Stocks closed higher last week, with the S&P 500 and the Nasdaq reaching record highs. Investors were encouraged by generally favorable fourth-quarter corporate earnings data and a downwardly revised Consumer Price Index for December. Each of the benchmark indexes listed here gained ground, led by the Russell 2000 and the Nasdaq. Last week saw information technology, communication services, industrials, and consumer discretionary lead the market sectors, while utilities and consumer staples trended lower. Crude oil prices continued to rise last week amid ongoing Middle East tensions.
The week kicked off with stocks falling as bond yields advanced. The small caps of the Russell 2000 took the brunt of the downturn, giving back 1.3%, followed by the Dow (-0.7%), the Global Dow (-0.5%), the S&P 500 (-0.3%), and the Nasdaq (-0.2%). Yields on 10-year Treasuries gained 13.1 basis points to close at 4.16%. Crude oil prices gained 0.8%, settling at $72.82 per barrel. The dollar advanced 0.5%, while gold prices fell 0.6%.
Equities closed up last Tuesday following a selloff in the prior session. Materials and real estate were solid sectors, offsetting a decline by information technology. Among the benchmark indexes listed here, the Russell 2000 gained the most after adding 0.9%. The Global Dow rose 0.8%, the Dow advanced 0.4%, the S&P 500 climbed 0.2%, while the Nasdaq inched up 0.1%. Ten-year Treasury yields closed at 4.09% after falling 7.4 basis points. Crude oil prices rose roughly $0.70 to $73.48 per barrel. The dollar ticked lower, while gold prices rose 0.4%. With earnings season reaching the half-way mark, 75% of S&P 500 companies have reported actual earnings per share (EPS) above estimates. In aggregate, S&P 500 companies have exceeded estimates by 7.3%, leading to a net $16.0 billion increase in earnings for the fourth quarter since January 19.
Stocks climbed higher last Wednesday as investors chewed over another batch of corporate earnings. The Nasdaq gained 1.0% to lead the benchmark indexes listed here. The S&P 500 rose 0.8% to hit a new record high. The Dow added 0.4% and the Global Dow ticked up 0.2%. The small caps of the Russell 2000 dipped 0.2%. Yields on 10-year Treasuries inched up 2.0 basis points to 4.11%. Crude oil prices rose $0.76 to $74.07 per barrel. The dollar and gold prices declined.
Last Thursday saw the S&P 500 reach 5,000 for the first time in its history, only to close slightly below that mark. A strong performance from chip makers helped advance the Nasdaq by 0.2%. The Dow edged up 0.1%. The small caps of the Russell 2000 led the benchmarks, gaining 1.5%. Despite the gain, the Russell 2000 remains in bear territory (down by 20% from a prior peak in 2021). The Global Dow dipped 0.2%. Crude oil prices jumped $2.60 to $76.46 per barrel. Ten-year Treasury yields closed at 4.17% after gaining 6.0 basis points. The dollar ticked up 0.1%, while gold prices fell 0.1%.
Last Friday saw the S&P 500 (0.6%) top the 5,000 mark, while the Nasdaq (1.3%) closed at a record high. The Russell 2000 enjoyed a second solid day, adding 1.5%. The Global Dow was flat, while the Dow dipped 0.1%. Ten-year Treasury yields inched up 1.7 basis points to 4.18%. Crude oil prices increased $0.32 to $76.55 per barrel. The dollar and gold prices closed the session in the red.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 2/9
Weekly Change
YTD Change
DJIA
37,689.54
38,654.42
38,671.69
0.04%
2.61%
Nasdaq
15,011.35
15,628.95
15,990.66
2.31%
6.52%
S&P 500
4,769.83
4,958.61
5,026.61
1.37%
5.38%
Russell 2000
2,027.07
1,962.73
2,009.99
2.41%
-0.84%
Global Dow
4,355.28
4,395.76
4,406.42
0.24%
1.17%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
4.03%
4.18%
15 bps
32 bps
US Dollar-DXY
101.39
103.92
104.06
0.13%
2.63%
Crude Oil-CL=F
$71.30
$72.15
$76.55
6.10%
7.36%
Gold-GC=F
$2,072.50
$2,054.10
$2,039.50
-0.71%
-1.59%
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
Business activity in the services sector expanded in January at the fastest pace since June 2023. New orders increased in both the domestic market and for exports. The increase in demand spurred more hirings by service firms. At the same time, inflationary pressures softened, with costs to service providers rising at the slowest pace since June 2020. The S&P Global US Services PMI Business Activity Index posted 52.5 in January, up from 51.4 in December. The latest reading marks the fourth straight month of expansion in the services sector.
The latest data from the Bureau of Economic Analysis shows the December trade deficit was $62.2 billion, up $0.3 billion, or 0.5%, from the November deficit. December exports were $258.2 billion, $3.9 billion, or 1.5%, more than November exports. December imports were $320.4 billion, $4.2 billion, or 1.3%, more than November imports. For 2023, the goods and services deficit was $773.4 billion, a decrease of $177.8 billion, or 18.7%, from 2022. This is the lowest annual trade deficit in three years. Exports increased $35.0 billion, or 1.2%. Imports decreased $142.7 billion, or 3.6%.
The national average retail price for regular gasoline was $3.136 per gallon on February 5, $0.041 per gallon higher than the prior week’s price but $0.308 per gallon less than a year ago. Also, as of February 5, the East Coast price increased $0.034 to $3.117 per gallon; the Midwest price rose $0.039 to $2.911 per gallon; the Gulf Coast price increased $0.068 to $2.821 per gallon; the Rocky Mountain price advanced $0.014 to $2.746 per gallon; and the West Coast price increased $0.046 to $3.983 per gallon.
For the week ended February 3, there were 218,000 new claims for unemployment insurance, a decrease of 9,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 27 was 1.2%, 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 January 27 was 1,871,000, a decrease of 23,000 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 January 20 were New Jersey (2.8%), Rhode Island (2.7%), Minnesota (2.6%), California (2.5%), Massachusetts (2.4%), Illinois (2.3%), Montana (2.3%), Alaska (2.2%), Oregon (2.1%), Pennsylvania (2.1%), and Washington (2.1%). The largest increases in initial claims for unemployment insurance for the week ended January 27 were in Oregon (+5,458), California (+5,015), New York (+4,133), Georgia (+1,032), and Texas (+900), while the largest decreases were in Illinois (-2,278), Missouri (-1,588), Massachusetts (-898), Montana (-717), and New Jersey (-507).
Eye on the Week Ahead
January inflation data is available this week with the release of the Consumer Price Index, the Producer Price Index, and the report on import and export prices. Consumer prices rose marginally in December, with the CPI increasing 0.3% for the month and 3.4% for the 12 months ended in December. Producer prices, on the other hand, ticked down 0.1% in December and were up only 1.0% for the year.
A strong labor report and solid earnings data from megatech companies helped drive stocks higher last week. Each of the benchmark indexes listed here posted solid gains with the exception of the Russell 2000. Nine of the 11 market sectors advanced last week, led by consumer discretionary, consumer staples, and health care, while real estate and energy declined. Ten-year Treasury yields trended lower for most of the week, only to vault higher on Friday. Crude oil prices, which had been surging, fell last week as continued unrest in the Middle East has irritated oil markets. The dollar inched higher, while gold prices advanced.
The S&P 500 (0.8%) and the Dow (0.6%) reached new record highs to kick off the week ahead of several key earnings reports. The tech-heavy Nasdaq gained 1.1% to reach a 52-week high. The Russell 2000 gained 1.6% and the Global Dow rose 0.5% as investors were bullish on stocks as they awaited fourth-quarter earnings data from more than 100 S&P 500 companies released later in the week. Ten-year Treasury yields fell 6.9 basis points to 4.09%. Crude oil prices stepped back following last week’s surge, falling nearly 1.3% to $77.00 per barrel. Gold prices advanced 0.7%, while the dollar was flat.
The Nasdaq lost 0.8% last Tuesday ahead of earnings reports from some major tech companies. The small caps of the Russell 2000 also slipped 0.8%, while the S&P 500 dipped 0.1%. The Dow rose 0.4% and the Global Dow ticked up 0.1%. Ten-year Treasury yields declined for the second straight day, losing 3.2 basis points to settle at 4.05%. Crude oil prices reversed course, closing at about $77.88 per barrel after gaining 1.4%. The dollar fell 0.2%, while gold prices continued their mini bull run after advancing 0.5%.
Last Wednesday saw Wall Street react negatively to the Federal Reserve’s indication that interest rates will not be coming down any time soon. Each of the benchmark indexes declined, with the Russell 2000 (-2.3%) and the Nasdaq (-2.2%) falling the furthest, followed by the S&P 500 (-1.6%), the Dow (-0.8%), and the Global Dow (-0.4%). Bond prices increased, pulling yields lower, with 10-year Treasury yields falling 9.2 basis points to 3.96%. Crude oil prices dropped 2.6%, settling at $75.78 per barrel. The dollar rose 0.2%, while gold prices ticked up 0.1%.
Stocks rebounded last Thursday, with each of the benchmark indexes listed here closing higher. Investors were not deterred by Federal Reserve Chair Jerome Powell’s indication that interest rates would not likely be lowered in March, when the Fed next meets. Several major corporations posted solid fourth-quarter earnings data, which also helped support equities. The Russell 2000 advanced 1.4% to lead the benchmark indexes listed here, followed by the Dow (1.0%), the Nasdaq and the S&P 500 (0.3%), and the Global Dow (0.2%). Ten-year Treasury yields fell to 3.86%, a decrease of 10.4 basis points. Crude oil prices dropped 2.5% to $73.92 per barrel as traders focused on attempts to broker a cease-fire between Israel and Hamas. The dollar slid 0.2%, while gold prices rose 0.2%.
