Consumer prices rose 0.2% in June, as did prices less food and energy. However, prices have risen 3.0% since June 2022. This is the lowest 12-month increase in consumer prices since the year ended in March 2021.
• The Consumer Price Index rose 0.2% in June after increasing 0.1% in May. Over the 12 months ended in June, the CPI advanced 3.0%, down from 4.0% for the year ended in May. This is the lowest 12-month rate since March 2021. Excluding food and energy prices, the CPI rose 0.2% in June and 4.8% over the last 12 months, marking the lowest 12-month rate since October 2021. Prices for shelter, which rose 0.4%, contributed more than 70.0% of the overall increase in the June CPI. Also advancing in June were prices for food (0.2%), energy (0.6%), and apparel (0.3%). For the 12 months ended in June, food prices have increased 3.0%, while energy prices have fallen 16.7%.
• Prices that producers received for goods and services inched up 0.1% in June, following a 0.3% decline in the previous month. Producer prices increased 0.1% for the 12 months ended in June, the lowest 12-month rate since August 2020. Driving the overall increase in producer prices was a 0.2% jump in prices for services. Goods prices were flat. Producer prices excluding food and energy rose 0.1% in June and 2.4% for the year. Energy prices rose 0.7% in June but fell 23.9% since June 2022. Food prices dipped 0.1% in June but were up 0.2% for the 12 months ended in June.
• Housing: Sales of existing homes decreased 3.3% in June. Since June 2022, existing-home sales dropped 18.9%. According to the report from the National Association of Realtors®, sales have fallen 23.0% during the first half of the year. In June, total existing-home inventory sat at a 3.1-month supply at the current sales pace. The dearth of available homes for sale has negatively impacted transactions. The median existing-home price was $410,200 in June, the second-highest price of all time and down only 0.9% from the record-high of $413,800 in June 2022. Sales of existing single-family homes dropped 3.4% in June and 18.8% from June 2022. The median existing single-family home price was $416,000 in June, up from the May price of $401,500 but well below the June 2022 price of $420,900.
• New single-family home sales declined in June, falling 2.5%, marking the first monthly decrease since February. Despite the June decrease, sales were up 23.8% from a year earlier. The median sales price of new single-family houses sold in June was $415,400 ($417,300 in May). The June average sales price was $494,700 ($488,700 in May). The inventory of new single-family homes for sale in June increased to 7.4 months, up from 7.2 months in May.
• Manufacturing: Industrial production declined 0.5% in June after falling 0.2% in May. Manufacturing decreased 0.3% in June, driven lower, in part, by a 3.0% decrease in motor vehicles and parts, and a 1.6% decline in petroleum. In June, mining slid 0.2%, while utilities dropped 2.6%. Total industrial production in June was 0.4% below its year-earlier level. Most major market groups posted declines in June. Consumer durables fell 2.7%, led by decreases in appliances, furniture, and carpeting (-3.8%) and automotive products (-3.6%). The decrease of 0.9% for consumer nondurables reflected declines in clothing (-2.1%), energy (-1.8%), and food and tobacco (-1.3%).
• New orders for durable goods rose for the fourth straight month after increasing 4.7% in June. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 6.2%. Transportation equipment, also up four consecutive months, led the increase, climbing 12.1%.
• Imports and exports: June saw both import and export prices decrease. Import prices fell 0.2%, following a 0.4% decline in May. The June drop in import prices was the fifth decrease out of the first six months of 2023. Imports declined 6.1% over the past year, the largest 12-month decrease since the year ended May 2020. Import fuel prices rose 0.8% in June, offset by a 0.4% decline in nonfuel import prices. Export prices fell 0.9% in June after declining 1.9% in the previous month. Lower prices for nonagricultural exports and agricultural exports in June contributed to the overall decrease. Export prices fell 12.0% from June 2022 to June 2023, the largest over-the-year decline since the series was first published in September 1984.
• The international trade in goods deficit fell $4.0 billion, or 4.4%, in June. Exports of goods increased 0.2% from May, while imports of goods decreased 1.4%.
• The latest information on international trade in goods and services, released July 6, was for May and revealed that the goods and services trade deficit fell $5.5 billion, or 7.3%, from April. Exports for May were $2.4 billion, or 0.8%, below April exports. Imports were $7.5 billion, or 2.3%, less than April imports. Year to date, the goods and services deficit decreased $101.7 billion, or 22.8%, from the same period in 2022. Exports increased $48.0 billion, or 3.9%. Imports decreased $53.7 billion, or 3.2%.
• International markets: Inflation continued to be the dominant topic last month. In the United Kingdom, although consumer prices inched up 0.1% in June, the 12-month rate remained elevated at 7.9%, still about 6.0 percentage points higher than the Bank of England’s target. In France, consumer prices rose 0.2% for the month, while falling from an annual rate of 5.1% to 4.5%. The 12-month rate of inflation in the Eurozone dipped from 6.1% to 5.5%, while Germany saw consumer prices remain at 6.4% for the 12 months ended in June. China, on the other hand, has seen consumer prices fall, which has depleted corporate profits and could lead to a reduction in the workforce. The prospects of Chinese deflation could benefit global trade partners, such as the United States, by easing product prices. However, China’s slowing economy could also reduce that country’s demand for materials and consumer goods, which would negatively impact world trade. For July, the STOXX Europe 600 Index increased 2.3%; the United Kingdom’s FTSE rose 2.3%; Japan’s Nikkei 225 Index fell 1.7%; and China’s Shanghai Composite Index ticked up 1.5%.
• Consumer confidence: Consumer confidence sits at the highest level since July 2021. The Conference Board Consumer Confidence Index® increased in July to 117.0, up from 110.1 in June. The July increase marked the second straight monthly gain in consumer confidence. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, improved to 160.0 in July, up from 155.3 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, rose to 88.3 in July from 80.0 in June. Importantly, according to the Conference Board’s report, the Expectations Index climbed above 80.0, the level associated with a recession. Despite rising interest rates, consumers are more upbeat, likely reflecting falling inflation and a tight labor market.

