What I’m Watching This Week – 18 October 2021

The Markets (as of market close October 15, 2021)

Despite a shaky start, Wall Street enjoyed a strong week of gains. A favorable start to corporate earnings season helped lift equities higher. Each of the benchmark indexes listed here posted solid weekly gains, led by the Nasdaq and the S&P 500. The dollar and Treasury yields slipped, while crude oil prices rose 3.5% to $82.25 per barrel. Despite the generally positive week, investors will continue to keep an eye on economic data and rising prices. Higher oil, gas, and other commodity prices could raise concerns about inflationary pressures and how they could drag down corporate profit margins. Materials shortages, rising wages, and shipping bottlenecks have driven up costs for producers. Many have passed these costs on to consumers, leading to more persistent inflation. Initial earnings data comes from banks and financial institutions. The next few weeks will see earnings reports from the bulk of companies in most sectors and may reveal the impact that inflation and supply demands has had on earnings margins so far in the third quarter.

Monday was the Columbus Day and Indigenous Peoples’ Day public holidays but stock markets were open and bond markets were closed. The Dow and the S&P 500 fell 0.7%, while the Nasdaq and the Russell 2000 dipped 0.6% on what was a fairly slow trading day. Crude oil prices rose 1.5% to reach $80.51 per barrel, a multi-year high. Investors may be waiting for the next round of corporate earnings data to weigh the potential impact of rising energy prices, labor costs, and supply-chain bottlenecks.

Stocks fell again last Tuesday. Only the small caps of the Russell 2000 ended the day in the black, gaining 0.6%. The Global Dow (-0.4%), the Dow (-0.3%), the S&P 500 (-0.2%), and the Nasdaq (-0.1%) declined. Ten-year Treasury yields dipped below 1.6%, closing the day at 1.58%. Crude oil prices were little changed, while the dollar advanced 0.2%. Consumer discretionary, real estate, and utilities led the market sectors, while communication services, information technology, and health care declined by at least 0.5%.

Equities rose for the first time in four sessions last Wednesday. With inflationary pressures continuing to run hot (see Consumer Price Index information below), technology shares increased, as investors seemed to focus on companies better able to pass on higher costs to consumers. The Nasdaq led the surge, climbing 0.7%, followed by the Russell 2000 and the S&P 500, which climbed 0.3%. The Dow and the Global Dow broke even on the day. Treasury yields, crude oil prices, and the dollar declined. Among the market sectors, utilities (1.1%) and information technology (0.6%) advanced, while financials dipped 0.6%.

Stocks rallied last Thursday, buoyed by strong bank earnings reports and encouraging unemployment data. Each of the benchmark indexes listed here gained at least 1.0%, led by the Nasdaq and the S&P 500, which added 1.7%. The Dow gained 1.6%, the Russell 2000 climbed 1.4%, and the Global Dow advanced 1.1%. The dollar and Treasury yields eased for the second consecutive day, while crude oil prices rose to $81.53 per barrel. Materials and information technology gained 2.4% and 2.3%, respectively, to lead the market sectors.

The market advanced for the third consecutive day last Friday. Strong earnings data and stronger-than-expected retail sales provided encouragement for investors. The Dow advanced 1.1%, followed by the Global Dow (0.9%), the S&P 500 (0.8%), and the Nasdaq (0.5%). The small caps of the Russell 2000 slipped 0.4%. Ten-year Treasury yields climbed 3.8%, crude oil prices rose 1.2%, while the dollar was little changed. The market sectors closed Friday generally higher, with consumer discretionary (1.8%) and financials (1.5%) leading the pack.

The national average retail price for regular gasoline was $3.267 per gallon on October 11, $0.077 per gallon more than the prior week’s price and $1.100 higher than a year ago. Gasoline production increased during the week ended October 8, averaging 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.1 million barrels per day during the week ended October 8 — 700,000 barrels per day less than the previous week’s average. Refineries operated at 86.7% of their operable capacity, down from the prior week’s level of 89.6%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 10/15Weekly ChangeYTD Change
DJIA30,606.4834,746.2535,294.761.58%15.32%
Nasdaq12,888.2814,579.5414,897.342.18%15.59%
S&P 5003,756.074,391.344,471.371.82%19.04%
Russell 20001,974.862,233.092,265.651.46%14.72%
Global Dow3,487.524,026.664,089.461.56%17.26%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.60%1.57%-3 bps66 bps
US Dollar-DXY89.8494.1093.94-0.17%4.56%
Crude Oil-CL=F$48.52$79.48$82.253.49%69.52%
Gold-GC=F$1,893.10$1,756.80$1,768.800.68%-6.57%

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

Last Week’s Economic News

  • Consumer prices continued to escalate in September. According to the latest report from the Bureau of Labor Statistics, the Consumer Price Index increased 0.4% last month after advancing 0.3% in August. Over the last 12 months ended in September, consumer prices have risen 5.4%. The price index less food and energy rose 0.2% in September and 4.0% over the last 12 months. In September, several price indexes increased, including the index for food (0.9%), food at home (1.2%), energy (1.3%), fuel oil (3.9%), new vehicles (1.3%), and shelter (0.4%). Price indexes that decreased include apparel (-1.1%), used cars and trucks (-0.7%), and transportation services (-0.5%). Since September 2020, the price index for energy has risen 24.8%, with gasoline prices advancing 42.1% and fuel oil prices up 42.6%.
  • Producer prices advanced 0.5% in September after climbing 0.7% the previous month. Producer prices have risen 8.6% over the past 12 months ended in September, the largest 12-month increase in the history of the index, which began November 2010. A 1.3% increase in goods accounted for nearly 80% of the overall price increase. Driving goods prices higher was a 2.8% jump in prices for energy (gasoline prices rose 3.9%). Producer prices for services moved up 0.2% in September, led by a 0.9% increase in trade services (a measure of the margins received by wholesalers and retailers).
  • Retail sales increased 0.7% in September following a 0.9% jump in August. Retail sales have risen 13.9% since September 2020. Excluding motor vehicle and gasoline sales, retail sales advanced 0.7%, an indication that total consumer spending was strong in September.
  • Import prices climbed 0.4% in September after declining 0.3% the prior month. The September rise in imports was the largest one-month increase since a 1.1% advance in June. In September, the advance was led by higher fuel import prices (3.7%). Since September 2020, import prices have risen 9.2%. Export prices ticked up 0.1% following a 0.4% increase in August. Export prices haven’t declined since April 2020 and are up 16.3% over the past 12 months.
  • The number of job openings decreased by 659,000 in August to 10.4 million. The rate of job openings also declined 0.4 percentage point to 6.6%. In August, there were 6.8 million hires, a decrease of 439,000 from July’s total. The number of separations in August, at 6.0 million, rose by 209,000. Within separations, the number of quits increased in August to 4.3 million (+242,000), and the quits rate increased to a series high of 2.9%. Over the 12 months ended in August, hires totaled 72.6 million and separations totaled 66.7 million, yielding a net employment gain of 5.9 million.
  • For the week ended October 9, there were 293,000 new claims for unemployment insurance, a decrease of 36,000 from the previous week’s level, which was revised up by 3,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 2 was 1.9%, 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 October 2 was 2,593,000, a decrease of 134,000 from the prior week’s level, which was revised up by 13,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 833,000 initial claims for unemployment insurance, and the rate for unemployment claims was 6.3%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended September 25 were Illinois (4.4%), Puerto Rico (4.3%), California (3.3%), Hawaii (2.9%), the Virgin Islands (2.8%), New Jersey (2.7%), the District of Columbia (2.6%), Nevada (2.6%), Alaska (2.5%), and Pennsylvania (2.5%). The largest increase in initial claims for the week ended October 2 was in Pennsylvania (+1,707), while the largest decreases were in California (-14,733), the District of Columbia (-3,905), Michigan (-3,370), Missouri (-2,598), and Texas (-2,376).

Eye on the Week Ahead

The Federal Reserve’s report on industrial production for September is available this week. The industrial sector has been advancing, despite supply-chain bottlenecks and labor shortages, which have led to increased costs. Data from the housing sector is also out this week, with reports on housing starts and existing home sales. Housing starts rose nearly 4.0% in August, although sales of existing homes fell more than 2.0%.

What I’m Watching This Week – 11 October 2021

The Markets (as of market close October 8, 2021)

Stocks closed last week generally higher, despite a weak jobs report. A Congressional deal to extend the debt ceiling until early December helped drive stocks higher during the middle of the week. A poor showing last Friday was not enough to prevent the benchmark indexes from closing the week mostly in the black. The Dow enjoyed its biggest weekly gain since June. The S&P 500 advanced, while the Global Dow ended the week up over 1.3%. The Nasdaq eked out a gain, but the Russell 2000 dipped nearly 0.4%. Among the market sectors, energy jumped 5.0%, financials rose 2.3%, industrials climbed 1.8%, utilities increased 1.5%, and consumer staples advanced 1.4%. The yield on 10-year Treasuries gained 14 basis points to close the week at the highest level since June 4. Crude oil prices continued to rise, closing in on $80.00 per barrel. The dollar rose marginally, while gold prices declined.

Wall Street did not get off to a strong start last Monday. The Dow fell over 320 points and the Nasdaq lost more than 2.0%. A sell-off in shares of tech/growth stocks including a major social-media company, led equities lower last Monday. With Monday’s downturn, the Nasdaq has declined about 7.0% since its September 7 peak as it inches closer to -10.0% correction territory. A jump in energy and utility shares wasn’t enough to keep the S&P 500 from dipping 1.3%. The Russell 2000 lost 1.1% and the Global Dow slid 0.3%. Treasury yields and crude oil prices rose, while the dollar slipped.

