What I'm Watching This Week

The Markets (third quarter through September 29, 2023)

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

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

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

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

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

Stock Market Indexes

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

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

Latest Economic Reports

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

Eye on the Quarter Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Latest Economic Reports

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

Eye on the Month Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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%.