Eye on the Month Ahead

Investors will focus on corporate earnings and the labor market in August. The Federal Open Market Committee does not meet in August, so there will be no change to the Federal Funds target rate. Manufacturing, which has slowed during the summer months, looks to pick up steam in August.

The Markets (as of market close July 28, 2023)

Stocks enjoyed a favorable week of returns, with each of the benchmark indexes listed here posting solid gains. The Dow and the S&P 500 notched their third straight week of gains. Inflation continued to cool in June, with the smallest 12-month rate increase since March 2021 (see below). So far, corporate earnings for the second quarter have been generally favorable, with some large tech companies beating expectations. Long-term bond prices fell, sending yields higher. Crude oil prices advanced, with global oil prices gaining more than 16.0% since late June. Rising oil prices have spurred an increase in gasoline prices. The dollar slipped lower last week, while gold prices climbed higher.

Wall Street began the week on a high note last Monday, with each of the benchmark indexes finishing the day up. The Dow gained 0.5% to extend its winning streak to 11 straight sessions. The S&P 500 added 0.4%, the Russell 2000 and the Global Dow each rose 0.3%, and the Nasdaq gained 0.2%. Ten-year Treasury yields inched up 2.0 basis points to close at 3.85%. Crude oil prices jumped 2.4%, settling at $78.92 per barrel. The dollar advanced 0.3%, while gold prices dipped 0.5%.

Stocks climbed higher last Tuesday, led by the Nasdaq (0.6%), while the Dow (0.1%) was able to eke out a gain to extend its streak to 12 days. The Global Dow and the S&P 500 added 0.3%, while the Russell 2000 closed the day essentially where it began. Crude oil prices rose 1.1% to hit $79.61 per barrel. The yield on 10-year Treasuries settled at 3.91%. The dollar dipped lower, while gold prices advanced 0.2%.