Equities closed higher last Friday with the exception of small caps which lagged. By the close of trading, the Dow (0.4%) and the S&P 500 (1.1%) reached new record highs. The Nasdaq jumped 1.7%, bolstered by strong earnings results from megatech companies. The Global Dow inched up 0.2%, while the Russell 2000 declined 0.6%. As investors moved to stocks, demand for bonds fell, sending yields higher. Ten-year Treasury yields climbed 17.0 basis points to 4.03%. Crude oil prices continued to slide, falling 2.3%. The dollar gained 0.8%, while gold prices lost 0.8%.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 2/2
Weekly Change
YTD Change
DJIA
37,689.54
38,109.43
38,654.42
1.43%
2.56%
Nasdaq
15,011.35
15,455.36
15,628.95
1.12%
4.11%
S&P 500
4,769.83
4,890.97
4,958.61
1.38%
3.96%
Russell 2000
2,027.07
1,978.33
1,962.73
-0.79%
-3.17%
Global Dow
4,355.28
4,372.08
4,395.76
0.54%
0.93%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
4.16%
4.03%
-13 bps
17 bps
US Dollar-DXY
101.39
103.46
103.92
0.44%
2.50%
Crude Oil-CL=F
$71.30
$78.19
$72.15
-7.72%
1.19%
Gold-GC=F
$2,072.50
$2,018.40
$2,054.10
1.77%
-0.89%
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
As expected, the Federal Open Market Committee maintained the federal funds target rate range at its current 5.25%-5.50%. While economic activity and employment were solid, inflation remained elevated. The Committee appeared to discourage any expectations of an impending interest rate reduction by indicating, “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”
January saw employment increase by 353,000, well above expectations. January’s total, coupled with December’s upwardly revised total of 333,000, clearly shows strength in the labor sector. Last month, job gains occurred in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry. In January, the unemployment rate was 3.7% for the third month in a row, and the number of unemployed people declined by 144,000 to 6.1 million. The labor participation rate, at 62.5% was unchanged from the December estimate. The employment-population ratio edged up 0.1 percentage point to 60.2%. In January, average hourly earnings rose by $0.19, or 0.6%, to $34.55. Over the past 12 months, average hourly earnings have increased by 4.5%. The average workweek decreased by 0.2 hour to 34.1 hours in January and was down by 0.5 hour over the year.
Manufacturing improved in January for the first time since April 2023. The S&P Global US Manufacturing Purchasing Managers’ Index™ was 50.7 in January, up from 47.9 in December. The latest advance in the purchasing managers’ index ended two months of declines and marked the strongest improvement in operating conditions since September 2022.
The number of job openings, at 9.0 million, ticked up 101,000 in December from November, according to the latest Job Openings and Labor Turnover Summary. Nevertheless, this measure is down from a series high of 12.0 million in March 2022. Job openings increased in professional and business services (+239,000) but decreased in wholesale trade (-83,000). In December, the number of hires, at 5.6 million, increased marginally from the November total. The number of hires decreased in health care and social assistance (-119,000) but increased in state and local government, excluding education (+35,000). In December, the number of total separations, which includes quits, layoffs, discharges, and other separations, changed little at 5.4 million. Over the month, the number of total separations decreased in health care and social assistance (-91,000) but increased in wholesale trade (+39,000).
The national average retail price for regular gasoline was $3.095 per gallon on January 29, $0.033 per gallon higher than the prior week’s price but $0.394 less than a year ago. Also, as of January 29, the East Coast price increased $0.062 to $3.083 per gallon; the Midwest price declined $0.017 to $2.872 per gallon; the Gulf Coast price increased $0.068 to $2.753 per gallon; the Rocky Mountain price rose $0.061 to $2.732 per gallon; and the West Coast price increased $0.011 to $3.937 per gallon.
For the week ended January 27, there were 224,000 new claims for unemployment insurance, an increase of 9,000 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 January 20 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 20 was 1,898,000, an increase of 70,000 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 January 13 were New Jersey (2.6%), Rhode Island (2.6%), Minnesota (2.4%), Massachusetts (2.3%), Alaska (2.2%), California (2.2%), Illinois (2.2%), Montana (2.1%), Puerto Rico (2.1%), Pennsylvania (2.0%), and Washington (2.0%). The largest increases in initial claims for unemployment insurance for the week ended January 20 were in Wisconsin (+1,048) and Washington (+428), while the largest decreases were in Texas (-5,636), California (-4,632), New York (-4,208), Georgia (-3,477), and Oregon (-2,388).
Eye on the Week Ahead
This week is light on economic data. Most of the attention will remain on the escalating conflict in the Middle East and the presidential primaries. The January survey of purchasing managers in the services sector is out this week. December saw the Purchasing Managers’ Index expand modestly.
Stocks closed January generally higher. Each of the benchmark indexes listed here ended January higher, with the exception of the small caps of the Russell 2000. Historically, positive market returns in January are often a precursor to favorable market performance for the remainder of the year. Of course, past performance is no guarantee of future results. Despite the end results, January proved to be a month of ebbs and flows. It began with stocks closing in the red, only to pick up momentum throughout the rest of the month.
The most recent inflation data showed prices inched higher in December after falling the previous month. Both the Consumer Price Index and the personal consumption expenditures price index increased, both monthly and annually. However, core prices, excluding the more volatile food and energy indexes, declined over the 12 months ended in December.
The Federal Reserve met in January and maintained the federal funds target rate range at its current 5.25%-5.50%. According to the Fed, the economy continued to show strength and job gains were steady. While noting that inflation had slowed, it remained above the Fed’s target of 2.0%, all of which bolstered the Fed’s reluctance to begin lowering interest rates.
The economy has proven resilient despite the ongoing war in Ukraine and turmoil in the Middle East. Fourth-quarter gross domestic product expanded at an annualized rate of 3.3%, according to the initial estimate. Consumer spending, the largest contributor to GDP, was 2.8%.
Job growth remained steady, with 216,000 new jobs added in December, an increase from November’s 173,000. Wages continued to rise, increasing 4.1% over the last 12 months. Unemployment claims increased from a year ago (see below).
Fourth-quarter earnings season for S&P 500 companies has been lackluster so far. While the majority of companies have yet to release earnings data, the percentage of S&P 500 companies that have reported positive earnings surprises is below average according to FactSet, while actual earnings reported have been below estimates in aggregate. Companies in the financial sector have been particularly subpar. Roughly 25% of the S&P 500 companies have reported fourth-quarter earnings. Of these companies, 69% exceeded estimates, which is below the five-year average of 77%. In aggregate, companies reported earnings that are 5.3% below estimates, which is below the five-year average of 8.5%.
Sales of existing homes retreated in December, primarily due to lack of inventory, high prices, and advancing mortgage rates. Sales of new single-family homes increased 8.0% in December and 4.4% over the past 12 months.
Industrial production ticked higher in December after no growth in November and an 0.8% decline in October. Manufacturing ticked up 0.1% in December but declined 2.2% in the fourth quarter. Excluding motor vehicles and parts, factory output declined 0.1% in December and 0.3% in the fourth quarter. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, the manufacturing sector slipped further into contraction in December. The services sector saw business accelerate marginally.
Eight of the 11 market sectors ended December higher, led by communication services and information technology. Last month saw real estate, consumer discretionary, materials, and utilities decline.
Bond prices gained some momentum at the end of January, particularly following the Fed’s decision to maintain interest rates for longer than some had expected. Despite the late-month surge in bond prices, 10-year Treasury yields generally closed the month higher. The 2-year Treasury yield fell nearly 11.0 basis points to about 4.21% in January. The dollar inched higher against a basket of world currencies. Gold prices rode a topsy-turvy month, ultimately closing lower. Crude oil prices advanced in January on the heels of production cuts and shipping interruptions in the Middle East. The retail price of regular gasoline was $3.095 per gallon on January 29, $0.233 above the price a month earlier but $0.394 lower than a year ago.
Stock Market Indexes
Market/Index
2023 Close
Prior Month
As of January 31
Monthly Change
YTD Change
DJIA
37,689.54
37,689.54
38,150.30
1.22%
1.22%
Nasdaq
15,011.35
15,011.35
15,164.01
1.02%
1.02%
S&P 500
4,769.83
4,769.83
4,845.65
1.59%
1.59%
Russell 2000
2,027.07
2,027.07
1,947.34
-3.93%
-3.93%
Global Dow
4,355.28
4,355.28
4,375.95
0.47%
0.47%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
3.86%
3.96%
10 bps
10 bps
US Dollar-DXY
101.39
101.39
103.55
2.13%
2.13%
Crude Oil-CL=F
$71.30
$71.30
$75.76
6.26%
6.26%
Gold-GC=F
$2,072.50
$2,072.50
$2,057.90
-0.70%
-0.70%
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: Total employment increased by 216,000 in December. Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs. Employment rose by 2.7 million in 2023 (an average monthly gain of 225,000), less than the increase of 4.8 million in 2022 (an average monthly gain of 399,000). Employment in October was revised down by 45,000 and the change for November was revised down by 26,000. With these revisions, employment in October and November combined was 71,000 lower than previously reported. In December, the unemployment rate was unchanged at 3.7% but was 0.2 percentage point higher than the rate a year earlier. The number of unemployed persons was relatively unchanged at 6.3 million but was 570,000 above the December 2022 figure. In December, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was little changed from November and over the year. These individuals accounted for 19.7% of all unemployed persons. The labor force participation rate, at 62.5%, and the employment-population ratio, at 60.1%, both decreased by 0.3 percentage point in December and showed little or no change over the year. In December, average hourly earnings increased by $0.15 to $34.27. For 2023, average hourly earnings rose by 4.1% (average hourly earnings were $32.29 in December 2022). The average workweek decreased by 0.1 hour to 34.3 hours in December, down 0.1 hour from December 2022.
There were 214,000 initial claims for unemployment insurance for the week ended January 20, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,833,000. A year ago, there were 194,000 initial claims, while the total number of workers receiving unemployment insurance was 1,658,000.
FOMC/interest rates: As expected, the Federal Open Market Committee maintained the target range for the federal funds rate at the current 5.25%-5.50% following its meeting in January. In arriving at its decision, the Committee noted that the economy had expanded at a solid pace, job gains moderated since last year but remained strong, the unemployment rate was low, and inflation eased over the past year but remained elevated. Essentially, while progress has been made in achieving employment and inflation goals, more moderating needs to be done. Interest rates are not expected to be reduced until the Committee has gained greater confidence that inflation is moving sustainably toward 2.0%.