Tech shares recovered from Monday’s decline to help drive the market higher last Tuesday. The Nasdaq jumped 1.3% to lead the benchmark indexes. The S&P 500 gained 1.1%, the Dow climbed 0.9%, the Global Dow gained 0.8%, and the Russell 2000 added 0.5%. The yield on 10-year Treasuries rose to 1.52%. Crude oil prices gained nearly 2.0% to reach $79.14 per barrel. The dollar advanced nearly 0.25%. Financials, communication services, and information technology increased at least 1.5% to lead the market sectors.

Wall Street ended last Wednesday generally higher on news that Congress was making progress toward a debt ceiling resolution. The Nasdaq (0.5%), the S&P 500 (0.4%), and the Dow (0.3%) rose, while the Russell 2000 (-0.6%) and the Global Dow (-0.3%) fell. Ten-year Treasury yields dipped, but remained over 1.52%. The dollar advanced, while crude oil prices declined. Energy, materials, and health care were the only market sectors to fall. Consumer staples and real estate advanced 1.0%.

Stocks posted a third straight day of gains last Thursday following the deal to push back the expiration of the debt ceiling to December 3. A larger-than-expected decline in new claims for unemployment insurance also helped bolster investor confidence. Consumer discretionary, health care, and materials led the market sectors. Each of the benchmark indexes listed here gained ground, led by the Russell 2000 (1.6%), followed by the Nasdaq (1.1%), the Dow (1.0%), the Global Dow (0.9%), and the S&P 500 (0.8%). Treasury yields reached 1.57%. The dollar dipped, while crude oil prices climbed nearly 2.0% to $78.85 per barrel.

Equities fell on weak jobs data last Friday. The Russell 2000 (-0.8%) and the Nasdaq (-0.5%) headed the declines. Only the Global Dow ended the day in the black. Energy and financials were the only market sectors to end the day higher. Ten-year Treasury yields continued to climb, closing last Friday at 1.60%. The dollar fell for the second consecutive day, while crude oil prices rose for the second consecutive day.

The national average retail price for regular gasoline was $3.190 per gallon on October 4, $0.015 per gallon more than the prior week’s price and $1.018 higher than a year ago. Gasoline production decreased during the week ended October 1, averaging 9.4 million barrels per day. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended October 1 — 330,000 barrels per day more than the previous week’s average. Refineries operated at 89.6% of their operable capacity, up from the prior week’s level of 88.1%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 10/8Weekly ChangeYTD Change
DJIA30,606.4834,326.4634,746.251.22%13.53%
Nasdaq12,888.2814,566.7014,579.540.09%13.12%
S&P 5003,756.074,357.044,391.340.79%16.91%
Russell 20001,974.862,241.632,233.09-0.38%13.08%
Global Dow3,487.523,973.934,026.661.33%15.46%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.46%1.60%14 bps69 bps
US Dollar-DXY89.8494.0494.100.06%4.74%
Crude Oil-CL=F$48.52$75.76$79.484.91%63.81%
Gold-GC=F$1,893.10$1,760.10$1,756.80-0.19%-7.20%

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

Last Week’s Economic News

  • Employment rose by 194,000 in September, well short of expectations. There were some encouraging signs, however. The unemployment rate fell by 0.4 percentage point to 4.8%, down from 7.8% in September 2020. The number of unemployed persons decreased by 710,000 to 7.7 million (12.5 million in September 2020). Despite these improving figures, they remain above their levels prior to the COVID-19 pandemic (3.5% and 5.7 million, respectively, in February 2020). Employment is down 5.0 million, or 3.3%, from its pre-pandemic level in February 2020. The labor force participation rate dipped 0.1 percentage point to 61.6%, while the employment-population ratio inched up 0.2 percentage point to 58.7%. The number of persons not in the labor force who currently want a job was 6.0 million in September. These individuals were not counted as unemployed because they were not actively looking for work during the last four weeks or were unavailable to take a job. In September, 13.2% of employed persons teleworked because of the pandemic, while 5.0 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. Average hourly earnings rose by $0.19 to $30.85 in September. Average hourly earnings have risen 4.6% since September 2020. The average work week increased 0.2 hour to 34.8 hours.
  • According to the latest report from IHS Markit, the purchasing managers’ services index expanded in September, but at the slowest pace in the last 13 months. Labor shortages hindered output growth, while sales were negatively impacted by the spread of COVID-19. Meanwhile, cost pressures rose for the second consecutive month as input prices increased at a steep rate. Companies continued to pass on higher costs to clients, but at the slowest pace in the last five months.
  • The goods and services trade deficit expanded by 4.2% to $73.3 billion in August. Exports grew 0.5%, while imports increased 1.4%. Year to date, the goods and services deficit increased $140.8 billion, or 33.7%, from the same period in 2020. Exports increased $244.3 billion, or 17.5%. Imports increased $385.1 billion, or 21.2%. The trade deficit for goods (not including services) with China increased $3.1 billion to $28.1 billion in August. The deficit with Canada increased $1.4 billion to $5.1 billion, while the deficit with Mexico decreased $1.9 billion to $6.6 billion.
  • The number of new claims for unemployment insurance benefits rose for the third consecutive week. For the week ended October 2, there were 326,000 new claims for unemployment insurance, a decrease of 38,000 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 September 25 was 2.0%, a decrease of 0.1 percentage point from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 25 was 2,714,000, a decrease of 97,000 from the prior week’s level, which was revised up by 9,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time, there were 782,000 initial claims for unemployment insurance, and the rate for unemployment claims was 7.2%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended September 18 were Puerto Rico (4.5%), Illinois (4.2%), California (3.1%), Hawaii (3.0%), New Jersey (2.9%), Nevada (2.8%), Alaska (2.7%), Oregon (2.7%), Louisiana (2.5%), and New York (2.5%). States and territories with the largest increases in initial claims for the week ended September 25 were California (+9,907), Michigan (+6,115), Texas (+4,625), the District of Columbia (+2,223), and Minnesota (+2,002), while the largest decreases were in Virginia (-7,245), Maryland (-5,617), Arizona (-4,241), Louisiana (-3,160), and Ohio (-2,853).

Eye on the Week Ahead

The latest reports on inflationary trends are available this week. Transitory or not, inflation has been rising for the past several months. The Consumer Price Index has risen 5.3%, the Producer Price Index is up 8.3%, import prices have increased 9.0%, and export prices have climbed 16.8%.

What I’m Watching This Week – 4 October 2021

The Markets (as of market close October 1, 2021)

A rally last Friday helped drive stocks generally higher last week. The Dow, the Russell 2000, and the Global Dow were able to post gains, while the Nasdaq and the S&P 500 closed the week in the red. Declines in the market sectors were broad-based, with only energy (5.8%) climbing higher. Growth shares fared worse than value stocks, as evidenced by the dip in the tech-heavy Nasdaq. While the federal government averted a partial shutdown, no progress was made on raising the federal debt limit. Investors also saw the prospects of inflationary pressures continuing as supply constraints are driving production costs higher. Ten-year Treasury yields rose 13 basis points to 1.46%. Some analysts suggest that a spike in Treasury yields may be reflective of investors’ expectations that the Federal Reserve could start tightening its monetary policies as early as November. Crude oil prices increased more than $5.00 per barrel. The dollar continued its bullish run, while gold prices dipped.

Stocks opened the week mixed, with the Dow, the Russell 2000, and the Global Dow gaining, while the Nasdaq and the S&P 500 lost value. The dollar and crude oil prices advanced. Bond prices slid, increasing the yield on 10-year Treasuries to 1.48%. Rising bond yields could weigh on growth stocks, particularly in the technology sector, which generally has low dividend yields. Energy and financials led the market sectors, while health care, information technology, utilities, and real estate dipped.

Stocks tumbled last Tuesday on growing concern over the debt-ceiling impasse in Washington. Technology shares underperformed, pulling the Nasdaq down 2.8% — its largest single-day decline since March. The Russell 2000 fell 2.3%, followed by the S&P 500 (-2.0%), the Dow (-1.6%), and the Global Dow (-1.1%). Ten-year Treasury yields reached 1.53%, a mark not approached since late June. The dollar rose for the second consecutive day, while crude oil prices fell. The market sectors declined, with information technology (-3.0%) and communication services (-2.8%) falling the furthest. Energy (0.5%) was the only sector to gain ground.

The market yielded mixed returns last Wednesday. Consumer staples, health care, utilities, and real estate helped push the large caps of the Dow (0.3%) and the S&P 500 (0.2%) higher, while a pullback in tech shares dragged the Nasdaq (-0.2%) lower. The Russell 2000 (-0.3%) and the Global Dow (-0.2%) also fell. Ten-year Treasury yields pushed higher, while the dollar climbed to its highest level since November 2020. Crude oil prices receded but remained well over $74.00 per barrel.

Equities dipped lower last Thursday, despite confirmation that Congress passed a nine-week spending bill to temporarily avert a U.S. government shutdown. Each of the indexes listed here closed in the red, led by the Dow (-1.6%), followed by the S&P 500 (-1.2%), the Russell 2000 (-0.9%), the Global Dow (-0.9%), and the Nasdaq (-0.4%). The dollar and 10-year Treasury yields fell, while crude oil prices rose. All of the market sectors declined, with industrials (-2.1%) and consumer staples (-1.9%) falling the furthest, while financials, materials, and real estate each fell 1.6%.

Stocks had their best day of the week last Friday, with dip-buying driving cyclicals higher. Investors got promising news about a new COVID-19 medication. Each of the indexes posted gains, led by the Russell 2000 (1.7%), followed by the Dow (1.4%), the S&P 500 (1.2%), the Nasdaq (0.8%), and the Global Dow (0.4%). Bond prices rose, pulling the yields on 10-year Treasuries lower. The dollar slid, while crude oil prices advanced. Energy (3.3%), communication services (1.8%), financials (1.6%), information technology (1.4%), and industrials (1.4%) led the market sectors.