As expected, last Wednesday the Federal Reserve raised interest rates 25.0 basis points (see below) to the highest range since 2001. Stocks closed the day with mixed results. The Dow gained 0.2%, notching its 13th consecutive day of gains, which is the longest winning streak for the Dow since 1987. The Russell 2000 (0.7%) and the Global Dow (0.3%) also posted gains, while the Nasdaq slipped 0.1%. The S&P 500 ended the day flat. Bond prices jumped higher, pulling yields lower. Ten-year Treasury yields fell 6.1 basis points to 3.85%. Crude oil prices reversed a rally, declining 0.9% to $78.95 per barrel. The dollar slipped lower, while gold prices rose for the second straight day.

The Dow’s winning streak ended at 13 days following last Thursday’s negative performance. The Russell 2000 fell 1.3%, the largest decline among the benchmark indexes listed here. The Dow slipped 0.7%, the S&P 500 and the Nasdaq fell 0.6%, while the Global Dow dropped 0.2%. Bond prices plunged lower, hiking yields on 10-year Treasuries 16.1 basis points to close at 4.01%. Crude oil prices jumped 1.4% to $79.91 per barrel. The dollar rose nearly 1.0%. Gold prices ended a mini two-day winning streak, declining 1.4% by the close of trading.

Stocks ended last week on a high note, fueled by favorable technology earnings and positive inflation data. Each of the benchmark indexes listed here posted solid gains last Friday, led by the Nasdaq (1.9%), followed by the Russell 2000 (1.4%), the S&P 500 (1.0%), and the Dow and the Global Dow (0.5%). Ten-year Treasury yields slid lower to close the day and week at 3.96%. Crude oil prices continued to climb, with prices per barrel eclipsing the $80.00 threshold for the first time since April. The dollar lost ground, while gold prices rose 0.6%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 7/28	Weekly Change	YTD Change
DJIA	33,147.25	35,227.69	35,459.29	0.66%	6.98%
Nasdaq	10,466.48	14,032.81	14,316.66	2.02%	36.79%
S&P 500	3,839.50	4,536.34	4,582.23	1.01%	19.34%
Russell 2000	1,761.25	1,960.26	1,981.54	1.09%	12.51%
Global Dow	3,702.71	4,201.62	4,245.17	1.04%	14.65%
Fed. Funds target rate	4.25%-4.50%	5.00%-5.25%	5.25%-5.50%	25 bps	100 bps
10-year Treasuries	3.87%	3.83%	3.96%	13 bps	9 bps
US Dollar-DXY	103.48	101.06	101.64	0.57%	-1.78%
Crude Oil-CL=F	$80.41	$76.88	$80.60	4.84%	0.24%
Gold-GC=F	$1,829.70	$1,963.70	$1,997.70	1.73%	9.18%