GDP/budget:The economy, as measured by gross domestic product, accelerated at an annual rate of 3.3% in the fourth quarter. GDP increased 2.5% in 2023 (from the 2022 annual level to the 2023 annual level), compared with an increase of 1.9% in 2022. The increase in GDP in 2023 primarily reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by decreases in residential fixed investment and inventory investment. Imports decreased. Consumer spending, as measured by the personal consumption expenditures index, rose 2.8% in the fourth quarter, down from 3.1% in the previous quarter. Spending on services rose 2.4% in the fourth quarter compared with a 2.2% increase in the third quarter. Consumer spending on durable goods increased 4.6% in the fourth quarter, while consumer spending on nondurable goods increased 3.4%. Fixed investment advanced 2.1% in the fourth quarter after increasing 10.0% in the third quarter. The personal consumption expenditures price index increased 1.7% in the fourth quarter, compared with an increase of 2.6% in the third quarter.
December saw the federal budget deficit come in at $129.4 billion, down roughly $185.0 billion under the November 2023 deficit. The deficit for the first three months of fiscal year 2024, at $509.9 billion, is $88.5 billion higher than the first three months of the previous fiscal year. So far in fiscal year 2024, total government receipts were $1.1 trillion ($1.0 trillion in 2023), while government outlays were $1.6 trillion through the first three months of fiscal year 2024, compared to $1.4 trillion over the same period in the previous fiscal year.
Inflation/consumer spending: According to the latest personal income and outlays report, personal income and disposable personal income rose 0.3% in December after increasing 0.4% in November. Consumer spending advanced 0.7% in December after increasing 0.4% the previous month. Consumer prices inched up 0.2% in December after falling 0.1% in November. Excluding food and energy (core prices), consumer prices rose 0.2% in December, 0.1 percentage point above the November advance. Consumer prices rose 2.6% since December 2022, unchanged from the 12 months ended in November. Core prices increased 2.9% over the same period, 0.3 percentage point lower than the year ended in November.
The Consumer Price Index rose 0.3% in December after ticking up 0.1% in November. Over the 12 months ended in December, the CPI rose 3.4%, up 0.3 percentage point from the period ended in November. Excluding food and energy prices, the CPI rose 0.3% in December, unchanged from the previous month, and 3.9% for the year ended in December, down 0.1 percentage point from the 12-month period ended in November. Prices for shelter, up 0.5%, continued to rise in December, contributing to over half of the monthly all items increase. Energy rose 0.4% over the month. Food prices increased 0.2% in December.
Prices that producers received for goods and services declined 0.1% in December after being unchanged in November. Producer prices increased 1.0% for the 12 months ended in December, up from a 0.9% increase for the year ended in November. Producer prices less foods, energy, and trade services inched up 0.2% in December (0.1% in November), while prices excluding food and energy were flat for the second straight month. For the 12 months ended in December, prices less foods, energy, and trade services moved up 2.5%, the same increase as for the 12 months ended in November. Prices less foods and energy increased 1.8% for the year ended in December (2.0% for the period ended in November). In December, prices for food fell 0.9% for the month and 5.0% year over year. Energy prices were down 1.2% in December and 4.8% since December 2022.
Housing: Sales of existing homes decreased 1.0% in December and 6.2% from December 2022. The median existing-home price was $382,600 in December, lower than the November price of $387,700 but higher than the December 2022 price of $366,500. Unsold inventory of existing homes represented a 3.2-month supply at the current sales pace, down slightly from November (3.5 months) but above the 2.9-month supply in December 2022. Sales of existing single-family homes decreased 0.3% in December and 7.3% since December 2022. The median existing single-family home price was $387,000 in December, down from $392,200 in November but above the December 2022 price of $372,000.
New single-family home sales increased in December, climbing 8.0% after dropping 7.4% in November. Sales were up 4.4% from December 2022. The median sales price of new single-family houses sold in December was $413,200 ($426,000 in November). The December average sales price was $487,300 ($485,500 in November). The inventory of new single-family homes for sale in December represented a supply of 9.1 months at the current sales pace.
Manufacturing: Industrial production increased 0.1% in December after being unchanged in the previous month. Manufacturing edged up 0.1% in December after increasing 0.2% in November. Mining rose 0.9%, while utilities fell 1.0%. Over the past 12 months ended in December, total industrial production was 1.0% below its year-earlier reading. For the 12 months ended in December, manufacturing increased 1.2%, utilities declined 4.9%, while mining increased 4.3%.
New orders for durable goods were flat in December following a 5.5% increase in November. New orders for durable goods rose 4.4% since December 2022. Excluding transportation, new orders increased 0.6% in December. Excluding defense, new orders increased 0.5%. Primary metals, up three of the last four months, drove the overall increase, after increasing 1.4% in December.
Imports and exports: U.S. import prices were unchanged in December after declining 0.5% in November. Import prices fell 1.6% over the past year. Prices for import fuel declined 0.3% in December following a 6.4% drop in November. Import fuel prices fell 9.4% from December 2022 to December 2023. Prices for nonfuel imports were unchanged in December after ticking up 0.1% in November. Nonfuel imports fell 0.8% since December 2022. Export prices declined 0.9% in December after falling 0.9% in November. Prices for exports decreased 0.9% for the third consecutive month in December. Those were the first one-month declines since June 2023. Lower prices for both agricultural and nonagricultural exports contributed to the December drop. U.S. export prices fell 3.2% over the past year. Despite the recent declines, the December decrease was the smallest 12-month drop since February 2023.
The international trade in goods deficit was $88.5 billion in December, down $0.9 billion, or 1.0%, from November. Exports of goods were $169.8 billion in December, $4.1 billion, or 2.5%, less than in November. Imports of goods were $258.3 billion in December, $3.2 billion, or 1.3%, less than in November. Since December 2022, exports rose 1.0%, while imports declined 0.3%.
The latest information on international trade in goods and services, released January 9, is for November and revealed that the goods and services trade deficit was $63.2 billion, a decrease of $1.3 billion from the October deficit. November exports were $253.7 billion, 1.9% less than October exports. November imports were $316.9 billion, 1.9% less than October imports. Year to date, the goods and services deficit decreased $161.8 billion, or 18.4%, from the same period in 2022. Exports increased $28.8 billion, or 1.0%. Imports decreased $133.0 billion, or 3.6%.
International markets: Inflation continued to fall in most major countries at the end of 2023. However, several central banks, including those of Japan, Germany, the European Union, Canada, and the United Kingdom are maintaining their current monetary policies. While Europe’s economic growth hasn’t quite kept up with the United States, it appears reasonably certain that the recession some feared will not come to fruition. The EU’s economy was flat in the fourth quarter, Japan’s economy declined 0.7%, Germany saw its economy recede 0.3%, while the U.K.’s economy dipped 0.1%. This is compared to the U.S. GDP, which expanded by 3.3%. For January, the STOXX Europe 600 Index rose 2.7%; the United Kingdom’s FTSE was flat; Japan’s Nikkei 225 Index gained 8.4%; and China’s Shanghai Composite Index lost 6.0%.
Consumer confidence: Consumers began the new year with a surge in confidence and restored optimism for 2024. The Conference Board Consumer Confidence Index® increased in January to 114.8, following a 108.0 reading in December. The reading was the highest since December 2021 and marked the third straight monthly increase. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose to 161.3 in January, up from 147.2 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, improved to 83.8 in January from 81.5 in December.
Eye on the Month Ahead
Entering February, much of the focus will be on the economy, inflation, and global unrest, particularly in the Middle East. Recent data has shown that the economy has weathered the aggressive interest-rate policy adopted by the Federal Reserve, which does not meet again until March. Inflationary pressures continued to slowly recede, prompting speculation as to when the Fed will begin lowering interest rates.
Stocks closed higher last week, with the S&P 500 and the Nasdaq reaching record highs. Investors spent most of the week parsing through corporate earnings results and important economic data. Among the market sectors, communication services and energy rose over 5.0%, while health care ended the week in the red. Ten-year Treasury yields ticked up marginally. Crude oil prices rose nearly 6.0% as production cuts have begun to drive prices higher. The dollar advanced, while gold prices fell 0.6%.
Wall Street opened last week on a high note, with the small caps of the Russell 2000 advancing 1.9%, while the Dow (0.4%) and the S&P 500 (0.2%) notched new record highs. The Nasdaq and the Global Dow rose 0.3%. Industrials, information technology, and health care garnered solid gains among the sectors. Ten-year Treasury yields slid 5.2 basis points to 4.09%. Crude oil prices rose 2.2% to $75.01 per barrel on supply disruptions and strong demand. The dollar was flat, while gold prices fell 0.4%.
Stocks closed last Tuesday mixed, with the Nasdaq (0.4%) and the S&P 500 (0.3%) hitting new record highs as investors dissected the latest batch of earnings reports. The Global Dow edged up 0.1%, while the Russell 2000 slid 0.4% and the Dow dipped 0.3%. Ten-year Treasury yields added 4.8 basis points to close at 4.14%. Crude oil prices ended the day at about $74.54 per barrel after falling 0.3%. The dollar and gold prices gained 0.2% and 0.4%, respectively.
Equities were mixed for the second straight session last Wednesday, with the Nasdaq (0.4%) and the S&P 500 (0.1%) achieving new all-time highs, while the Russell 2000 (-0.7%) and the Dow (-0.3%), slid lower. The Global Dow edged up 0.5%. Several tech companies reported strong earnings, which helped offset several declining sectors, including real estate, materials, consumer staples, health care, and utilities. Long-term bond values continued to decline, pushing yields higher. Ten-year Treasury yields closed at 4.17%, an increase of 3.6 basis points. Crude oil prices jumped 1.5% to $75.46 per barrel. The dollar and gold prices declined.
Last Thursday saw the S&P 500 hit a record high for the fifth straight session. The Dow and the Russell 2000 led the benchmark indexes listed here, each gaining 0.6%, followed by the S&P 500, which added 0.5%. The Nasdaq and the Global Dow edged up 0.2%. Investors digested another batch of corporate earnings, along with a favorable report on fourth-quarter gross domestic product (see below). Ten-year Treasury yields fell 4.6 basis points, settling at 4.13%. Crude oil prices rose 2.8% to $77.71 per barrel. The dollar and gold prices moved higher.