The national average retail price for regular gasoline was $3.175 per gallon on September 27, $0.009 per gallon less than the prior week’s price but $1.006 higher than a year ago. Gasoline production increased during the week ended September 24, averaging 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 15.4 million barrels per day during the week ended September 24 — 67,000 barrels per day more than the previous week’s average. Refineries operated at 88.1% of their operable capacity, up from the prior week’s level of 87.5%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 10/1Weekly ChangeYTD Change
DJIA30,606.4834,258.3234,326.460.20%12.15%
Nasdaq12,888.2815,047.7014,566.70-3.20%13.02%
S&P 5003,756.074,395.644,357.04-0.88%16.00%
Russell 20001,974.862,218.562,241.631.04%13.51%
Global Dow3,487.523,961.733,973.930.31%13.95%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.33%1.46%13 bps55 bps
US Dollar-DXY89.8493.2794.040.83%4.67%
Crude Oil-CL=F$48.52$70.51$75.767.45%56.14%
Gold-GC=F$1,893.10$1,768.40$1,760.10-0.47%-7.03%

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

Last Week’s Economic News

  • The economy accelerated at an annualized rate of 6.7% in the second quarter, according to the third and final estimate from the Bureau of Economic Analysis. GDP increased 6.3% in the first quarter. Contributing to the increase in GDP were upward revisions in personal consumption expenditures (12.0%) and exports (7.6%), which were partially offset by an upward revision to imports, which are a subtraction in the calculation of GDP. The increase in second-quarter GDP reflected continued economic recovery, reopening of establishments, and an ongoing government response related to the COVID-19 pandemic. In the second quarter, government assistance payments in the form of loans to businesses and grants to state and local governments increased, while social benefits to households, such as the direct economic impact payments, declined. The personal consumption price index, a measure of inflation, increased 6.5% in the second quarter. Excluding food and energy prices, the price index advanced 6.1%.
  • According to the latest report from the Bureau of Economic Analysis, personal income inched up 0.2% in August after rising 1.1% in July. The small August increase in personal income was likely impacted by a 3.7% decline in unemployment insurance benefits. Wages and salaries gained 0.5% (1.1% in July). Disposable (after-tax) income rose 0.1% in August after increasing 1.1% the prior month. Consumer spending increased 0.8% in August after dipping 0.1% in July. Prices for goods and services continued to rise in August, increasing 0.4%, the same advance as in July. Excluding food and energy, consumer prices rose 0.3% (0.3% in July). For the year ended in August, consumer prices have increased 4.3%.
  • New orders for durable goods increased 1.8% in August. This increase, up 15 of the last 16 months, followed a 0.5% rise in July. Transportation equipment, up three of the last four months, led the increase, climbing 5.5% in August. Excluding transportation, however, new orders edged up just 0.2%. Unfilled orders and inventories increased, while shipments decreased 0.5% following three consecutive monthly increases. New orders for motor vehicles and parts dipped 3.1% in August after advancing 5.3% in July. Orders for nondefense aircraft and parts jumped 77.9% in August after falling 36.3% the previous month. New orders for capital goods rose 6.7%, driven higher by a 9.0% increase in orders for nondefense capital goods. Defense capital goods fell 8.3%.
  • The advance report on international trade in goods revealed the trade deficit expanded by 0.9% in August. Exports of goods increased by 0.7%, while imports of goods grew by 0.8%. Since August 2020, exports have increased 25.6% and imports have climbed 17.8%.
  • According to the latest report from IHS Markit, the purchasing managers’ index dropped to a five-month low in September, as production was hampered by material and labor shortages. The IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 60.7 in September, down from 61.1 in August. While a reading above 50 indicates expansion, the rate of growth is slowing. As a result of supply-chain bottlenecks, backlogs of work have risen at the fastest pace on record. Prices continue to rise as the rate of input cost inflation, which softened only slightly from August’s series record, caused firms to raise their charges at an unprecedented pace.
  • The number of new claims for unemployment insurance benefits rose for the third consecutive week. For the week ended September 25, there were 362,000 new claims for unemployment insurance, an increase of 11,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 18 was 2.0%, 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 September 18 was 2,802,000, a decrease of 18,000 from the prior week’s level, which was revised down by 25,000. For comparison, last year at this time, there were 803,000 initial claims for unemployment insurance, and the rate for unemployment claims was 7.8%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended September 11 were Puerto Rico (4.7%), California (3.4%), the District of Columbia (3.2%), Oregon (3.2%), Alaska (3.1%), Nevada (3.1%), New Jersey (3.1%), the Virgin Islands (3.1%), Hawaii (2.7%), and Illinois (2.7%). States and territories with the largest increases in initial claims for the week ended September 18 were California (+17,218), Virginia (+12,140), Ohio (+4,147), Oregon (+3,413), and Maryland (+2,452), while the largest decreases were in Louisiana (-6,935), New York (-2,275), Missouri (-1,568), Oklahoma (-1,264), and New Mexico (-1,055).

Eye on the Week Ahead

Employment figures for September are available at the end of this week. While the jobs sector has been steadily improving, the pace of new hires has slowed. Since June and July, when more than 900,000 new jobs were added each month, August saw a job increase of only 235,000. On the other hand, earnings have increased 4.3% since August 2020.

Quarterly Market Review July-September 2021

The Markets (third quarter through September 30, 2021)

Overall, the third quarter was a roller-coaster ride for the market. The Dow, the Russell 2000, the Nasdaq, and the Global Dow lost value, while the S&P 500 was able to eke out a quarterly gain. Treasury yields, the dollar, and crude oil prices ended the third quarter higher, while gold prices dipped lower. Financials, information technology, communication services, and health care ended the quarter in the black. Energy, industrials, and materials fell by at least 4.5%. Despite the downturns, the benchmark indexes remain well ahead of their 2020 closing values, led by the S&P 500, which ended the quarter nearly 15.0% over last year’s pace.

The yield on 10-year Treasuries fell 30 basis points. Crude oil prices increased $14.17 per barrel, or 24.0%, in the third quarter. The dollar lost nearly 1.0%, while gold prices advanced 3.6%. The national average retail price for regular gasoline was $3.175 per gallon on September 27, up from the August 30 price of $3.139 and higher than the June 28 price of $3.091.

July kicked off the third quarter with large caps outperforming small caps. The S&P 500, the Dow, and the Nasdaq advanced, reaching record highs along the way, while the small caps of the Russell 2000 fell over 3.5%. Treasury yields, the dollar, and crude oil prices also declined. Gold prices advanced. By the end of the month, over 80% of the S&P 500 companies that reported earnings exceeded expectations. COVID cases surged as the Delta variant spread across the country. Inflation figures continued to rise. The Consumer Price Index rose 0.9%, the Producer Price Index climbed 1.0%, both import and export prices advanced 1.0%, and retail sales increased 0.6%. The Federal Reserve noted that the economic recovery remained on track. Second-quarter gross domestic product advanced at an annualized rate of 6.5%, according to the initial estimate from the Bureau of Economic Analysis. Health care led the market sectors, followed by real estate, utilities, information technology, and communication services. Financials and energy lagged.

Equities continued their strong showing in August, recording several record highs during the month. Strong corporate earnings reports and improving economic conditions helped bolster investor confidence, despite the increasing prevalence of the Delta variant. Growth stocks outpaced value shares. Financials and communication services led the market sectors, while energy lagged. The Nasdaq paced the indexes, climbing 4.0%, followed by the S&P 500 (2.9%), the Russell 2000 (2.1%), the Global Dow (2.1%), and the Dow (1.2%). Ten-year Treasury yields jumped 7 basis points to close the month at 1.30%. The dollar rose by 0.6%, while crude oil prices fell 7.2% to $68.51 per barrel on the last business day of the month. Gold prices changed little, trading at $1,817.50 per ounce. The jobs sector improved, adding 943,000 new jobs. Wage gains were strong, while unemployment claims dipped.

Following a strong July and August, September saw the market struggle with volatility. Traders had other concerns to deal with, including slowing economic growth, elevated inflation, supply-chain disruptions, a global energy crunch, and China’s regulatory restrictions. In addition, investors are facing the prospects of the Federal Reserve beginning to wind down its stimulus measures. Each of the benchmark indexes lost value, with the Nasdaq falling more than 5.0% and the S&P 500 dipping 4.8%. Among the market sectors, energy climbed 8.5%, while the remaining sectors ended well in the red. Crude oil prices rose more than 9.0% to close the month over $75.00 per barrel. The dollar and 10-year Treasury yields advanced, while gold prices declined.

Stock Market Indexes

Market/Index2020 CloseAs of September 30Monthly ChangeQuarterly ChangeYTD Change
DJIA30,606.4833,843.92-4.29%-1.91%10.58%
Nasdaq12,888.2814,448.58-5.31%-0.38%12.11%
S&P 5003,756.074,307.54-4.76%0.23%14.68%
Russell 20001,974.862,204.37-3.05%-4.60%11.62%
Global Dow3,487.523,958.34-2.59%-1.08%13.50%
Fed. Funds0.00%-0.25%0.00%-0.25%0 bps0 bps0 bps
10-year Treasuries0.91%1.52%22 bps8 bps61 bps
US Dollar-DXY89.8494.251.70%2.07%4.91%
Crude Oil-CL=F$48.52$75.039.52%2.07%54.64%
Gold-GC=F$1,893.10$1,758.20-3.26%-0.69%-7.13%

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.