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 Federal Reserve hiked the federal funds rate 25.0 basis points to 5.25%-5.50%. The statement released by the Fed contained virtually the same information as from its previous statement. Job gains have been robust, the economy has been expanding at a moderate pace, and inflation remains elevated. The Fed does not meet again until September.
• The economy accelerated at an annualized rate of 2.4% in the second quarter, according to the second estimate of gross domestic product. GDP increased 2.0% in the first quarter. Compared to the first quarter, the acceleration in GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in nonresidential (business) fixed investment. These movements were partly offset by a downturn in exports, and decelerations in consumer spending, federal government spending, and state and local government spending. Imports, which are a negative in the calculation of GDP, decreased. The personal consumption expenditures price index increased 2.6%, down from the 4.1% increase in the first quarter. Consumer spending rose 1.6% in the second quarter, following an increase of 4.2% in the first quarter.
• Consumer prices, as measured by the personal consumption expenditures price index, rose 0.2% in June. Prices less food and energy also increased 0,2% from May. Since June 2022, consumer prices are up 3.0%, the lowest yearly price increase since March 2021, when the advance was 2.5%. The PCE price index, the preferred measure of inflation for the Federal Reserve, is clearly ebbing but has yet to reach the 2.0% target rate of the Fed. Personal income and disposable personal income rose 0.3% last month. Consumer spending increased 0.5% in June.
• Durable goods orders rose 4.7% in June, marking the fourth straight month of increases. Transportation contributed to the increase in new orders for durable goods in June, increasing 12.1%. Also contributing to the June advance in new orders was nondefense aircraft and parts (69.4%), defense aircraft and parts (5.5%), and capital goods (11.2%). New orders for durable goods have increases 4.6% since June 2022.
• Sales of new single-family homes declined in June for the first time since February. According to the Census Bureau, new home sales dipped 2.5% last month, but were up 23.8% over June 2022. The median sales price in June was $415,400, while the average sales was $494,700. Inventory for new single-family homes for sale sat at a 7.4-month supply, based on the current pace of sales.
• The advance report on the international trade in goods deficit was $87.8 billion in June, down $4.0 billion, or 4.4%, from May. Exports of goods for June were $0.4 billion, or 0.2%, more than May exports. Imports of goods for June were $3.6 billion, or 2.7%, less than May imports. Over the last 12 months, exports are down 9.3%, and imports have dropped 9.9%.
• The national average retail price for regular gasoline was $3.596 per gallon on July 24, $0.037 per gallon higher than the prior week’s price but $0.734 less than a year ago. Also, as of July 24, the East Coast price increased $0.066 to $3.488 per gallon; the Midwest price declined $0.009 to $3.404 per gallon; the Gulf Coast price rose $0.106 to $3.243 per gallon; the Rocky Mountain price decreased $0.010 to $3.755 per gallon; and the West Coast price declined $0.010 to $4.539 per gallon.
• For the week ended July 22, there were 221,000 new claims for unemployment insurance, a decrease of 7,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 15 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 July 15 was 1,690,000, a decrease of 59,000 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 July 8 were Connecticut (2.6%), New Jersey (2.5%), California (2.4%), Puerto Rico (2.4%), Rhode Island (2.2%), Massachusetts (2.0%), New York (1.9%), Oregon (1.9%), Minnesota (1.8%), and Pennsylvania (1.8%). The largest increases in initial claims for unemployment insurance for the week ended July 15 were in Georgia (+4,879), California (+3,875), South Carolina (+2,376), Oregon (+1,354), and Texas (+1,267), while the largest decreases were in Michigan (-3,620), Kentucky (-2,730), New Jersey (-2,036), New York (-1,917), and Indiana (-1,360).

Eye on the Week Ahead

Manufacturing and labor are the focus of this week’s economic data. The manufacturing sector slowed in June for the second straight month, while services expanded. Employment remained relatively strong in June, although the number of new hires (209,000) was well below the 2023 monthly average of 273,000.

The Markets (as of market close July 21, 2023)

Last week saw stocks close generally higher, with only the tech-heavy Nasdaq slipping lower. The Dow extended its winning streak to 10 straight sessions, its longest run since August 2017. Investors, probably anticipating another 25.0 basis-point hike from the Federal Reserve this week, moved from information technology, communication services, and consumer discretionary shares to more defensive sectors such as health care, utilities, and consumer staples. Long-term bond prices remained relatively stable for the week, with yields on 10-year Treasuries inching up 2.0 basis points. The dollar rebounded last week after sliding over 2.0% the prior week. The labor market remained strong, with jobless claims (see below) coming in lower than expected, which reduces the risk of recession and strengthens the dollar. Crude oil prices advanced again last week, keeping July’s streak of weekly increases intact.

Stocks opened higher to begin last week as investors looked ahead to the start of corporate earnings season. Traders looked past a disappointing report on China’s gross domestic product, instead focusing on hopes that waning inflation may quell fears of a recession. The small caps of the Russell 2000 gained 1.0% and the Nasdaq rose 0.9% to lead the benchmark indexes listed here. The S&P 500 advanced 0.4% and the Dow inched up 0.2%. The Global Dow ended the session flat. Ten-year Treasury yields fell 2.2 basis points to 3.79%. Crude oil prices slid 1.8%, falling to $74.09 per barrel on reports that Kuwait plans to boost its crude oil production. The dollar ended the day where it began, while gold prices dipped 0.3%.