In yet another day of uneven returns, stocks closed last Friday mixed, with the Dow, the Global Dow, and the Russell 2000 each edging up 0.2%, while the Nasdaq (-0.4%) and the S&P 500 (-0.1%) ticked lower. Ten-year Treasury yields settled at 4.16% after gaining 2.8 basis points. Crude oil prices neared $80.00 per barrel. The dollar dipped 0.1%, while gold prices closed the day flat.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 1/26
Weekly Change
YTD Change
DJIA
37,689.54
37,863.80
38,109.43
0.65%
1.11%
Nasdaq
15,011.35
15,310.97
15,455.36
0.94%
2.96%
S&P 500
4,769.83
4,839.81
4,890.97
1.06%
2.54%
Russell 2000
2,027.07
1,944.39
1,978.33
1.75%
-2.40%
Global Dow
4,355.28
4,318.47
4,372.08
1.24%
0.39%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
4.14%
4.16%
2 bps
30 bps
US Dollar-DXY
101.39
103.25
103.46
0.20%
2.04%
Crude Oil-CL=F
$71.30
$73.79
$78.19
5.96%
9.66%
Gold-GC=F
$2,072.50
$2,031.50
$2,018.40
-0.64%
-2.61%
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 initial estimate of gross domestic product for the fourth quarter of 2023, revealed that the economy accelerated at an annualized rate of 3.3%, down from the third quarter rate of 4.9%, but well above expectations that hovered around 2.0%. Compared to the third quarter of 2023, the deceleration in GDP in the fourth quarter primarily reflected slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending. Personal consumption expenditures, a measure of consumer spending, rose 2.8% in the fourth quarter and was the largest contributor to GDP. Spending on durable goods rose 4.6%, while nondurable goods spending advanced 3.4%. Services gained 2.4%. Despite rising interest rates, gross domestic investment rose 2.1% in the fourth quarter, well below the third-quarter rate of 10.0%. Nevertheless, both residential and nonresidential fixed investment increased 1.1% and 1.9%, respectively. Exports increased 6.3%, while imports, which are a negative in the calculation of GDP, increased 1.9%. The personal consumption expenditures price index increased 1.7%, compared with an increase of 2.6% in the third quarter. Excluding food and energy prices, the PCE price index increased 2.0%, the same change as the third quarter.
According to the latest report on personal income and outlays, consumer prices edged up 0.2% in December, while core prices, excluding food and energy, also increased 0.2%. For the 12 months ended in December, consumer prices rose 2.6%, unchanged from the previous 12-month period. Core prices rose 2.9%, the lowest 12-month advance since the period ended March 2021. Both personal income and disposable (after-tax) personal income rose 0.3% in December. Consumer spending, as measured by the personal consumption expenditures index, outpaced income growth after climbing 0.7% last month.
The advance report on international trade in goods showed the deficit was $88.5 billion in December, down $0.9 billion, or 1.0%, from the November figure. Exports of goods for December were $169.8 billion, $4.1 billion, or 2.5%, more than November exports. Imports of goods for December were $258.3 billion, $3.2 billion, or 1.3%, more than November imports. New orders for transportation fell 0.9% last month, while new orders for defense declined 2.9%. New orders for capital goods decreased 1.1% in December after increasing 13.0% in November. The largest drag on new orders for capital goods in December was a 14.5% decline in defense capital goods.
The advance report on durable goods orders for December showed new orders inched up $0.1 billion for a net 0.0% change after advancing 5.5% in November. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 0.5%.
December saw sales of new single-family homes increase 8.0% from November and 4.4% from December 2022. The median sales price of new houses sold in December 2023 was $413,200. The average sales price was $487,300. Inventory of new single-family homes for sale in December represented an 8.2-month supply at the current sales pace, down from the 8.8-month supply in November.
The national average retail price for regular gasoline was $3.062 per gallon on January 22, $0.004 per gallon higher than the prior week’s price but $0.353 less than a year ago. Also, as of January 22, the East Coast price decreased $0.018 to $3.021 per gallon; the Midwest price rose $0.066 to $2.889 per gallon; the Gulf Coast price increased $0.015 to $2.685 per gallon; the Rocky Mountain price fell $0.062 to $2.671 per gallon; and the West Coast price decreased $0.050 to $3.926 per gallon.
For the week ended January 20, there were 214,000 new claims for unemployment insurance, an increase of 25,000 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 January 13 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 13 was 1,833,000, an increase of 27,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended January 6 were New Jersey (2.7%), Rhode Island (2.6%), Minnesota (2.5%), California (2.4%), Alaska (2.3%), Massachusetts (2.3%), Illinois (2.2%), Puerto Rico (2.2%), Montana (2.1%), and Washington (2.1%). The largest increases in initial claims for unemployment insurance for the week ended January 13 were in Texas (+2,433), California (+1,949), Oregon (+1,111), Kansas (+1,054), and Florida (+1,025), while the largest decreases were in New York (-17,358), Wisconsin (-4,505), Michigan (-4,427), Pennsylvania (-3,835), and South Carolina (-3,042).
Eye on the Week Ahead
The Federal Open Market Committee meets this week. The consensus is that interest rates will remain unchanged, however, it will be interesting to glean the direction of the Committee moving forward. The employment figures for January are also out this week. Employment grew by 216,000 in December, well above expectations.
Wall Street closed the holiday-shortened week generally higher, with each of the benchmark indexes listed here posting gains, except for the Russell 2000 and the Global Dow. The surge in stocks was driven primarily by information technology and communication services, with chip makers leading the charge. Other than financials, which ticked up marginally higher, the remaining market sectors ended the week in the red. Following December’s surge, investors became pensive about stocks to begin the new year after expectations of an impending interest rate cut waned. However, favorable economic news helped bolster confidence in equities, at least for the time being. Long-term bond prices faded, pushing yields higher, as good economic news, particularly in the labor sector, supported the Federal Reserve’s inclination to keep rates higher for longer.
Stocks closed lower last Tuesday as investor sentiment was dampened by rising bond yields and a suggestion from Federal Reserve Governor Christopher Waller that interest rate cuts should not be rushed. The Russell 2000 fell 1.2%, the Global Dow lost 1.0%, the Dow slid 0.6%, the S&P 500 declined 0.4%, and the Nasdaq dipped 0.2%. Ten-year Treasury yields rose 11.6 basis points to 4.06% as bond values declined. Crude oil prices settled at $71.81 per barrel after falling 1.2%. The dollar rose 0.7%, while gold prices fell 1.0%.
Equities fell for the second straight session last Wednesday as rising Treasury yields impacted megacap companies. The Global Dow (-0.8%) fell the furthest, followed by the Russell 2000 (-0.7%), the Nasdaq and the S&P 500 (-0.6%), and the Dow (-0.3%). Yields on 10-year Treasuries rose to 4.10%. The worst-performing sectors included real estate, consumer discretionary, information technology, and materials. Crude oil prices rose 0.6% to $72.81 per barrel. The dollar was flat, while gold prices declined 1.1%.
A surge in megacap tech shares helped push stocks higher last Thursday. The Nasdaq led the benchmark indexes listed here, gaining 1.4%, followed by the S&P 500 (0.9%), the Global Dow and the Russell 2000 (0.6%), and the Dow (0.5%). Ten-year Treasury yields continued to ascend, gaining 3.8 basis points to close at 4.14%. Crude oil prices jumped 2.0% to $74.02 per barrel. The dollar was flat, while gold prices gained 0.9%.
Stocks rallied to close out the week last Friday, with the S&P 500 reaching an all-time high. The information technology sector led the day’s gains with chip makers driving the advance. The Nasdaq advanced 1.7%, followed by the S&P 500 (1.2%), the Dow (1.1%), the Russell 2000 (1.0%), and the Global Dow (0.8%). Ten-year Treasury yields were flat, closing at 4.14%. Crude oil prices ended their streak, falling 0.4% to $73.82 per barrel. The dollar dipped 0.3%, while gold prices rose 0.5%.
Stock Market Indexes
Market/Index
2023 Close
Prior Week
As of 1/19
Weekly Change
YTD Change
DJIA
37,689.54
37,592.98
37,863.80
0.72%
0.46%
Nasdaq
15,011.35
14,972.76
15,310.97
2.26%
2.00%
S&P 500
4,769.83
4,783.83
4,839.81
1.17%
1.47%
Russell 2000
2,027.07
1,950.96
1,944.39
-0.34%
-4.08%
Global Dow
4,355.28
4,341.83
4,318.47
-0.54%
-0.85%
fed. funds target rate
5.25%-5.50%
5.25%-5.50%
5.25%-5.50%
0 bps
0 bps
10-year Treasuries
3.86%
3.95%
4.14%
`19 bps
28 bps
US Dollar-DXY
101.39
102.43
103.25
0.80%
1.83%
Crude Oil-CL=F
$71.30
$72.80
$73.79
1.36%
3.49%
Gold-GC=F
$2,072.50
$2,052.20
$2,031.50
-1.01%
-1.98%
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 and food services sales rose 0.6% in December and 5.6% over the December 2022 rate. Total retail sales for 2023 increased 3.2%. Retail trade sales were up 0.6% from November 2023 and up 4.8% above last year. Nonstore (online) retail sales were up 9.7% from last year, while sales at food services and drinking places increased 11.1% from December 2022.
Import prices were unchanged in December after declining 0.5% in November. Import fuel prices decreased 0.3% in December, while nonfuel prices were unchanged. Prices for imports fell 1.6% for the year ended in December. Import prices have not risen on a 12-month basis since January 2023. Prices for exports fell 0.9% for the third consecutive month in December. Export prices fell 3.2% over the past year.