Latest Economic Reports

  • Employment: The pace of job gains slowed in August, as 235,000 new jobs were added, well off the pace set in July (943,000) and June (938,000). Through the first eight months of the year, monthly job growth has averaged 586,000. The unemployment rate declined by 0.2 percentage point to 5.2% in August. The number of unemployed persons edged down to 8.4 million, following a large (782,000) decrease in July. Both measures are down considerably from their highs at the end of the February-April 2020 period. However, they remain above their levels prior to the COVID-19 pandemic (3.5% and 5.7 million, respectively, in February 2020). In August, notable job gains occurred in professional and business services (74,000), transportation and warehousing (53,000), private education (40,000), and manufacturing (37,000). Employment in retail trade declined 29,000. Among the unemployed, the number of permanent job losers declined by 443,000 to 2.5 million in August but is 1.2 million higher than in February 2020. The number of persons on temporary layoff, at 1.3 million, was essentially unchanged in August. The number of persons not in the labor force who currently want a job declined by 835,000 in August to 5.7 million but remains higher than the level in February 2020 (5.0 million). The labor force participation rate in August, at 61.7%, was unchanged over the month and has remained within a narrow range of 61.4% to 61.7% since June 2020. The employment-population ratio, at 58.5%, was little changed in August. This measure is up from its low of 51.3% in April 2020 but remains below the figure of 61.1% in February 2020. In August, 13.4% of employed persons teleworked because of the pandemic, little changed from the prior month. In August, 5.6 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, which is up from 5.2 million in July. Average hourly earnings rose $0.17 to $30.73 ($0.11/$30.54 in July). Earnings have increased 4.3% since August 2020. The average work week in August was 34.7 hours, unchanged since June 2021.
  • The number of claims for unemployment insurance fell in September. According to the latest weekly totals, as of September 18 there were 2,802,000 workers receiving unemployment insurance benefits, down from the August 14 total of 2,862,000. The unemployment rate for the week ended September 18 was 2.0%, down 0.1 percentage point from the August 14 rate of 2.1%. During the week ended September 11, Extended Benefits were available in 9 states/territories: Alaska, California, Connecticut, the District of Columbia, Illinois, Nevada, New Jersey, New Mexico, and Texas; 44 states reported 1,059,248 continued weekly claims for Pandemic Unemployment Assistance benefits, and 46 states reported 991,813 continued claims for Pandemic Emergency Unemployment Compensation benefits.
  • FOMC/interest rates: The Federal Open Market Committee met in September. While noting that the economy has continued to recover, the ongoing spread of the coronavirus, particularly the Delta variant, may be slowing the pace of recovery. With the goals of maximum employment and inflation running at 2.0%, the Committee decided to maintain the current target range for the federal funds rate at 0.00%-0.25%. However, the FOMC indicated that it may begin scaling back its purchases of securities as early as this November.
  • GDP/budget: According to the third and final estimate from the Bureau of Economic Analysis, the economy accelerated at an annual rate of 6.7% in the second quarter of 2021 after advancing 6.3% in the first quarter. Consumer spending, as measured by personal consumption expenditures, increased 12.0% in the second quarter after rising 11.4% in the prior quarter. The personal consumption price index (prices for consumer goods and services) rose 6.5% in the second quarter after climbing 3.8% in the first quarter. Excluding food and energy, the price index increased 6.1%. In the second quarter, fixed investment climbed 3.3% following a 13.0% increase in the first quarter, and residential fixed investment fell 11.7% after increasing 13.3% in the first quarter. Exports rose 7.6% in the second quarter after decreasing 2.9% in the first quarter. Imports (which are a negative in the calculation of GDP) increased 7.1% in the second quarter (9.3% in the first quarter).
  • The Treasury budget deficit was $170.6 billion in August following the July deficit of $302.1 billion. Following the latest increase, the budget deficit through the first 11 months of the current fiscal year widened to $2.7 trillion, roughly 10.9% lower than last year’s deficit over the same period. Compared to last fiscal year, government expenditures have increased 4.0% to $6.3 trillion, while receipts have increased 18.0% to $3.6 trillion.
  • Inflation/consumer spending: Prices at the consumer level continued to advance in August. According to the latest Personal Income and Outlays report, consumer prices rose 0.4% in August after edging up 0.4% in July. Prices have increased 4.3% since August 2020. Excluding food and energy, consumer prices rose 0.3% in August (0.3% in July) and 3.6% since August 2020. Personal income increased 0.2% in August, while disposable (after-tax) personal income increased 0.1%. Consumer spending rose 0.8% in August following a -0.1% dip in July.
  • The Consumer Price Index climbed 0.3% in August following a 0.5% jump in July. Over the 12 months ended in August, the CPI rose 5.3%. Prices less food and energy rose 0.1% in August, the smallest increase since February 2021. Energy prices increased 2.0%, mainly due to a 2.8% rise in gasoline prices. Food prices increased 0.4% (0.7% in July), and new vehicle prices rose 1.2% (1.7% in July). Over the 12 months ended in August, energy prices have risen 25.0%, food prices have increased 3.7%, and prices for used cars and trucks have climbed 31.9%.
  • Prices that producers receive for goods and services continued to climb in August, increasing 0.7% after rising 1.0% in both June and July. Producer prices increased 8.3% for the 12 months ended in August, the largest yearly gain since November 2010 when 12-month data was first calculated. In August, prices for services rose 0.7% (1.1% in July), and prices for goods moved up 1.0% (0.6% in July). Producer prices less foods, energy, and trade services advanced 0.3% in August (0.9% in July) and have risen 6.3% since August 2020, the largest 12-month increase since August 2014.
  • Housing: Existing home sales fell 2.0% in August following two consecutive monthly gains. Over the past 12 months, existing home sales dropped 1.5%. The median existing-home price was $356,700 in August ($359,900 in July), up 14.9% from August 2020. Total housing inventory at the end of August dropped 1.5% from July’s supply and is down 13.4% from one year ago. In August, unsold inventory sat at a 2.6-month supply at the present sales pace, the same figure recorded in July but down from 3.0 months in August 2020. Sales of existing single-family homes also decreased in August, falling 1.9% after increasing 2.7% in July. Year over year, sales of existing single-family homes fell 2.8%. The median existing single-family home price was $363,800 in August, down from $367,000 in July.
  • New single-family home sales increased for the second consecutive month in August, advancing 1.5% after climbing 1.0% in July. Despite the recent monthly increases, sales of new single-family homes have decreased 24.3% from August 2020. The median sales price of new single-family houses sold in August was $390,900 ($390,500 in July). The August average sales price was $443,200 ($446,000 in July). The inventory of new single-family homes for sale in August represents a supply of 6.2 months at the current sales pace, up slightly from the July revised estimate of 5.7 months.
  • Manufacturing: Industrial production increased 0.4% in August after advancing 0.8% (revised) the previous month. Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point. Manufacturing output rose 0.2% in August after rising 1.6% in July. In August, mining fell 0.6%, reflecting hurricane-induced disruptions to oil and gas extraction in the Gulf of Mexico. The output of utilities increased 3.3%, as warm temperatures boosted demand for air conditioning. Total industrial production in August was 5.9% higher than its year-earlier level and 0.3% above its pre-pandemic (February 2020) level.
  • New orders for durable goods increased 1.8% in August after advancing 0.5% in July (revised). Transportation drove the August increase, with new orders climbing 5.5% after decreasing 0.4% in July. Excluding transportation, new orders edged up 0.2%. Excluding defense, new orders advanced 2.4% after dipping 0.5% in July. New orders for nondefense aircraft and parts jumped 77.9% in August after falling 36.3% the previous month. Goods declined 8.0% following a 1.6% increase in July. New orders for capital goods reversed a 3.1% drop in July, increasing 6.7% in August. The advance was driven by a 9.0% rise in orders for nondefense capital goods. New orders for defense capital goods fell 8.3%.
  • Imports and exports: August import prices decreased for the first time since October 2020. The import price index declined 0.3% in August following increases of 0.4% in July and 1.1% in June. Import prices rose 9.0% over the 12 months ended in August (10.1% for the 12 months ended in July). This is the smallest 12-month increase since March 2021. Import fuel prices fell 2.3% in August — the first monthly decrease since October 2020. The August downturn in fuel prices was mostly driven by a 2.4% decline in petroleum prices. Despite the decline in August, import fuel prices advanced 56.5% for the year ended in August. Nonfuel import prices dipped 0.1% in August after ticking up 0.1% in July. Export prices increased 0.4% in August after increases of 1.1% in July and 1.2% in June. For the year ended in August, the price index for exports rose 16.8%. Agricultural export prices rose 1.1% in August following a 1.7% decline in July. Nonagricultural exports rose 0.2% in August after increasing 1.4% in July.
  • The international trade in goods deficit was $87.6 billion in August, up $0.8 billion, or 0.9%, from July. In August, exports increased $1.1 billion, or 0.7%, while imports rose $1.9 billion, or 0.8%. For the 12 months ended in August, exports have risen 25.6%, while imports have increased 17.8%.
  • The latest information on international trade in goods and services, out September 2, was for July and showed that the goods and services trade deficit decreased by 4.3% to $70.1 billion. July exports rose 1.3%, while imports declined 0.2%. Year over year, the goods and services deficit increased $131.0 billion, or 37.1%, from July 2020. Exports increased $205.0 billion, or 16.8%. Imports increased $336.0 billion, or 21.3%.
  • International markets: Whether it’s transitory or not remains to be seen, but several countries are experiencing accelerated inflation. Germany, Europe’s largest economy, saw inflation grow at a record pace in September, climbing 4.1% following a 3.4% jump in August. French inflation hit a near 10-year high of 2.7% in September. Like the case in many countries, surging energy prices are driving the inflation spike in France. Nevertheless, if inflation continues to climb, pressure will be on the European Central Bank to determine how to proceed with its asset purchases going forward. China, the world’s second largest economy, is attempting to contain the financial fallout from the default or bankruptcy of mega-developer Evergrande. Also last month, the People’s Bank of China, which has targeted bitcoin since 2013, declared that all crypto-related activities are illegal in China. For September, the STOXX Europe 600 Index fell about 3.8%; the United Kingdom’s FTSE declined 0.8%; Japan’s Nikkei 225 Index rose 3.5%; and China’s Shanghai Composite Index was essentially unchanged from August.
  • Consumer confidence: According to the latest report from The Conference Board, consumer confidence declined in September for the third consecutive month. The Consumer Confidence Index® stands at 109.3, down from 115.2 in August. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 143.4 in September from 148.9 the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, registered 86.6 in September, down from 92.8 in August. According to the report, consumer confidence waned, as the spread of the Delta variant deepened concerns over the state of the economy and short-term growth prospects. Nevertheless, consumer confidence is still high by historical levels, while these declines in confidence suggest consumers have grown more cautious and are likely to curtail spending going forward.