Last Tuesday saw stocks close higher, with the Dow reaching a one-year high. Information technology, energy, and financials led the market sectors. A couple of major financial corporations posted favorable earnings to help propel bank shares. The Russell 2000 led the benchmark indexes for the second straight session, gaining 1.3%, followed by the Dow (1.1%) and the Nasdaq (0.8%). The Global Dow and the S&P 500 advanced 0.7%. Ten-year Treasury yields ticked lower, closing at 3.78%. Crude oil prices shrugged off the prior day’s declines, gaining 2.1% to settle at $75.71 per barrel. The dollar inched higher, while gold prices rose 1.3%.

Stocks finished higher last Wednesday for the third straight session. Tech shares lagged a bit, but consumer staples, financials, energy, and health care advanced. The Nasdaq ended the day flat, while the Russell 2000 (0.5%), the Dow (0.3%).The Global Dow and the S&P 500 edged 0.2% higher. Data in the United Kingdom showed inflation slowed somewhat, which impacted long-term bonds. The yield on 10-year Treasuries fell 4.7 basis points, closing at 3.74%. Crude oil prices continued to ride a bumpy wave, following the prior day’s advance by sliding 0.6% settling at $75.27 per barrel. The dollar edged higher, while gold prices were unchanged by the close of trading.

Wall Street closed generally lower last Thursday. The Dow advanced for the ninth straight session after gaining 0.5%, marking its longest winning streak since 2017. The Nasdaq (-2.1%), the Russell 2000 (-1.0%), and the S&P 500 (-0.7%) declined. The Global Dow was flat. Consumer discretionary, information technology, and communication services lost ground, while health care, utilities, and energy were strong performers. Ten-year Treasury yields, pushed higher by sagging bond prices, climbed 11.2 basis points to close at 3.85%. Crude oil prices settled at $75.63 per barrel, up 0.4% on the day. The dollar advanced over 0.5%, while gold prices dipped lower.

Stocks ended last Friday with mixed returns. The Dow barely edged higher to maintain its bull run. Investors moved from information technology and communication services to more defensive sectors such as utilities and health care. The Nasdaq fell for the second consecutive day, falling 0.2%, while the small caps of the Russell 2000 dipped 0.4%. The Global Dow slid 0.2%. The S&P 500 ended the day relatively flat. Yields on 10-year Treasuries slipped lower, closing at 3.83%. Crude oil prices advanced 1.7%. The dollar inched up 0.2%, while gold prices fell 0.4% by the close of trading.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 7/21	Weekly Change	YTD Change
DJIA	33,147.25	34,509.03	35,227.69	2.08%	6.28%
Nasdaq	10,466.48	14,113.70	14,032.81	-0.57%	34.07%
S&P 500	3,839.50	4,505.42	4,536.34	0.69%	18.15%
Russell 2000	1,761.25	1,931.09	1,960.26	1.51%	11.30%
Global Dow	3,702.71	4,172.05	4,201.62	0.71%	13.47%
Fed. Funds target rate	4.25%-4.50%	5.00%-5.25%	5.00%-5.25%	0 bps	75 bps
10-year Treasuries	3.87%	3.81%	3.83%	2 bps	-4 bps
US Dollar-DXY	103.48	99.98	101.06	1.08%	-2.34%
Crude Oil-CL=F	$80.41	$75.23	$76.88	2.19%	-4.39%
Gold-GC=F	$1,829.70	$1,959.80	$1,963.70	0.20%	7.32%