Industrial production inched up 0.1% in December after being unchanged in November. For the 12 months ended in December, industrial production rose 1.0%. Manufacturing output ticked up 0.1% last month after increasing 0.2% in November. Excluding motor vehicles and parts, manufacturing output declined 0.1% in December. Utilities declined 1.0% in December, while mining rose 0.9%. The major market groups posted mixed results in December. The production of consumer goods moved up 0.2%, while production of nondurable consumer goods was flat.
The number of building permits issued for residential construction increased by 1.9% in December over November and 6.1% above the December 2022 rate. Issued building permits for single-family homes in December were 1.7% above the November figure. In 2023, an estimated 1,469,800 building permits were issued, which was 11.7% below the 2022 figure. The number of housing starts fell 4.3% last month, but was 7.6% above the December 2022 estimate. Housing completions rose 8.7% in December and 13.2% above the December 2022 rate.
Sales of existing homes declined 1.0% in December and 6.2% from December 2022. According to the latest report from the National Association of REALTORS®, despite the drop in December sales, activity is expected to pick up in 2024 as mortgage rates continue to decline and more inventory is expected to appear on the market. In December, unsold inventory sat at a 3.2-month supply, down from 3.5 months in November, but up from 2.9 months a year ago. The median existing-home sales price was $382,600 in December, down from $387,700 in November, but 4.4% above the December 2022 price of $366,500. Sales of existing single-family homes also fell in December, down 0.3% from the previous month’s total. The median existing single-family home price was $387,000, down from November’s price of $392,200, but up from the December 2022 price of $372,000.
The national average retail price for regular gasoline was $3.058 per gallon on January 15, $0.015 per gallon lower than the prior week’s price and $0.252 less than a year ago. Also, as of January 15, the East Coast price decreased $0.036 to $3.039 per gallon; the Midwest price rose $0.055 to $2.823 per gallon; the Gulf Coast price decreased $0.006 to $2.670 per gallon; the Rocky Mountain price fell $0.032 to $2.733 per gallon; and the West Coast price decreased $0.096 to $3.976 per gallon.
For the week ended January 13, there were 187,000 new claims for unemployment insurance, a decrease of 16,000 from the previous week’s level, which was revised up by 1,000. This is the lowest level for initial claims since September 24, 2022 when it was 182,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 6 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 6 was 1,806,000, a decrease of 26,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended December 30 were New Jersey (2.8%), Rhode Island (2.8%), Minnesota (2.6%), Montana (2.5%), Alaska (2.3%), California (2.3%), Massachusetts (2.3%), Pennsylvania (2.2%), New York (2.1%), and Washington (2.1%). The largest increases in initial claims for unemployment insurance for the week ended January 6 were in New York (+20,535), California (+9,454), Texas (+9,337), Georgia (+6,261), and South Carolina (+4,152), while the largest decreases were in New Jersey (-4,044), Massachusetts (-3,341), Connecticut (-2,896), Iowa (-1,847), and Pennsylvania (-1,566).
Eye on the Week Ahead
Reports focusing on several different sectors of the economy are available this week. The manufacturing sector is represented by the report on durable goods orders for December. New orders for durable goods rose 5.4% in November. The latest information on sales of new single-family homes is out this week. Sales fell 12.2% in November and look to rebound in December. The advance estimate of gross domestic product for the fourth quarter of 2023 is out this week. GDP expanded at an annualized rate of 4.9% in the third quarter. The report on personal income and expenditures for December is released this week. This report includes the personal consumption expenditures price index, a key inflation guide for the Federal Reserve. The PCE price index slid 0.1% in November. However, other inflation indicators increased in December, and it is likely that the PCE price index will follow suit.
The Markets (as of market close December 15, 2023)
Last week saw stocks rally after the Federal Reserve policy statement released last Wednesday suggested no more interest rate hikes, while predicting rate cuts in 2024 (see below). Despite losing momentum at the end of the week, stocks enjoyed their seventh consecutive week of gains, with the S&P 500 marking its longest winning streak since 2017 and the Dow’s longest since 2018. Each of the market sectors ended the week higher, led by real estate, consumer discretionary, materials, and financials. Bond yields continued to be volatile, dropping 32.0 basis points as investors tried to determine the direction interest rates will take. Crude oil prices ended a stretch of six weeks of losses. The dollar registered its largest weekly drop in a month against a basket of currencies.
Wall Street began last week on a positive note as investors awaited the upcoming release of the latest inflation data and the Federal Reserve meeting. Each of the benchmark indexes listed here closed higher last Monday, led by the Dow, the S&P 500, and the Global Dow, which each rose 0.4%. The Russell 2000 and the Nasdaq inched up 0.2%. Ten-year Treasury yields slipped minimally to 4.23%. Crude oil prices rose 0.3% to $71.45 per barrel. The dollar ticked higher, while gold prices fell nearly 1.0%.
Markets closed generally higher last Tuesday. The Consumer Price Index (see below) showed inflation held steady with the Federal Reserve’s final meeting of 2023 on tap for Wednesday. The Dow and the S&P 500 gained 0.5%, while the Nasdaq added 0.7%, with all three indexes closing at their highest levels since January 2022. The Global Dow ticked up 0.2%, while the Russell 2000 dipped 0.1%. Crude oil prices gave back recent gains, falling 3.6% to $68.73 per barrel. Yields on 10-year Treasuries fell 3.3% to 4.20%. The dollar fell 0.3%, while gold prices rose less than 0.1%.
Wall Street reacted favorably to the outcome of the Federal Reserve’s meeting last Wednesday (see below) as stocks climbed to record highs. Each of the benchmark indexes listed here posted solid gains led by the Russell 2000, which climbed 3.5%. The Dow, the Nasdaq, and the S&P 500 each rose 1.4%, while the Global Dow added 1.1%. Ten-year Treasury yields fell to 4.03%, the lowest rate since August, while two-year yields tumbled 30.0 basis points to 4.43%, all in response to the Fed’s statement. Crude oil prices swung higher, closing at $69.74 per barrel after gaining 1.65%. The dollar fell 0.9%, while gold prices rose 2.3%.
Stocks continued to climb higher last Thursday as investors rode momentum from the Fed’s aforementioned policy statement. The Dow jumped 0.4% to hit another record high, while the S&P 500 (0.3%) and the Nasdaq (0.2%) notched gains. But the interest-sensitive small caps of the Russell 2000 posted notable gains after advancing 2.7%, while the Global Dow rose 1.3%. Ten-year Treasuries dipped to 3.93%, falling below 4.0% for the first time since August. Crude oil prices rose 3.2% to $71.70 per barrel. The dollar declined 0.9%, while gold prices climbed 2.7%.
Stocks cooled to end last week. Of the benchmark indexes listed here, only the Nasdaq (0.4%) and the Dow (0.2%) advanced. The Russell 2000 lost 0.7%, the Global Dow fell 0.2%, while the S&P 500 was flat. Crude oil prices rose for the fourth day out of five, gaining 0.7%. The dollar ended a three-day losing streak after gaining 0.6%. Gold prices dipped 0.6%.
Stock Market Indexes
Market/Index
2022 Close
Prior Week
As of 12/15
Weekly Change
YTD Change
DJIA
33,147.25
36,247.87
37,305.16
2.92%
12.54%
Nasdaq
10,466.48
14,403.97
14,813.92
2.85%
41.54%
S&P 500
3,839.50
4,604.37
4,719.19
2.49%
22.91%
Russell 2000
1,761.25
1,880.82
1,985.13
5.55%
12.71%
Global Dow
3,702.71
4,191.86
4,285.04
2.22%
15.73%
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%
4.24%
3.92%
-32 bps
5 bps
US Dollar-DXY
103.48
103.98
102.61
-1.32%
-0.84%
Crude Oil-CL=F
$80.41
$71.25
$71.62
0.52%
-10.93%
Gold-GC=F
$1,829.70
$2,019.40
$2,033.40
0.69%
11.13%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Last Week’s Economic News
The Federal Reserve decided to maintain the target range for the federal funds rate at 5.25%-5.50% for the third straight meeting. Based on Fed projections for interest rates by the end of next year, it appears the Fed anticipates making three rate cuts of 0.25% each over the course of 2024.
The Consumer Price Index increased 0.1% in November, after being unchanged in October. The index less food and energy rose 0.3% in November, after rising 0.2% in October. Prices for shelter continued to rise in November, offsetting a decline in gasoline prices. Prices for energy fell 2.3%, while prices for food increased 0.2%. The CPI rose 3.1% for the 12 months ended in November, a smaller increase than the 3.2% advance for the 12 months ended in October. Prices less food and energy rose 4.0% for the year ended in November, the same increase as for the 12 months ended in October. Energy prices decreased 5.4% for the 12 months ended in November, while food prices increased 2.9% over the last year.
The Producer Price Index, which measures prices producers receive for goods and services, was unchanged in November after declining 0.4% in October. Last month, prices for both goods and services were unchanged. For the year ended in November, the PPI increased 0.9%. Producer prices less foods, energy, and trade services edged up 0.1% in November, the sixth consecutive monthly advance. For the 12 months ended in November, prices less foods, energy, and trade services rose 2.5%.
Retail sales rose by 0.3% in November and were up 4.1% from November 2022. Retail trade sales rose 0.1% last month and 3.1% from November 2022.
Prices for imports decreased 0.4% in November following a 0.6% decline the previous month. The November decline was the first one-month declines since June 2023. Lower fuel prices in November more than offset an increase in nonfuel prices. Prices for imports fell 1.4% for the year ended in November. Export prices fell 0.9% for the second consecutive month in November. Lower prices for nonagricultural exports in November more than offset higher agricultural prices. The price index for exports also declined over the past 12 months, decreasing 5.2% from November 2022.
Industrial production increased 0.2% in November. Manufacturing output jumped 0.3%, largely due to a 7.1% increase in motor vehicles and parts production following the resolution of strikes at several major automakers. Excluding motor vehicles and parts, manufacturing fell 0.2%. The output of utilities moved down 0.4%, and the output of mines moved up 0.3%. Total industrial production in November was 0.4% below its year-earlier level.
The November deficit for the federal government was $314.0 billion, $247.5 billion above the October deficit and $65.5 billion higher than the November 2022 deficit. Total government receipts in November were $274.8 billion and government outlays totaled $588.8 billion. Through the first two months of fiscal year 2024, the government budget deficit sat at $380.6 billion compared to $336.4 billion over the same period last fiscal year.