Eye on the Month Ahead

Heading into the fourth quarter of 2021, several economic indicators have improved, while a few have waned. Real estate and manufacturing slowed from the pace set earlier in the year. GDP posted strong data for the second quarter, although some estimates suggest that the third quarter will not be quite as strong. On the jobs front, there were nearly 11 million jobs available but nearly 8.7 million unemployed actively looking for work, further widening the gap between job openings and hires.

What I’m Watching This Week – 27 September 2021

The Markets (as of market close September 24, 2021)

Investors rode a bumpy ride, opening last week lower only to rebound later but not enough to avoid a third consecutive weekly dip. Only the Nasdaq was able to avoid closing the week in the red, but barely. The Dow and the Global Dow fell nearly 1.0%, while the S&P 500 and the Russell 2000 declined more than 0.8%. Traders were able to overcome concerns early in the week of the possible financial collapse of a major Chinese property developer, only to learn last Friday that Chinese regulators will now consider crypto-related transactions illicit financial activity.

Wall Street suffered its worst day in nearly four months last Monday. Each of the benchmark indexes listed here fell, led by the Russell 2000 (-2.4%), followed by the Nasdaq (-2.2%), the Dow (-1.8%), the S&P 500 (-1.7%), and the Global Dow (-1.7%). Prices on 10-year Treasuries climbed, driving yields down by 4.5%. The dollar was mixed, while crude oil prices fell 1.6%. Each of the market sectors declined, with energy (-3.0%), consumer discretionary (-2.4%), and financials (-2.2%) falling the most. Investors were concerned about the impact on global financial markets from the possible collapse of Evergrande.

Stocks closed mixed last Tuesday, with the Nasdaq and Russell 2000 edging 0.2% higher, while the Dow and the S&P 500 ticked lower. Crude oil prices and Treasury yields rose, while the dollar was unchanged. Industrials and communication services were sectors that weighed down stocks, while energy and health care climbed higher.

Equities rebounded last Wednesday, as the Dow, the S&P 500, and the Nasdaq each rose by at least 1.0%. The Russell 2000 led the indexes, gaining 1.5%, while the Global Dow advanced 0.8%. Ten-year Treasury yields, the dollar, and crude oil prices each ticked higher. Among the market sectors, energy, financials, information technology, and consumer discretionary advanced. Investors may have been encouraged by potentially favorable developments involving Evergrande. Also, the Federal Open Market Committee was guardedly bullish on the growth of the economy, indicating that a tapering of its asset purchases may begin soon but that interest rates would remain at their current level for quite some time.

Wall Street continued to rally last Thursday. Investors were buoyed by the Fed’s stance on paring stimulus, the Food and Drug Administration’s authorization of a Pfizer booster vaccine for those age 65 and older, and an easing of concerns over the ripple effect of an Evergrande default. Each of the benchmark indexes listed here posted gains of at least 1.0%, with the Russell 2000 again leading the pack after advancing 1.5%. The dollar and crude oil prices fell, while yields on 10-year Treasuries ticked higher. Several of the market sectors also climbed higher, led by energy (3.4%) and financials (2.5%).

Friday ended the week with mixed results. The large caps of the Dow (1.0%) and the S&P 500 (1.0%) closed higher. The Global Dow also advanced 0.8%. The tech stocks of the Nasdaq dipped less than 0.1 percentage point, while the small caps of the Russell 2000 fell 0.5%. Ten-year Treasury yields and the dollar advanced, while crude oil prices edged lower. The market sectors also closed mixed last Friday. Energy, financials, and communication services climbed higher. Real estate, materials, health care, and utilities declined.

The national average retail price for regular gasoline was $3.184 per gallon on September 20, $0.019 per gallon more than the prior week’s price and $1.016 higher than a year ago. Gasoline production increased during the week ended September 17, averaging 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.3 million barrels per day during the week ended September 17 — 1.0 million barrels per day more than the previous week’s average. Refineries operated at 87.5% of their operable capacity, up from the prior week’s level of 82.1%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 9/24Weekly ChangeYTD Change
DJIA30,606.4834,584.8834,258.32-0.94%11.93%
Nasdaq12,888.2815,043.9715,047.700.02%16.75%
S&P 5003,756.074,432.994,395.64-0.84%17.03%
Russell 20001,974.862,236.872,218.56-0.82%12.34%
Global Dow3,487.523,997.523,961.73-0.90%13.60%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.37%1.33%-4 bps42 bps
US Dollar-DXY89.8493.2493.270.03%3.82%
Crude Oil-CL=F$48.52$71.96$70.51-2.02%45.32%
Gold-GC=F$1,893.10$1,752.60$1,768.400.90%-6.59%

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

  • Following its meeting earlier in the week, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at its current 0.00%-0.25%. The Committee also agreed to continue to increase its holdings of Treasury securities and agency mortgage-backed securities. The FOMC noted that the economy has made progress toward the Committee’s goals of maximum employment and price stability. If progress continues, a moderation in the pace of asset purchases may soon be warranted. However, the FOMC did not indicate when it would begin to slow the pace of asset purchases, instead proffering that it would adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s aforementioned goals. Following the Committee’s statement, FOMC Chairman Jerome Powell said that the Fed could wrap up its asset purchase program before the end of 2022 as long as the economic recovery remains on track.
  • New home construction picked up the pace in August. The number of building permits increased 6.0% from the July rate and are 13.5% above the August 2020 pace. Housing starts rose 3.9% in August, while housing completions dipped 4.5%. However, single-family housing completions advanced 2.8% last month.
  • Existing home sales retreated 2.0% in August, following two consecutive monthly increases. Sales are down 1.5% from August 2020. Rising existing home prices may have caused potential buyers to be more measured about their financial limits, prompting a slowdown in the pace of sales. The median existing-home price in August was $356,700, down from $359,900 in July. However, home prices have increased 14.9% since August 2020. Unsold inventory sat at a 2.6-month supply in August, unchanged from July. Single-family existing-home sales fell 1.9% in August and are down 2.8% from a year ago. The median existing single-family home price was $363,800 in August ($367,000 in July), up 15.6% from August 2020.
  • Sales of new single-family houses in August were 1.5% above the July rate, but 24.3% below the August 2020 pace. The median sales price of new houses sold in August was $390,900, unchanged from July. The average sales price was $443,200, down from $448,700 in July. The estimate of new houses for sale at the end of August represents a supply of 6.1 months at the current sales rate.
  • Industrial production rose 0.4% in August after climbing 0.8% the previous month. Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point. Despite interruptions caused by the hurricane, manufacturing output increased 0.2%. Hurricane Ida impacted mining production, which fell 0.6%. Utilities increased 3.3%, as unseasonably warm temperatures boosted demand for air conditioning.
  • For the week ended September 18, there were 351,000 new claims for unemployment insurance, an increase of 16,000 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 September 11 was 2.1%, an increase of 0.1 percentage point from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 11 was 2,845,000, an increase of 131,000 from the prior week’s level, which was revised up by 49,000. For comparison, last year at this time, there were 860,000 initial claims for unemployment insurance and the rate for unemployment claims was 8.7%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended September 4 were Puerto Rico (4.4%), the District of Columbia (4.2%), California (3.1%), New Jersey (3.0%), Nevada (2.8%), New York (2.8%), Rhode Island (2.7%), Hawaii (2.5%), and Connecticut (2.2%). States and territories with the largest increases in initial claims for the week ended September 11 were Louisiana (+4,318), the District of Columbia (+3,783), Arizona (+3,739), Maryland (+2,018), and Missouri (+1,658), while the largest decreases were in Illinois (-7,481), California (-5,950), Ohio (-4,665), Texas (-3,635), and Virginia (-2,357).

Eye on the Week Ahead

There’s plenty of important economic data available the last week of September. Orders for durable goods slipped in July but are expected to rebound in August. The third and final estimate of second-quarter gross domestic product is also out this week. The economy expanded at an annualized rate of 6.6%, according to the second estimate.

What I’m watching This Week – 20 September 2021

The Markets (as of market close September 17, 2021)

Stocks have generally retreated in September on concerns that the Delta variant is slowing the economy’s rebound and that the markets, which had been surging, may be primed for a decline. The benchmark indexes generally lost ground for the second consecutive week, with only the Russell 2000 able to close the week in the black. Ten-year Treasury yields climbed 3 basis points last week, the dollar climbed higher, and crude oil prices increased $2.34 per barrel. Among the market sectors, only consumer discretionary (0.5%) and energy (3.3%) advanced. The remaining sectors lost value, led by materials (3.2%) and utilities (3.1%).

Wall Street opened last week mostly higher, with each of the benchmark indexes listed here advancing, except for the Nasdaq (-0.1%). The large caps of the Dow (0.8%) and the S&P 500 (0.2%) gained ground, as did the small caps of the Russell 2000 (0.6%) and the Global Dow (0.7%). The market sectors were mixed to higher, with energy gaining 2.9% and financials climbing 1.1%, while health care (-0.6%) and utilities (-0.2%) dipped. Crude oil prices eclipsed the $70.00-per-barrel price for the first time since early August. The dollar was little changed, and 10-year Treasury yields slid.

Last Tuesday was another rough day on Wall Street. Each of the benchmark indexes fell, as the spread of a COVID-19 outbreak in a Chinese province raised trade concerns and worries that economic growth would be hindered. The Russell 2000 dropped 1.1%, followed by the Dow (-0.8%), the Global Dow (-0.6%), the S&P 500 (-0.6%), and the Nasdaq (-0.5%). Yields on 10-year Treasuries dipped to 1.27%, while crude oil prices and the dollar advanced. The market sectors hung back, with energy (-1.6%), financials (-1.4%), industrials (-1.2%), and materials (-1.2%) dipping the furthest.