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

• Retail sales inched up 0.2% in June and rose 1.5% since June 2022. Retail trade sales also increased 0.2% last month and were up 0.5% from a year ago. Retailers that enjoyed solid June sales included furniture and home furnishing stores; electronics and appliance stores; clothing and clothing accessories stores; miscellaneous store retailers; and nonstore retailers. Sales at general merchandise stores and department stores along with gasoline station sales slipped the most in June.
• Industrial production edged down 0.5% in June, marking the second straight monthly decline. Manufacturing output dipped 0.3% last month, while mining and utilities fell 0.2% and 2.6%, respectively. Overall, total industrial production in June was 0.4% below its June 2022 level. Most major market groups posted declines in June. The indexes for nondurable manufacturing and durable manufacturing fell 0.6% and 0.1%, respectively.
• The number of residential building permits issued in June declined 3.7% from the May total and is 15.3% below the June 2022 figure. Issued building permits for single-family housing increased 2.2% in June. Housing starts decreased 8.0% last month and were 8.1% below the total from a year earlier. Single-family housing starts in June were 7.0% below the prior month’s rate. Home completions dipped 3.3% in June from May but were 5.5% above the June 2022 total. Single-family home completions in June dipped 2.8% below May’s figure.
• Sales of existing homes retreated 3.3% in June and 18.9% since June 2022. This year has not been a good one for sales of existing homes, as they are lower by 23.0% from the end of 2022. Total housing inventory sits at a 3.1-month supply at the current sales pace. The dearth of existing homes for sale coupled with rising mortgage rates has stifled sales. The median sales price for existing homes was $410,200 in June, the second-highest price all-time, just below the highest price of $413,800 in June 2022. Single-family home sales also fell last month, down 3.4% from May and 18.8% from a year earlier. The median price for single-family existing homes was $416,000 in June, down 1.2% from June 2022.
• The national average retail price for regular gasoline was $3.559 per gallon on July 17, $0.013 per gallon higher than the prior week’s price but $0.931 less than a year ago. Also, as of July 17, the East Coast price decreased $0.007 to $3.422 per gallon; the Midwest price increased $0.051 to $3.413 per gallon; the Gulf Coast price fell $0.015 to $3.137 per gallon; the Rocky Mountain price rose $0.017 to $3.765 per gallon; and the West Coast price increased $0.015 to $4.549 per gallon.
• For the week ended July 15, there were 228,000 new claims for unemployment insurance, a decrease of 9,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 8 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 8 was 1,754,000, an increase of 33,000 from the previous week’s level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended July 1 were Puerto Rico (2.4%), New Jersey (2.3%), California (2.1%), Connecticut (2.0%), Rhode Island (2.0%), Massachusetts (1.9%), New York (1.8%), Oregon (1.7%), Minnesota (1.6%), and Pennsylvania (1.6%). The largest increases in initial claims for unemployment insurance for the week ended July 8 were in New York (+8,043), Ohio (+1,783), Pennsylvania (+1,413), Iowa (+1,368), and Arizona (+1,118), while the largest decreases were in Connecticut (-3,538), New Jersey (-3,290), Michigan (-1,434), Minnesota (-758), and Rhode Island (-751).

Eye on the Week Ahead

This is a very noteworthy week for the release of important economic information. The initial estimate of second-quarter gross domestic product is released this week. The economy advanced at an annualized rate of 2.0% in the first quarter. Also out this week is the report on personal income and outlays, which includes the personal consumption expenditures price index, a preferred inflation indicator of the Federal Reserve. Prices inched up 0.1% in May and are expected to maintain a comparable pace in June. All of which leads to the July meeting of the Federal Open Market Committee. The FOMC passed on increasing interest rates following its June meeting, but the expectation is that the Committee will raise rates by at least 25.0 basis points in July.

The Markets (as of market close July 14, 2023)

Wall Street enjoyed a positive week of returns, with each of the benchmark indexes posting solid gains, despite a marginal downturn at the end of last week. The financial sector began releasing quarterly updates last Friday as investors focused on the state of the banking industry. A few major banks reported increasing profits in the second quarter, while more data will be released this week. The Russell 2000, the Global Dow, and the Nasdaq gained over 3.0% last week, while the S&P 500 and the Dow advanced over 2.3%. Ten-year Treasury yields fell 24.0 basis points as investors saw hope that inflation may be subsiding and the Federal Reserve may be nearing an end to its policy of interest rate hikes. Crude oil prices climbed higher last week, despite last Friday’s drop, which was the largest decline since the end of last month. The dollar slid lower and is now down 3.4% year to date. Gold prices, on the other hand, rose higher last week and are up more than 7.0% for the year.