The national average retail price for regular gasoline was $3.126 per gallon on December 11, $0.095 per gallon lower than the prior week’s price and $0.103 less than a year ago. Also, as of December 11, the East Coast price decreased $0.083 to $3.123 per gallon; the Midwest price fell $0.090 to $2.901 per gallon; the Gulf Coast price declined $0.116 to $2.622 per gallon; the Rocky Mountain price dropped $0.116 to $2.899 per gallon; and the West Coast price decreased $0.111 to $4.141 per gallon.
For the week ended December 9, there were 202,000 new claims for unemployment insurance, a decrease of 19,000 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 December 2 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 2 was 1,876,000, an increase of 20,000 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 November 25 were New Jersey (2.4%), California (2.3%), Alaska (2.2%), Puerto Rico (1.9%), Washington (1.9%), Hawaii (1.8%), Massachusetts (1.8%), Minnesota (1.8%), New York (1.8%), and Oregon (1.8%). The largest increases in initial claims for unemployment insurance for the week ended December 2 were in California (+13,478), New York (+9,073), Texas (+8,321), Georgia (+6,728), and Oregon (+5,406), while the largest decreases were in Kansas (-893), Vermont (-14), and Delaware (-14).
Eye on the Week Ahead
The final estimate of third-quarter gross domestic product is available this week. The second estimate had the economy accelerating at an annualized rate of 5.2%. The November data on personal income and outlays is also out this week. Consumer spending rose 0.2% in October, while the personal consumption expenditures price index, a measure of inflation, was flat. Consumer prices continue to inch lower, although they remain above the Federal Reserve’s target of 2.0%.
The Markets (as of market close September 18, 2020)
Stocks rebounded to begin last week on a positive note, as each of the benchmark indexes listed here posted notable gains by the close of trading last Monday. Tech stocks surged, pushing the Nasdaq up 1.9%. Hopes for a COVID-19 vaccine moved pharmaceutical shares higher. Energy shares fell as crude oil prices dropped. The dollar declined, while Treasury yields moved slightly higher.
Last Tuesday saw stocks post their second consecutive session of gains. Tech stocks and mega-caps continued to rebound. Other than the Dow, which was flat, each of the benchmark indexes listed here posted gains, led by the Nasdaq (1.2%), followed by the S&P 500 (0.5%), the Russell 2000, and the Global Dow, each of which gained 0.8%. Crude oil prices and Treasury yields rose, and the dollar was mixed against a basket of currencies.
Stocks were mixed last Wednesday, with the Dow, the Russell 2000, and the Global Dow posting modest gains, while the S&P 500 and the Nasdaq fell. Mega-caps and tech stocks reversed course from the prior few days and sank. Energy shares rose, boosted by advancing oil prices. Value stocks performed better along with financial shares. Treasury yields, the dollar, and crude oil prices each rose.
Last Thursday, each of the benchmark indexes gave back any gains from earlier in the week. Word that Congress and the president may be nearing an accord on a new round of stimulus wasn’t enough to keep money from flowing out of the market. Investors may have been perplexed by the confusing government rhetoric on when a COVID-19 vaccine would be available. Tech stocks and mega-caps took a big hit, pulling stock indexes lower. The Nasdaq lost 1.3%, the S&P 500 fell 0.8%, both the Russell 2000 and the Global Dow dropped 0.6%, and the Dow declined 0.5%. Treasury yields and the dollar fell, while crude oil prices rose.
Tech stocks and mega-caps continued to slide last Friday. Each of the benchmark indexes listed here lost value by the end of the day, with the S&P 500 and the Nasdaq each falling 1.1%, closely followed by the Dow (-0.9%), the Global Dow (-0.7%), and the Russell 2000 (-0.4%). Treasury yields advanced, crude oil prices fell, and the dollar rose.
Overall, stocks lost value for the week. Mixed signals from the federal government as to whether and when a virus vaccine would be available, coupled with the Federal Reserve’s somber assessment of the state of the economy, prompted investors to pull away from equities. Only the small caps of the Russell 2000 gained value last week. The S&P 500, the Nasdaq, the Dow, and the Global Dow each fell behind. Despite the past few weeks of downturns, the Nasdaq remains solidly ahead of its year-end value. The S&P 500 is marginally ahead, while the other indexes listed here remain below their respective 2019 closing marks.
Crude oil prices rebounded last week, closing at $40.84 per barrel by late Friday afternoon, up from the prior week’s price of $37.76. The price of gold (COMEX) advanced last week, closing at $1,958.10, up from the prior week’s price of $1,950.00. The national average retail price for regular gasoline was $2.183 per gallon on September 14, $0.028 lower than the prior week’s price but $0.369 less than a year ago.
Stock Market Indexes
Market/Index
2019 Close
Prior Week
As of 9/18
Weekly Change
YTD Change
DJIA
28,538.44
27,665.64
27,657.42
-0.03%
-3.09%
Nasdaq
8,972.60
10,853.54
10,793.28
-0.56%
20.29%
S&P 500
3,230.78
3,340.97
3,319.47
-0.64%
2.75%
Russell 2000
1,668.47
1,497.27
1,536.78
2.64%
-7.89%
Global Dow
3,251.24
3,042.09
3,041.96
-0.01%
-6.44%
Fed. Funds target rate
1.50%-1.75%
0.00%-0.25%
0.00%-0.25%
0 bps
-150 bps
10-year Treasuries
1.91%
0.66%
0.69%
3 bps
-122 bps
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
Following its meeting held last week, the Federal Open Market Committee decided to keep the target range for the federal funds rate at 0.00%-0.25% and expects to maintain this target range until labor market conditions have reached maximum employment and inflation has risen to at least 2.0%, or exceeds 2% for some time. The Committee noted that economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses. Nevertheless, the Committee noted that the path of the economy will depend on the course of COVID-19, which will continue to weigh on economic activity, employment, and inflation in the near term while posing considerable risks to the economic outlook over the medium term.
U.S. import prices rose 0.9% in August, following advances of 1.2% in July and 1.4% in June. Higher prices for both fuel (+3.3%) and nonfuel (+0.7%) imports contributed to the August increase. The increase in nonfuel prices was the largest since April 2011. Driving the nonfuel price increase was a 3.6% jump in industrial supplies and materials prices. Prices for U.S. exports also advanced in August, rising 0.5% after increasing 0.9% the previous month.
According to the Federal Reserve, industrial production rose 0.4% in August for its fourth consecutive monthly increase. However, even after the recent gains, industrial production in August was 7.3% below its February pre-pandemic level. Manufacturing output continued to improve in August, rising 1.0%, but the gains for most manufacturing industries have gradually slowed since June. Mining production fell 2.5% in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling. The output of utilities moved down 0.4%. The level of total industrial production was 7.7% lower in August than it was a year earlier.
Sales at the retail level advanced 0.6% in August from the previous month and 2.6% above their August 2019 pace. Retail trade sales inched ahead 0.1% in August. Nonstore (online) retail sales were flat last month but are 22.4% ahead of August 2019. Retailers that had a favorable August include furniture and home furnishing stores (2.1%); building material and garden equipment and supplies dealers (2.0%); clothing and clothing accessories stores (2.9%); and food services and drinking places (4.7%). Retailers that slumped last month include sporting goods, hobby, musical instrument, and book stores (-5.7%); department stores (-2.3%); grocery stores (-1.6%); and food and beverage stores (-1.2%).
Overall, housing starts and building permits fell in August, although the market for new single-family residential construction excelled. The number of building permits issued in August was 0.9% below the July total. However, single-family building permits were 6.0% higher than July. Housing starts also fell in August, dropping 5.1% below the prior month’s figure. Single-family housing starts rose by 4.1% last month. Housing completions fell 7.5% in August from July. Single-family housing completions were 4.4% below the July rate.
For the week ended September 12, there were 860,000 new claims for unemployment insurance, a decrease of 33,000 from the previous week’s level, which was revised up by 9,000. According to the Department of Labor, the advance rate for insured unemployment claims was 8.6% for the week ended September 5, a decrease of 0.7 percentage point from the prior week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 5 was 12,628,000, a decrease of 916,000 from the prior week’s level, which was revised up by 159,000.
Eye on the Week Ahead
Two important reports in the housing sector are available this week. August data for both new and existing home sales should reveal continued growth, following July’s robust sales report. Orders for durable goods are also out this week for August. July saw new orders jump more than 11.0% as the economy continues to slowly pick up steam.
The Markets (as of market close September 11, 2020)
Stocks continued to slide last Tuesday as falling tech shares pulled the Nasdaq down 4.1%. Crude oil prices plunged 7.5%, and Treasury yields sank 5.1% as money poured into bonds, driving prices higher. Investors, leery of overvaluations, continued to sell off shares. The relationship between the United States and China continued to sour as President Trump threatened recourse against American companies that create jobs overseas or that do business with China. By the close of trading, the S&P 500 lost 2.8%, the Dow fell 2.3%, the Russell 2000 lost 2.0%, and the Global Dow sank 1.6%.
After three days of sell-offs, tech shares reversed course last Wednesday. Lower stock prices were too tempting for some investors to pass up. The Nasdaq jumped 2.7%, the S&P 500 gained 2.0%, and the Dow climbed 1.6%. Crude oil prices and Treasury yields rose while the dollar declined.
Investors were clearly trying to scoop up some bargains last Wednesday as the sell-off resumed the following day. Tech and growth stocks plunged, pulling down the Nasdaq (-2.0%) and the S&P 500 (-1.8%). The Dow (-1.5%), the Russell 2000 (-1.2%), and the Global Dow (-1.0%) also lost value last Thursday. Crude oil prices and Treasury yields sank while the dollar was generally higher. Investors were also hit by a disappointing jobless claims report and the rejection by Senate Democrats of the Republican stimulus bill.
Stocks were mixed last Friday with the Dow, the S&P 500, and the Global Dow posting modest gains, while the Nasdaq and the Russell 2000 fell. Mega-caps and growth shares performed poorly and were outperformed by financials, industrials, and materials.