Stocks closed higher last Wednesday as energy shares advanced notably. Aside from utilities, each of the market sectors rose, with energy climbing 3.8%, followed by industrials, materials, and financials. The Dow, the S&P 500, and the Nasdaq finished at least 0.7% in the black for the day. Ten-year Treasury yields and crude oil prices rose, while the dollar dipped.

Wall Street followed a positive Wednesday by retreating on Thursday. Among the indexes listed here, only the Nasdaq inched higher, as the remaining benchmarks ended the day in the red. Treasury yields rose and the dollar strengthened. Crude oil prices slipped lower. The energy sector has been volatile in September. Following a notable gain last Wednesday, energy fell 1.1% on Thursday. Among the remaining market sectors, only real estate and consumer discretionary edged higher.

Equities closed the week generally lower last Friday. Only the Russell 2000 was able to eke out a 0.2% gain. The Nasdaq and the S&P 500 fell 0.9%. The Global Dow dropped 1.0%, and the Dow declined 0.5%. Treasury yields and the dollar advanced. Crude oil prices dropped. Several of the market sectors decreased, with materials (-2.01%), utilities (-1.6%), information technology (-1.5%), communication services (-1.3%), and industrials (-1.1%) tumbling the furthest.

The national average retail price for regular gasoline was $3.165 per gallon on September 13, $0.011 per gallon less than the prior week’s price but $0.982 higher than a year ago. Gasoline production decreased during the week ended September 10, averaging 9.3 million barrels per day. U.S. crude oil refinery inputs averaged 14.4 million barrels per day during the week ended September 10 — 85,000 barrels per day more than the previous week’s average. Refineries operated at 82.1% of their operable capacity, up from the prior week’s level of 81.9%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 9/17Weekly ChangeYTD Change
DJIA30,606.4834,607.7234,584.88-0.07%13.00%
Nasdaq12,888.2815,115.4915,043.97-0.47%16.73%
S&P 5003,756.074,458.584,432.99-0.57%18.02%
Russell 20001,974.862,227.552,236.870.42%13.27%
Global Dow3,487.524,030.323,997.52-0.81%14.62%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.34%1.37%3 bps46 bps
US Dollar-DXY89.8492.6493.240.65%3.78%
Crude Oil-CL=F$48.52$69.62$71.963.36%48.31%
Gold-GC=F$1,893.10$1,789.40$1,752.60-2.06%-7.42%

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 August federal government deficit was $170.6 billion, down from July’s $302.1 billion. August expenditures totaled $439.0 billion ($564.1 billion in July), while receipts equaled $268.4 billion ($262.0 billion in July). Of the total receipts in August, $231.0 billion is attributable to corporate and individual income taxes. Social Security ($95.0 billion) and income security ($93.0 billion) accounted for 57% of the total government outlays in August. Year to date, the government deficit sits at $2,710.6 billion, 10.9% lower than the government deficit ($3,007.3 billion) over the same period last fiscal year.
  • The Consumer Price Index rose 0.3% in August after rising 0.5% in July. Over the last 12 months ended in August, consumer prices have advanced 5.3%. The index less food and energy rose 0.1% in August, its smallest increase since February 2021. Price increases in gasoline (2.8%), household furnishings and operations (1.3%), food (0.4%), and shelter (0.2%) contributed to the overall CPI increase in August. Several indexes declined in August, including airline fares (-9.1%), used cars and trucks (-1.5%), transportation services (-2.3%), and motor vehicle insurance (-2.8%).
  • Import prices fell 0.3% in August, the first decrease since October 2020. The August downturn was mostly driven by a 2.4% decline in petroleum prices. Despite the declines in August, prices for import fuel rose 56.5% over the past year. Export prices rose 0.4% last month, the smallest one-month advance since October 2020. Agricultural export prices increased 1.1%, while nonagricultural export prices inched up 0.2%, the smallest monthly increase since last October.
  • Industrial production rose 0.4% in August after climbing 0.8% the previous month. Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point. Despite interruptions caused by the hurricane, manufacturing output increased 0.2%. Hurricane Ida impacted mining production, which fell 0.6%. Utilities increased 3.3%, as unseasonably warm temperatures boosted demand for air conditioning.
  • Retail sales rose 0.7% in August over July. Retail sales have risen 15.1% since August 2020. Retail trade sales were up 0.8% last month and up 13.1% from a year ago. Clothing and clothing accessories stores sales were up 38.8% from August 2020, while gasoline station sales were up 35.7% from last year. Online sales jumped 5.3% in August after falling 4.6% the previous month.
  • For the week ended September 11, there were 332,000 new claims for unemployment insurance, an increase of 20,000 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 September 4 was 1.9%, a decrease of 0.2 percentage point from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 4 was 2,665,000, a decrease of 187,000 from the prior week’s level, which was revised up by 69,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 860,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 8.7%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended August 28 were Puerto Rico (4.5%), California (3.7%), New Jersey (3.4%), the District of Columbia (3.3%), Illinois (3.1%), New York (3.0%), Rhode Island (2.9%), Connecticut (2.8%), Georgia (2.8%), and Hawaii (2.6%). States and territories with the largest increases in initial claims for the week ended September 4 were Louisiana (+7,664), Michigan (+5,318), California (+1,209), Kansas (+528), and Nevada (+420), while the largest decreases were in Missouri (-6,949), New York (-3,020), Florida (-2,482), Tennessee (-1,923), and Georgia (-1,814).

Eye on the Week Ahead

August data for the housing sector is available this week. The pace of sales for both new and existing homes has slowed from its torrid pace earlier in the year. The big news this week focuses on the meeting of the Federal Open Market Committee. It is possible that the Committee will present a firmer timeline for scaling back its current bond purchasing program.

What I’m Watching This Week – 13 September 2021

The Markets (as of market close September 10, 2021)

Stocks retreated last week, with each of the benchmark indexes listed here falling at least 1.3%. The Russell 2000 and the Dow dropped the furthest, declining 2.8% and 2.2%, respectively. Investors contended with mixed signals. A better-than-expected jobless claims report, while encouraging, could prompt the Federal Reserve to start reducing its asset purchases sooner. Also, the spread of the Delta variant may impede economic recovery. Each of the market sectors fell for the week, with real estate dropping nearly 4.0%. Crude oil prices and the dollar inched ahead last week, while gold prices, which had been climbing, fell 2.2%. Ten-year Treasury yields climbed marginally higher.

Stocks opened the Labor Day week mostly down. Last Tuesday saw only the Nasdaq eke out a 0.1% gain, while the remaining benchmark indexes listed here lost value. The Dow and the Russell 2000 fell by nearly 8.0%, with the S&P 500 and the Global Dow dropping nearly 0.4%. The yield on 10-year Treasuries rose, crude oil prices dipped, and the dollar advanced. Several of the market sectors lost ground, with only communication services, consumer discretionary, and information technology advancing.

Wall Street ended lower last Wednesday, reflecting fears that the Delta variant could stymie the economy’s recovery and uncertainty over when the Federal Reserve might begin to pull back its accommodative bond purchasing. Each of the benchmark indexes listed here lost ground, with the Russell 2000 dipping 1.2%, followed by the Global Dow and the Nasdaq, which fell 0.6%. Crude oil prices and the dollar rose, while 10-year Treasury yields declined. Consumer staples, real estate, utilities, and industrials were the only market sectors to advance. Energy and materials decreased more than 1.0%.

Stocks trended lower last Thursday, despite jobless claims hitting an 18-month low. The S&P 500 fell for the fourth consecutive session after dipping 0.5%. The Dow and the Global Dow dropped 0.4%, the Nasdaq declined 0.3%, and the Russell 2000 slipped less than 0.1%. Ten-year Treasury yields fell 2.6%, crude oil prices declined 2.0%, and the dollar was mixed. Energy, financials, and materials were the only market sectors to advance, while real estate (-2.1%) and health care (-1.2%) fell the furthest.

Last week ended with stocks closing lower. The Russell 2000 dropped 1.0%, followed by the Nasdaq (-0.9%), the Dow and the S&P 500 (-0.8%), and the Global Dow (-0.3%). Treasury yields, crude oil prices, and the dollar increased. Each of the market sectors lost ground, with real estate, utilities, and information technology falling at least 1.0%.

The national average retail price for regular gasoline was $3.176 per gallon on September 6, $0.037 per gallon more than the prior week’s price and $0.965 higher than a year ago. Gasoline production increased during the week ended September 3, averaging 10.1 million barrels per day. U.S. crude oil refinery inputs averaged 14.3 million barrels per day during the week ended September 3 — 1.6 million barrels per day less than the previous week’s average. Refineries operated at 81.9% of their operable capacity, down from the prior week’s level of 91.3%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 9/10Weekly ChangeYTD Change
DJIA30,606.4835,369.0934,607.72-2.15%13.07%
Nasdaq12,888.2815,363.5215,115.49-1.61%17.28%
S&P 5003,756.074,535.434,458.58-1.69%18.70%
Russell 20001,974.862,292.052,227.55-2.81%12.80%
Global Dow3,487.524,082.924,030.32-1.29%15.56%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.32%1.34%2 bps43 bps
US Dollar-DXY89.8492.1492.640.54%3.12%
Crude Oil-CL=F$48.52$69.26$69.620.52%43.49%
Gold-GC=F$1,893.10$1,830.20$1,789.40-2.23%-5.48%

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 job market is wide open, based on the latest data from the Job Openings and Labor Turnover summary. The number of job openings increased to an all-time high of 10.9 million (+749,000) on the last business day of July. The rate of job openings increased to 6.9%. Job openings increased in several industries, with the largest increases in health care and social assistance (+294,000), finance and insurance (+116,000), and accommodation and food services (+115,000). There were 4.0 million workers who voluntarily quit, while the numbers of layoffs and discharges were 1.5 million and 1.0 million, respectively. Over the 12 months ended in July, hires totaled 72.6 million and separations (includes quits, layoffs, and discharges) totaled 65.6 million, yielding a net employment gain of 7.0 million.
  • Producer prices have risen 8.3% over the last 12 months after climbing 0.7% in August. Following a 0.3% increase last month, producer prices less foods, energy, and trade services are up 6.3% since August 2020, the largest 12-month advance since data was first calculated in 2014. Producer prices for services advanced 0.7% in August, while goods prices rose 1.0%. Half of the August increase in goods prices is attributable to a 2.9% jump in prices for foods.
  • For the week ended September 4, there were 310,000 new claims for unemployment insurance, a decrease of 35,000 from the previous week’s level, which was revised up by 5,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 28 was 2.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 28 was 2,783,000, a decrease of 22,000 from the prior week’s level, which was revised up by 57,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 881,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 9.3%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended August 21 were Puerto Rico (4.8%), the District of Columbia (4.0%), New Jersey (3.6%), California (3.4%), Illinois (3.3%), New York (3.0%), Rhode Island (3.0%), Connecticut (2.9%), Hawaii (2.6%), and the Virgin Islands (2.6%). States and territories with the largest increases in initial claims for the week ended August 28 were Missouri (+7,182), Ohio (+5,563), New York (+3,776), Tennessee (+1,854), and Florida (+1,723), while states/territories with the largest decreases were California (-7,009), Illinois (-6,712), Virginia (-4,146), New Jersey (-2,496), and Oregon (-1,686).