Last Monday saw investors grab some apparent bargains, pushing stocks higher to begin the week. The Russell 2000 led the benchmark indexes listed here, climbing 1.6%. The Dow advanced 0.6%, while the Global Dow (0.4%), the S&P 500 (0.2%), and the Nasdaq (0.2%) ticked higher. Ten-year Treasury yields settled at 4.06% after falling 4.4 basis points on rising bond prices. Crude oil prices ended a streak of increases, dipping 0.9% to $73.21 per barrel. The dollar and gold prices began last week on a downturn.

Stocks closed higher for the second straight session last Tuesday as investors awaited the Wednesday release of the Consumer Price Index report. The Global Dow rose 1.1% to head the indexes listed here. The Russell 2000 enjoyed a second day of notable gains after advancing 1.0%. The Dow rose 0.9%, followed by the S&P 500 (0.7%), and the Nasdaq (0.6%). Crude oil prices reversed the prior day’s downturn, climbing 2.6% to settle at $74.86 per barrel. The yield on 10-year Treasuries slipped 2.6 basis points to close at 3.98%. The dollar declined, while gold prices advanced.

Signs that inflation may be receding drove stocks and bond prices higher last Wednesday. A better-than-expected Consumer Price Index (see below) offered encouragement to investors that the Federal Reserve’s interest rate hikes may be nearing an end. For the second day in a row, the Global Dow (1.4%) led the benchmark indexes listed here, followed by the Nasdaq (1.2%), the Russell 2000 (1.1%), the S&P 500 (0.7%), and the Dow (0.3%). With bond prices climbing higher, yields on 10-year Treasuries fell nearly 12.0 basis points to close at 3.86%. Crude oil prices rose 1.4% to $75.86 per barrel. The dollar continued to decline, while gold prices continued to advance.

Stocks rallied for a fourth straight day last Thursday, with the S&P 500 and the Nasdaq reaching new intraday 52-week highs. Tech stocks were some of the highest climbers helping to drive the indexes. The Nasdaq rose 1.6%, followed by the Global Dow (1.1%), the Russell 2000 and the S&P 500 (0.9%), and the Dow (0.1%). Bond prices continued to climb, pulling yields lower. Ten-year Treasury yields fell 10.0 basis points to settle at 3.76%. Crude oil prices advanced for the third straight day, reaching $77.31 per barrel. The dollar continued to slide, falling 0.8%. Gold prices inched up 0.2%.

Last Friday saw stocks close generally lower, with only the Dow posting a 0.3% gain among the benchmark indexes listed here. The Russell 2000 fell 1.0%, the Global Dow dipped 0.5%, the Nasdaq slipped 0.2%, and the S&P 500 declined 0.1%. Ten-year Treasury yields rose 5.8 basis points. The dollar advanced for the only day last week, while gold prices fell. Crude oil prices dropped 2.2% to $75.23 per barrel.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 7/14	Weekly Change	YTD Change
DJIA	33,147.25	33,734.88	34,509.03	2.29%	4.11%
Nasdaq	10,466.48	13,660.72	14,113.70	3.32%	34.85%
S&P 500	3,839.50	4,398.95	4,505.42	2.42%	17.34%
Russell 2000	1,761.25	1,864.66	1,931.09	3.56%	9.64%
Global Dow	3,702.71	4,044.03	4,172.05	3.17%	12.68%
Fed. Funds target rate	4.25%-4.50%	5.00%-5.25%	5.00%-5.25%	0 bps	75 bps
10-year Treasuries	3.87%	4.05%	3.81%	-24 bps	-6 bps
US Dollar-DXY	103.48	102.28	99.98	-2.25%	-3.38%
Crude Oil-CL=F	$80.41	$73.66	$75.23	2.13%	-6.44%
Gold-GC=F	$1,829.70	$1,930.50	$1,959.80	1.52%	7.11%