Overall, the major indexes fell for the second week in a row as each of the benchmarks listed here lost value. Tech stocks continued to fall, ending a five-month rally. The Nasdaq had its worst week since March. Global shares also plunged for the second consecutive week. Treasury prices rose sending yields lower, crude oil prices continued to sink, and the dollar dropped against most major currencies. Year to date, the Nasdaq and the S&P 500 remain ahead of last year’s pace, while the gap widened for the Russell 2000, the Dow, and the Global Dow.
Crude oil prices fell again last week, closing at $37.76 per barrel by late Friday afternoon, down from the prior week’s price of $39.59. The price of gold (COMEX) also rose last week, closing at $1,950.00, up from the prior week’s price of $1,940.60. The national average retail price for regular gasoline was $2.211 per gallon on September 7, $0.011 lower than the prior week’s price but $0.339 less than a year ago.
Stock Market Indexes
Market/Index
2019 Close
Prior Week
As of 9/11
Weekly Change
YTD Change
DJIA
28,538.44
28,133.31
27,665.64
-1.66%
-3.06%
Nasdaq
8,972.60
11,313.13
10,853.54
-4.06%
20.96%
S&P 500
3,230.78
3,426.96
3,340.97
-2.51%
3.41%
Russell 2000
1,668.47
1,535.30
1,497.27
-2.48%
-10.26%
Global Dow
3,251.24
3,058.68
3,042.09
-0.54%
-6.43%
Fed. Funds target rate
1.50%-1.75%
0.00%-0.25%
0.00%-0.25%
0 bps
-150 bps
10-year Treasuries
1.91%
0.72%
0.66%
-6 bps
-125 bps
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 government deficit was $200 billion in August, relatively equal to the August 2019 monthly deficit. Through 11 months of the fiscal year, the deficit is $3.007 trillion, a 182% increase over the same period in fiscal year 2019. Government outlays for the current fiscal year are roughly 46% higher than the expenditures for the prior fiscal year.
According to the latest Job Openings and Labor Turnover report, the number of job openings increased to 6.6 million in July (6.0 million in June). Hires decreased to 5.8 million (7.0 million in June), and separations were little changed at 5.0 million (4.9 million in June). Industries with the largest increase in hires include retail trade (172,000), health care and social assistance (146,000), and construction (90,000). Industries with the largest reduction in hires include accommodation and food services (599,000), followed by other services (143,000) and health care and social assistance (137,000). Over the 12 months ended in July, hires totaled 70.2 million and separations totaled 78.5 million, yielding a net employment loss of 8.2 million.
Consumer prices are slowly rising. According to the latest Consumer Price Index, prices for goods and services rose 0.4% in August after advancing 0.6% in July. Over the last 12 months ended in August, the Consumer Price Index increased 1.3%. Consumer prices less food and energy rose 0.4% in August. Items experiencing notable price increases were used cars and trucks (5.4%) and fuel oil (3.9%). Food prices increased 0.1%, energy rose 0.9%, and apparel climbed 0.6%.
Prices at the producer level rose 0.3% in August following a 0.6% jump in July. Producer prices have declined 0.2% over the last 12 months. A 0.5% spike in prices for services drove the climb in producer prices. Goods prices inched up 0.1%. Producer prices less foods, energy, and trade services moved up 0.3% in August, the same as in both July and June. For the 12 months ended in August, prices less food, energy, and trade services increased 0.3%.
For the week ended September 5, there were 884,000 new claims for unemployment insurance, unchanged from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims was 9.2% for the week ended August 29, an increase of 0.1 percentage point from the prior week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 29 was 13,385,000, an increase of 93,000 from the prior week’s level, which was revised up by 38,000.
Eye on the Week Ahead
The Federal Open Market Committee meets this week, the first such meeting since July. It is expected that the Fed will maintain its present stance and maintain the target interest rate range at its current 0.00%-0.25%.
The Markets (as of market close September 4, 2020)
Stocks sagged last Monday, but not enough to dampen a banner month of returns in August. Only the Nasdaq pushed ahead to start the week as the remaining benchmark indexes lost value. Crude oil prices, Treasury yields, and the dollar all declined.
Last Tuesday marked the first day of September and the start of another strong market performance. Each of the benchmark indexes listed here posted solid gains, led by the Nasdaq (1.4%), the Russell 2000 (1.1%), the Dow (0.8%), the S&P 500 (0.8%), and the Global Dow (0.1%). Rising bond prices drove Treasury yields lower. Crude oil prices and the dollar rose. Surging mega-caps gave the market a boost, as did materials, technology, and communications.
Wednesday saw both the S&P 500 and the Nasdaq soar to fresh record highs. Utilities and financials led the way while technology shares lagged. The dollar rose while crude oil and Treasury yields dropped. Global stocks also surged last Wednesday as investors anticipated further stimulus (and liquidity) from central banks.
Last Thursday, in a complete reversal, stocks suffered their worst day since June. The Nasdaq plunged 5.0%, the S&P 500 dropped 3.5%, the Russell 2000 gave back 3.0%, the Dow fell 2.8%, and the Global Dow lost 1.7%. Money moved to Treasuries sending bond prices higher and yields plummeting. Crude oil prices fell and the dollar rose. Mega-caps and technology stocks sank, pulling the major market indexes lower. Analysts have been pointing to overvaluations in some sectors, particularly technology, and investors may be taking heed.
Tech shares continued to tumble last Friday, pulling the Nasdaq down to its worst week since March. The selloff that began last Thursday continued into Friday as each of the benchmark indexes listed here lost value on the last day of the week. Treasury yields climbed, the dollar fell, and crude oil prices fell below $40 per barrel. Mega-caps tumbled again last Friday as investors continue to show concern that the market may be overvalued.
For the week, early gains weren’t enough to overcome losses later, as each of the indexes listed here lost value. The Nasdaq fell 3.3%, followed by the Russell 2000 (-2.7%), the S&P 500 (-2.1%), the Dow (-1.8%), and the Global Dow (-1.8%). Even favorable employment data wasn’t enough to halt the selloff. An additional 1.4 million new jobs were added in August, and the latest unemployment figures showed the total number of claimants dipped below 1 million.
Stock Market Indexes
Market/Index
2019 Close
Prior Week
As of 9/4
Weekly Change
YTD Change
DJIA
28,538.44
28,653.87
28,133.31
-1.82%
-1.42%
Nasdaq
8,972.60
11,695.63
11,313.13
-3.27%
26.09%
S&P 500
3,230.78
3,508.01
3,426.96
-2.31%
6.07%
Russell 2000
1,668.47
1,578.34
1,535.30
-2.73%
-7.98%
Global Dow
3,251.24
3,113.05
3,058.68
-1.75%
-5.93%
Fed. Funds target rate
1.50%-1.75%
0.00%-0.25%
0.00%-0.25%
0 bps
-150 bps
10-year Treasuries
1.91%
0.72%
0.72%
0 bps
-119 bps
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
There were 1.4 million new jobs added in August, below the February level by 11.5 million, or 7.6%. The unemployment rate fell 1.8 percentage points to 8.4%, and the number of unemployed persons decreased by 2.8 million to 13.6 million. Nevertheless, both the unemployment rate and the number of unemployed persons remain much higher than their pre-pandemic February figures of 4.9% and 7.8 million, respectively. The labor force participation rate increased by 0.3 percentage point to 61.7% in August but is 1.7 percentage points below its February level. The employment-population ratio rose by 1.4 percentage points to 56.5% but is 4.6 percentage points lower than in February. In August, 24.3% of employed persons teleworked because of the coronavirus pandemic, down from 26.4% in July. In August, 24.2 million persons reported that they were unable to work because their employer closed or lost business due to the pandemic — down from 31.3 million in July. Government employment rose in August, largely reflecting temporary hiring for the 2020 Census. Notable job gains also occurred in retail trade, professional and business services, leisure and hospitality, and education and health services. In August, average hourly earnings rose by $0.11 to $29.47. The average work week increased by 0.1 hour to 34.6 hours in August.
Manufacturing continues to recover from the slowdown brought about by the COVID-19 pandemic. According to the August Manufacturing ISM® Report On Business®, manufacturing expanded for the fourth consecutive month. New orders, production, employment, prices, exports, and imports all advanced in August over July. Inventories were lower, the result of an acceleration of shipments and deliveries.
The services sector grew in August, but at a slower place than July, according to the latest Services ISM® Report On Business®. Business activity and production fell in August, as did new orders and inventories. Employment, supplier deliveries, prices, backlog of orders, exports, and imports each increased last month.
The trade deficit increased by $10.1 billion in July, according to the latest report from the Bureau of Economic Analysis. July exports were $12.6 billion more than June exports. July imports were $22.7 billion more than June imports. Year to date, the goods, and services deficit increased $6.4 billion, or 1.8%, from the same period in 2019. Exports decreased $257.8 billion, or 17.5%. Imports decreased $251.3 billion, or 13.8%. The deficit with Mexico increased $2.5 billion in July, and the deficit with China increased $1.6 billion. The United States had a trade surplus with South America and Central America ($2.9 billion), OPEC ($1.5 billion), Hong Kong ($1.4 billion), and the United Kingdom ($0.6 billion).
For the week ended August 29, there were 881,000 new claims for unemployment insurance, a decrease of 130,000 from the previous week’s level, which was revised up by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims was 9.1% for the week ended August 22, a decrease of 0.8 percentage point from the prior week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 22 was 13,254,000, a decrease of 1,238,000 from the prior week’s level, which was revised down by 43,000.
Eye on the Week Ahead
Economic reports during the Labor Day week focus on inflation, which has been muted at best. Both the Producer Price Index and the Consumer Price Index for August are out this week. Producer prices advanced 0.6% in July, but are down 0.4% over the last 12 months. Consumer prices also inched ahead by 0.6% in July and have increased a scant 1.0% for the year.
The positive run for stocks continued in August as the major market indexes regularly reached all-time highs. While investors remained bullish toward equities, it wasn’t always clear why.