Eye on the Week Ahead

Inflation indicators are front and center this week, with the latest release of the Consumer Price Index, the retail sales report, and import and export data. The CPI has risen 5.4% since July 2020, while retail sales have risen 15.8% over the same period. Import prices have risen 10.2% for the 12 months ended in July, while export prices are up 17.2%.

What I’m Watching This Week – 7 September 2021

The Markets (as of market close September 3, 2021)

Wall Street closed the week generally higher, with only the Dow dipping. Investors have the Labor Day weekend to weigh the effects of the somewhat lackluster jobs report for August. Last week, traders continued to move back to tech stocks and megacaps, driving the Nasdaq to record highs. Following the advancing Nasdaq was the Global Dow, the Russell 2000, and the S&P 500. Ten-year Treasury yields inched up, the dollar slipped, while crude oil prices rose less than $1.00 per barrel. Gold prices climbed for the second consecutive week. Year to date, the S&P 500 is nearly 21.0% higher than its 2020 closing mark, closely followed by the Nasdaq. Among the market sectors, energy, financials, industrials, and materials fell, while communication services, real estate, technology, consumer discretionary, health care, utilities, and consumer staples advanced.

Stocks closed last Monday mixed, with the Nasdaq (0.9%) and the S&P 500 (0.4%) reaching new highs, while the Dow (-0.2%) and the Russell 2000 (-0.5%) lagged. The Global Dow inched up 0.1%. Megacap growth stocks advanced, while value stocks and cyclicals fell. Among the sectors, real estate, information technology, consumer discretionary, and communication services performed well, while financials and energy declined. Ten-year Treasury yields dipped, crude oil prices were unchanged, and the dollar rose 0.4%.

Last Tuesday, equities ended August with monthly gains. Following last month’s advance, the S&P 500 posted its strongest year-to-date increase since 1997. However, stocks opened September with mixed returns. The Dow, the S&P 500, and the Nasdaq declined 0.1%; the Russell 2000 advanced 0.3%; and the Global Dow ticked up 0.2%. Treasury yields rose, the dollar was mixed, and crude oil prices fell.

Stocks closed mostly higher last Wednesday, with only the Dow slipping. Megacaps helped push the Nasdaq and the S&P 500 higher. A surge in consumer staples drove the Russell 2000 up 0.6%. Real estate, utilities, and communication services advanced among the sectors, while energy and financials declined. Treasury yields, crude oil prices, and the dollar fell.

Wall Street closed higher last Thursday, with each of the benchmark indexes listed here posting gains. Energy and industrial shares helped drive the S&P 500 to another record high. Cyclical stocks outperformed tech shares. The small caps of the Russell 2000 (0.7%) led the indexes, followed by the Dow (0.4%), the Global Dow (0.3%), the S&P 500 (0.3%), and the Nasdaq (0.1%). Ten-year Treasury yields and the dollar declined for the third consecutive day. Crude oil prices rose, likely impacted somewhat by the aftermath of Hurricane Ida in the Gulf of Mexico.

A disappointing jobs report left equities mixed last Friday, although the Nasdaq managed to advance 0.2% — enough to reach a record high. Otherwise, stocks dipped lower on the day, with the Russell 2000 falling 0.5%, followed by the Dow (-0.2%) and the Global Dow (-0.1%). The S&P 500 closed essentially unchanged. Treasury yields advanced, while the dollar and crude oil prices slipped. Energy, financials, industrials, utilities, and materials fell by at least 0.5%.

The national average retail price for regular gasoline was $3.139 per gallon on August 30, $0.006 per gallon less than the prior week’s price but $0.917 higher than a year ago. Gasoline production decreased during the week ended August 27, averaging 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended August 27 — 133,000 barrels per day less than the previous week’s average. Refineries operated at 91.3% of their operable capacity, down from the prior week’s level of 92.4%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 9/3Weekly ChangeYTD Change
DJIA30,606.4835,454.8135,369.09-0.24%15.56%
Nasdaq12,888.2815,129.5015,363.521.55%19.21%
S&P 5003,756.074,509.374,535.430.58%20.75%
Russell 20001,974.862,278.022,292.050.62%16.06%
Global Dow3,487.524,055.614,082.920.67%17.07%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.31%1.32%1 bps41 bps
US Dollar-DXY89.8492.6892.14-0.58%2.56%
Crude Oil-CL=F$48.52$68.72$69.260.79%42.75%
Gold-GC=F$1,893.10$1,821.60$1,830.200.47%-3.32%

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

Last Week’s Economic News

  • There were 235,000 new jobs added in August, well below the totals from both June (962,000) and July (1.1 million). Employment has risen by 17.0 million since April 2020 but is down by 5.3 million, or 3.5%, from its pre-pandemic level in February 2020. In August, notable job gains occurred in professional and business services, transportation and warehousing, private education, manufacturing, and other services. Employment in retail trade declined over the month. The unemployment rate dipped 0.2 percentage point to 5.2% in August. The number of unemployed persons edged down 318,000 to 8.4 million, following a 782,000 decrease in July. Both the unemployment rate and the number of unemployed persons are well below their April 2020 highs but remain above their levels prior to COVID-19 (3.5% and 5.7 million, respectively). The number of long-term unemployed (those jobless for 27 weeks or more) decreased by 246,000 in August to 3.2 million but is 2.1 million higher than in February 2020. These long-term unemployed accounted for 37.4% of the total unemployed in August. The labor force participation rate, at 61.7% in August, was unchanged from July. The employment-population ratio, at 58.5%, was 0.1 percentage point above July’s total. This measure is up from its low of 51.3% in April 2020 but remains below the figure of 61.1% in February 2020. The number of persons not in the labor force who currently want a job declined by 835,000 in August to 5.7 million. In August, the number of employed persons who teleworked because of the coronavirus pandemic, at 13.4%, was little changed from the prior month. In August, 5.6 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, up from 5.2 million in July. Average hourly earnings rose for the fifth consecutive month after increasing by $0.17 to $30.73 in August. Average hourly earnings have risen 4.3% since August 2020. In August, the average work week for all employees was 34.7 hours for the third consecutive month.
  • Manufacturing improved in August, but at a slightly slower pace than in July, according to the latest IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™). The purchasing managers’ index for August was 61.1, down from 63.4 the previous month. The August growth in manufacturing was supported by increases in production and new orders, which were hampered by capacity constraints and material shortages. In addition, cost burdens rose substantially in August, with the rate of price inflation the fastest in more than 14 years.
  • Activity in the services sector slowed in August, according to the IHS Markit US Services PMI. Services increased at the slowest rate in eight months as waning demand, both domestically and abroad, led to the softest rise in new business since August 2020. Jobs growth was the slowest in 14 months. Meanwhile, input costs and output charges quickened slightly as hikes in supplier and wage bills were partly passed on to clients.
  • The goods and services trade deficit was $70.1 billion in July, down $3.2 billion, or 4.3%, from the June figure. July exports were $212.8 billion, $2.8 billion, or 1.3%, more than June exports. July imports were $282.9 billion, $0.4 billion, or -0.2%, less than June imports. Year to date, the goods and services deficit increased $131.0 billion, or 37.1%, from the same period in 2020. Exports increased $205.0 billion, or 16.8%. Imports increased $336.0 billion, or 21.3%.
  • For the week ended August 28, there were 340,000 new claims for unemployment insurance, a decrease of 14,000 from the previous week’s level, which was revised up by 1,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 21 was 2.0%, a 0.1 percentage point decrease from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 21 was 2,748,000, a decrease of 160,000 from the prior week’s level, which was revised up by 46,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 875,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 9.1%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended August 14 were Puerto Rico (4.8%), California (4.0%), the District of Columbia (3.6%), New Jersey (3.5%), Illinois (3.4%), Rhode Island (3.1%), Connecticut (3.0%), New York (3.0%), the Virgin Islands (2.7%), and Nevada (2.6%). States and territories with the largest increases in initial claims for the week ended August 21 were Illinois (+3,832), Florida (+2,545), Maryland (+1,723), Oregon (+1,377), and New Jersey (+837), while states and territories with the largest decreases were Michigan (-6,757), Virginia (-4,670), Texas (-3,040), Ohio (-1,515), and Georgia (-1,407).

Eye on the Week Ahead

This week includes a couple of potentially market-moving economic reports. The Job Openings and Labor Turnover Survey (JOLTS) report for July is available this week. The number of job openings increased to a series high of 10.1 million in June, with the largest increases in job openings occurring in professional and business services (227,000), retail trade (133,000), and accommodation and food services (121,000). The Producer Price Index for August is also out this week. Prices at the producer level have been rising steadily over the past several months and have risen 7.8% for the 12 months ended in July.