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

Last Week’s Economic News

• The Consumer Price Index rose 0.2% in June after advancing 0.1% in May. Shelter prices (0.4%) accounted for over 70% of the CPI increase in June. Also advancing in June were prices for motor vehicles, insurance, apparel, recreation, and personal care. Prices for airline fares, communication, used cars and trucks, and household furnishings and operations were among those that decreased last month. Prices less food and energy rose 0.2% in June, the smallest one-month increase since August 2021. Over the last 12 months, the CPI rose 3.0%, which is the smallest yearly increase since the period ended March 2021. The CPI less food and energy rose 4.8% over the last 12 months. Energy prices decreased 16.7% for the 12 months ended in June, while the food prices increased 5.7%.
• Producer prices inched up 0.1% in June after declining 0.4% in the previous month. Since June 2022, Producer prices have risen 0.1%. Pushing producer prices higher was a 0.2% increase in prices for services. Prices for goods were unchanged in June. producer prices less foods, energy, and trade services moved up 0.1% in June after no change in May. For the 12 months ended in June, producer prices less foods, energy, and trade services advanced 2.6%.
• Import and export prices continued to decline in June. According to the latest report from the Bureau of Labor Statistics, import prices fell 0.2% in June after decreasing 0.4% in May. Export prices declined 0.9% in June following a 1.9% drop the previous month. In 2003, import prices have fallen in five of the last six months after rising 3.2% in 2022. Import prices declined 6.1% thus far this year, the largest 12-month drop since the year ended May 2020. Export prices fell 12.0% from June 2022 to June 2023, the largest 12-month decline since the data was first published in September 1984.
• The Treasury budget deficit was $227.8 billion in June, a decrease of about $12.6 billion from the May deficit but $139.0 billion above the June 2022 deficit. Through the first nine months of the fiscal year, the government deficit sits at $1.392.6 trillion compared to $515.1 billion over the same period in the prior fiscal year. Compared to last fiscal year, government receipts are down $422.8 billion, while government expenditures rose by $454.7 billion.
• The national average retail price for regular gasoline was $3.546 per gallon on July 10, $0.019 per gallon hither than the prior week’s price but $1.100 less than a year ago. Also, as of July 10, the East Coast price increased $0.057 to $3.429 per gallon; the Midwest price fell $0.027 to $3.362 per gallon; the Gulf Coast price rose $0.044 to $3.152 per gallon; the Rocky Mountain price declined $0.042 to $3.748 per gallon; and the West Coast price inched up $0.001 to $4.534 per gallon. The U.S. Energy Information Administration forecasts higher oil prices in the second half of 2023 and into 2024. EIA expects production cuts from OPEC members and higher demand, which will likely drive Brent crude oil prices to the mid $80.00 per barrel range by the end of 2024.
• For the week ended July 8, there were 237,000 new claims for unemployment insurance, a decrease of 12,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 1 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 1 was 1,729,000, an increase of 11,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended June 24 were California (2.2%), New Jersey (2.2%), Puerto Rico (2.2%), Massachusetts (1.9%), Connecticut (1.8%), Rhode Island (1.8%), New York (1.7%), Oregon (1.7%), Pennsylvania (1.7%), and Minnesota (1.6%). The largest increases in initial claims for unemployment insurance for the week ended July 1 were in Michigan (+6,792), New York (+4,152), Ohio (+3,028), Kentucky (+2,449), and Indiana (+1,549), while the largest decreases were in Texas (-3,126), New Jersey (-1,137), Colorado (-509), Wisconsin (-504), and Connecticut (-446).

Eye on the Week Ahead

The June retail sales report is released this week. May saw retail sales increase by 0.3% from the previous month. The June report on industrial production is also out this week. Industrial production has been somewhat flat over the past few months, decreasing 0.2% in May. June reports on housing starts and existing home sales are available this week. In general, new home sales have increased throughout the year, while sales of existing homes have declined, primarily due to rising mortgage rates and a dearth of inventory.