Although the economy is gradually picking up steam, it has a ways to go to reach its pre-pandemic level. Gross domestic product for the second quarter showed that the economy receded at an annual rate of 31.7%. Job growth is ongoing, yet more than 14 million people are receiving unemployment benefits.
Personal income inched ahead by 0.4%, but consumer spending rose by 1.9%. Inflation remained well below the Federal Reserve’s target of 2.0%, keeping prices for consumer goods and services down. Interest rates for loans and mortgages remain low helping the housing sector to surge.
The Federal Reserve has maintained accommodative measures to help spur the economy, yet additional stimulus relief from the federal government has reached a stalemate. Globally, tensions between the United States and China have risen, potentially putting the phase-one trade deal between the economic giants in jeopardy.
The COVID-19 pandemic continues to dominate nearly every aspect of life. States are struggling to settle on appropriate protocols for reopening schools. Testing for the virus has increased, and the numbers of COVID-related infections and deaths continue to mount. Throughout August, news of improved virus treatments and possible vaccines offered encouragement.
By the end of the month, each of the benchmark indexes listed here scored sizable gains, leading to the best August in decades. The technology sector continued to flourish last month, leading the Nasdaq to record highs. The Dow closed the month up 7.6%, followed by the S&P 500, the Global Dow, and the Russell 2000.
Year to date, the Nasdaq is 31.2% ahead of last year’s pace, followed by the S&P 500, which is up 8.3%. The Dow is nearly at its 2019 closing value, while the Global Dow and the Russell 2000 continued to gain ground.
By the close of trading on August 31, the price of crude oil (CL=F) was $42.81 per barrel, ahead of its July 31 price of $40.41 per barrel. The national average retail regular gasoline price was $2.182 per gallon on August 24, $0.007 higher than the July 27 selling price of $2.175, but $0.392 less than a year ago. The price of gold remained steady through August, closing at $1,974.90 on August 31, down slightly from its July 31 closing price of $1,989.90.
Stock Market Indexes
Market/Index
2019 Close
Prior Month
As of August 31
Month Change
YTD Change
DJIA
28,538.44
26,428.32
28,430.05
7.57%
-0.38%
Nasdaq
8,972.60
10,745.27
11,775.46
9.59%
31.24%
S&P 500
3,230.78
3,271.12
3,500.31
7.01%
8.34%
Russell 2000
1,668.47
1,480.43
1,561.88
5.50%
-6.39%
Global Dow
3,251.24
2,920.53
3,094.33
5.95%
-4.83%
Fed. Funds
1.50%-1.75%
0.00%-0.25%
0.00%-0.25%
0 bps
-150 bps
10-year Treasuries
1.91%
0.53%
0.69%
16 bps
-122 bps
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 increased by 1.8 million in July after adding 4.8 million jobs in June. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In July, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care. The unemployment rate dropped 0.9 percentage point to 10.2% for the month as the number of unemployed persons dropped by 1.4 million to 16.3 million (17.8 million in June). Despite declines over the past three months, these measures are up by 6.7 percentage points and 10.6 million, respectively, since February. In July, average hourly earnings rose by $0.07 to $29.39. Average hourly earnings increased by 4.8% over the last 12 months ended in July. The average work week decreased by 0.2 hour to 34.5 hours in June. The labor participation rate, at 61.4%, changed little in July following increases in May and June. The employment-population ratio rose by 0.5 percentage point to 55.1%.
Claims for unemployment insurance mostly leveled off in August. According to the latest weekly totals, as of August 15 there were nearly 14.5 million workers still receiving unemployment insurance. The insured unemployment rate was 9.9% (11.6% as of July 18). The highest insured unemployment rates in the week ended August 8 were in Hawaii (19.8%), Puerto Rico (19.2%), Nevada (17.3%), California (16.1%), New York (15.4%), Connecticut (13.6%), Louisiana (13.5%), the Virgin Islands (12.8%), Georgia (12.6%), and Massachusetts (12.2%). During the week ended August 8, 49 states reported 10,972,770 individuals claiming Pandemic Unemployment Assistance benefits and 49 states reported 1,407,802 individuals claiming Pandemic Emergency Unemployment Compensation benefits.
FOMC/interest rates: The Federal Open Market Committee did not meet in August. The FOMC is scheduled to next meet in September.
GDP/budget: According to the second estimate for second-quarter gross domestic product, the economy decelerated at an annualized rate of 31.7%. GDP decreased 5.0% in the first quarter. Stay-at-home orders issued in March and April in response to the COVID-19 pandemic greatly impacted the economy. Consumer spending was a big drag, falling 34.1%, reeling from the initial effects of the pandemic. Fixed investment fell 28.9% in the second quarter (-1.4% in the first quarter), and nonresidential fixed investment dropped 26.0% in the second quarter, compared to a 6.7% decline in the prior quarter. Exports were down 63.2%, and imports sank 54.0%. Nondefense government expenditures increased 40.1% due to stimulus spending programs initiated in response to the pandemic.
The Treasury budget deficit may have come in smaller than expected in May, but it surged in June. The deficit was $864.1 billion, exceeding the June 2019 budget deficit by nearly $855 billion. Government spending reached $1.1 trillion in June. Through the first nine months of fiscal year 2020, the deficit is $2.74 trillion. Over the same period in the previous fiscal year, the budget deficit was $744.1 billion.
Inflation/consumer spending: According to the Personal Income and Outlays report for July, personal income increased 0.4%, and disposable (after-tax) personal income advanced 0.2% after falling 1.1% and 1.4%, respectively, in June. Consumer spending slowed in July but still increased 1.9% for the month, well short of June’s 6.2% advance. Inflation remained muted as consumer prices inched ahead by 0.3% in July. Prices have increased by a mere 1.0% over the last 12 months.
Following three consecutive monthly declines, consumer prices rose 0.6% in June, according to the Consumer Price Index. Year to date, consumer prices are up 0.6%. Gasoline prices surged in June, climbing 12.3%. Excluding food and energy, consumer prices increased 0.2% in June and 1.2% over the last 12 months.
Prices that producers receive for goods and services declined 0.2% in June after climbing 0.4% in May. Year to date, producer prices are down 0.8%. In June, the decrease in overall producer prices was driven by a 0.3% decline in prices for services. Producer prices for goods rose 0.2%.
Housing: The housing sector continued to post strong sales numbers in July. Sales of existing homes jumped 24.7% last month after climbing 20.7% in June. Over the 12 months ended in July, existing home sales are up 8.7% (-11.3% for the 12 months ended in June). The median existing-home price in July was $304,100 ($295,300 in June). Unsold inventory of existing homes represents a 3.1-month supply at the current sales pace, down from 3.9 months in June. Sales of existing single-family homes soared 23.9% in July following a 19.9% surge in June. Over the last 12 months, sales of existing single-family homes are up 9.8%.
After climbing 13.8% in June, sales of new single-family homes surged again in July, increasing 13.9% for the month. The median sales price of new houses sold in July was $330,600 ($329,200 in June). The average sales price was $391,300 ($384,700 in June). July’s inventory of new single-family homes for sale represents a supply of 4.0 months at the current sales pace, down from June’s estimate of 4.7 months.
Manufacturing: Total industrial production rose 3.0% in July after increasing 5.7% in June; even so, industrial production remained 8.4% below its pre-pandemic February level. Manufacturing output continued to improve in July, rising 3.4%. Most major industries posted increases, though they were much smaller in magnitude than the advances recorded in June. The largest gain in July — 28.3% — was registered by motor vehicles and parts; factory production elsewhere advanced 1.6%. Mining production rose 0.8% after five consecutive monthly decreases. The output of utilities increased 3.3%. Total industrial production was 8.2% lower in July than it was a year earlier.
For the third consecutive month, new orders for durable goods increased, climbing 11.2% in July following June’s 7.7% increase. Transportation equipment, also up for three consecutive months, again drove the July increase, surging ahead by 35.6%. Excluding transportation, new orders increased by 2.4%. Excluding defense, new orders increased by 9.9%.
Imports and exports: The price index for U.S. imports rose 0.7% in July, following a 1.4% jump in June. Both the June and July advances were driven by rising fuel prices. U.S. export prices increased 0.8% in July, after advancing 1.2% the previous month. Year to date, import prices are down 3.3%, while export prices have fallen 4.4%.
The international trade in goods deficit was $79.3 billion in July, up $8.3 billion, or 11.7% from June. Exports of goods for July were $12.2 billion, or 11.8% more than June exports. Imports of goods for July were $20.5 billion, or 11.8% more than June imports. Exports of motor vehicles increased 44.6% in July. Imports of motor vehicles climbed 41.3% in July.
The latest information on international trade in goods and services, out August 5, is for June and shows that the goods and services trade deficit was $50.7 billion, down $4.1 billion, or 7.5% less than the May deficit. June exports were $13.6 billion, or 9.4% more than May exports. June imports were $9.5 billion, or 4.7% more than May imports. Year to date, the goods and services deficit sits at $274.3 billion, a decrease of $23.1 billion, or 7.8%, from the same period in 2019.
International markets: Shinzo Abe, Japanese Prime Minister since 2012, announced that he will resign due to poor health. A new leader is expected to be chosen by the Liberal Democratic Party, of which Abe was the leader, and approved by parliament until national elections are held in October of 2021. The Nikkei fell following Abe’s announcement. Elsewhere, Andrew Bailey, Bank of England Governor, pronounced more stimulus is available, if needed, to support the U.K. economy. German bond prices plunged, sending yields to their highest level since early June, a sign that inflation and interest rates will remain low. In China, industrial production fell in July, although it remains 4.8% ahead of last year’s pace.
Consumer confidence: The Conference Board Consumer Confidence Index® decreased in August after declining in July. The index stands at 84.8, down from 91.7 in July. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased sharply from 95.9 to 84.2. The Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, declined from 88.9 in July to 85.2 in August.
Eye on the Month Ahead
Most economic indicators in July were positive as the economy continued to reopen. However, the pandemic still rages and new issues may develop as schools reopen. The trade dilemma with China will likely continue to impact the economies of both countries. New developments in the treatment of the pandemic should bring hope that the end is in sight and spur further economic growth.
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