Monthly Market Review – August 2021

The Markets (as of market close August 31, 2021)

The benchmark indexes enjoyed a solid August, with the S&P 500 and the Nasdaq reaching record highs multiple times during the month. In fact, the S&P 500 recorded its seventh straight monthly advance — its longest streak of monthly gains since January 2018. Each of the benchmarks is well ahead of its 2020 year-end value, led by the S&P 500, followed by the Nasdaq, the Global Dow, the Dow, and the Russell 2000. Ten-year Treasury yields increased and crude oil prices fell, while the dollar and gold prices inched higher.

Stocks climbed higher in August, despite a drop in consumer confidence amid the spread of the Delta variant and the possibility of travel restrictions. Growth and technology shares outperformed cyclicals. Each of the market sectors gained, with only the energy sector sliding lower. Financials and communication services advanced the most.

Federal Reserve Chair Jerome Powell may have done enough to help calm investors’ concerns by promoting the idea that interest rates will remain at their current level for some time, although a reduction in the bond-buying stimulus program may begin before the end of the year. Inflationary pressures continued to rise as prices at the consumer and producer levels increased in July.

Second-quarter GDP showed the economy expanded by nearly 7.0%. Sales of existing and new homes advanced, as prices for new single-family homes rose, while prices for existing homes slid. Industrial production increased. Close to 1.0 million new jobs were added in both June and July, while the unemployment rate and the number of unemployment claims fell.

Stock Market Indexes

Market/Index2020 ClosePrior MonthAs of August 31Monthly ChangeYTD Change
DJIA30,606.4834,935.4735,360.731.22%15.53%
Nasdaq12,888.2814,672.6815,259.244.00%18.40%
S&P 5003,756.074,395.264,522.682.90%20.41%
Russell 20001,974.862,226.252,273.772.13%15.14%
Global Dow3,487.523,981.324,063.772.07%16.52%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.23%1.30%7 bps39 bps
US Dollar-DXY89.8492.1492.670.58%3.15%
Crude Oil-CL=F$48.52$73.81$68.51-7.18%41.20%
Gold-GC=F$1,893.10$1,816.701,817.500.04%-3.99%

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: There were 943,000 new jobs added in July, keeping up with the pace of June’s upwardly revised estimate of 938,000 new jobs. Employment in July is up by 16.7 million since April 2020 but is down by 5.7 million, or 3.7%, from its pre-pandemic level in February 2020. Notable job growth in July occurred in leisure and hospitality (+380,000), with over half of the job gain coming from food services and drinking places (+253,000). Job gains also occurred in local government education (+221,000) and private education (+40,000), professional and business services (+60,000), and transportation and warehousing (+50,000). In July, the unemployment rate declined 0.5 percentage point to 5.4%, with the number of unemployed persons falling by 782,000 to 8.7 million. These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the pandemic (3.5% and 5.7 million, respectively, in February 2020). Among the unemployed, the number of persons on temporary layoff dropped by 572,000 to 1.2 million. This measure is down considerably from the recent high of 18.0 million in April 2020 but is 489,000 above the February 2020 level. In July, the number of persons not in the labor force who currently want a job was 6.5 million, little changed over the month but up by 1.5 million since February 2020. In July, the number of employed persons who teleworked because of the pandemic fell to 13.2%, down from 14.4% in the prior month. In July, 5.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This measure is down from 6.2 million in June. The labor force participation rate ticked up 0.1 percentage point to 61.7% in July, and the employment-population ratio increased by 0.4 percentage point to 58.4%. Average hourly earnings increased by $0.11 to $30.54 in July after increasing $0.10 in June. Average hourly earnings are up 4.0% from July 2020. The average work week was unchanged at 34.8 hours in July.
  • The number of claims for unemployment insurance continued to fall. According to the latest weekly totals, as of August 14 there were 2,862,000 workers receiving unemployment insurance benefits, down from the July 17 total of 3,269,000. The unemployment rate for the week ended August 14 was 2.1%, down 0.3 percentage point from the July 17 rate of 2.4%. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. During the week ended August 7, Extended Benefits were available in 10 states/territories: Alaska, California, Connecticut, the District of Columbia, Illinois, Nevada, New Jersey, New Mexico, New York, and Texas; 46 states reported 5,004,753 continued weekly claims for Pandemic Unemployment Assistance benefits (5,246,162 in July), and 47 states reported 3,793,956 continued claims for Pandemic Emergency Unemployment Compensation benefits (4,233,883 in July).
  • FOMC/interest rates: The Federal Open Market Committee did not meet in August. However, at the Jackson Hole Economic Policy Symposium, Federal Reserve Chair Jerome Powell reiterated that the current spike in inflation is largely the result of transitory factors and that the FOMC will continue to hold the current target range for the federal funds rate at its current level. Powell also noted that an eventual reduction of monthly asset purchases is likely to begin some time before the end of 2021.
  • GDP/budget: According to the second estimate, the economy accelerated at an annual rate of 6.6% in the second quarter of 2021 after advancing 6.3% in the first quarter of 2021. Consumer spending, as measured by personal consumption expenditures, increased 11.9% in the second quarter after rising 11.4% in the prior quarter. The personal consumption price index (prices for consumer goods and services) rose 6.5% in the second quarter after climbing 3.8% in the first quarter. Excluding food and energy, the price index increased 6.1%. In the second quarter, fixed investment climbed 3.4% following a 13.0% increase in the first quarter; residential fixed investment fell 11.5% after increasing 13.3% in the first quarter. Exports rose 6.6% in the second quarter after decreasing 2.9% in the first quarter, and imports (which are a negative in the calculation of GDP) increased 6.7% in the second quarter (9.3% in the first quarter).
  • The Treasury budget deficit was $302.1 billion in July, following the June deficit of $174.2 billion. The deficit is 380% larger than the deficit in July 2020. Following the latest increase, the budget deficit through the first 10 months of the current fiscal year widened to $2.54 trillion, 10.0% lower than last year’s deficit over the same period. Compared to last fiscal year, government expenditures have increased 4.0%, while receipts have increased 18.0%.
  • Inflation/consumer spending: Prices at the consumer level continued to advance in July. According to the latest Personal Income and Outlays report, consumer prices rose 0.4% in July after edging up 0.5% in June. Prices have increased 4.2% since July 2020. Excluding food and energy, consumer prices rose 0.3% in July (0.4% in June) and 3.6% since July 2020. Both personal income and disposable (after-tax) personal income increased 1.1% in July. Consumer spending rose 0.3% in July following a 1.1% jump in June.
  • The Consumer Price Index climbed 0.5% in July, the same increase as in June. Over the 12 months ended in July, the CPI rose 5.4%. Food prices increased 0.7% and new vehicle prices rose 1.7%. Energy prices rose 1.6%, with gasoline prices climbing 2.4%. Core prices, excluding food and energy, climbed 0.3% in July and have advanced 4.3% since July 2020. Over the last 12 months, energy prices have risen 23.8%, food prices have increased 3.4%, and prices for used cars and trucks have climbed 41.7%.
  • Prices that producers receive for goods and services continued to climb in July, increasing 1.0% for the second consecutive month. Producer prices increased 7.8% for the 12 months ended in July, the largest yearly gain since November 2010 when 12-month data was first calculated. In July, prices for services rose 1.1% and prices for goods moved up 0.6%. Producer prices less foods, energy, and trade services advanced 0.9% in July and have risen 6.1% since July 2020, the largest 12-month increase since August 2014.
  • Housing: Existing home prices advanced for the second consecutive month after climbing 2.0% in July. Over the past 12 months, existing home sales increased 1.5%. The median existing-home price was $359,900 in July ($363,300 in June), up 17.8% from July 2020. Total housing inventory at the end of July rose 7.3% from June’s supply but is down 12.0% from one year ago. Unsold inventory sits at a 2.6-month supply at the present sales pace, up slightly from the 2.5-month figure recorded in June but down from 3.1 months in July 2020. Sales of existing single-family homes rose 2.7% in July following a 1.4% advance in June. Year over year, sales of existing single-family homes fell 0.8%. The median existing single-family home price was $367,000 in July, down from $370,600 in June.
  • New single-family home sales increased for the first time in four consecutive months after advancing 1.0% in July. Sales of new single-family homes have decreased 27.2% from July 2020. The median sales price of new single-family houses sold in July was $390,500 ($361,800 in June). The July average sales price was $446,000 ($428,700 in June). The inventory of new single-family homes for sale in July represents a supply of 6.2 months at the current sales pace, up slightly from the June estimate of 6.0 months.
  • Manufacturing: Industrial production increased 0.9% in July after advancing 0.2% the previous month. Manufacturing output rose 1.4% after edging down 0.1% in June. About half of the gain in factory output was attributable to a jump of 11.2% for motor vehicles and parts, as a number of vehicle manufacturers trimmed or canceled their typical July shutdowns. In July, mining increased 1.2% (0.5% in June), while utilities slipped 2.1% after advancing 3.1% in June. Total industrial production in July was 6.6% higher than its year-earlier level, but it was 0.2% below its pre-pandemic (February 2020) level.
  • New orders for durable goods decreased 0.1% in July after falling 0.8% in June. Transportation drove July’s decrease, with new orders down 2.2% after advancing 1.4% in June. Excluding transportation, new orders increased 0.7%. Excluding defense, new orders fell 1.2%. New orders for nondefense capital goods declined 8.0% following a 1.6% increase in June. New orders for defense capital goods increased 20.5% in July after decreasing 1.4% in June.
  • Imports and exports:Inflationary pressures at the import level slowed in July. Import prices rose 0.3% following a 1.1% advance in June. Import prices rose 10.2% over the 12 months ended in July (11.2% for the 12 months ended in June). The monthly advance in import prices was the lowest since November 2020. Import fuel prices increased 2.9% in July following a 5.5% jump in June. Import fuel prices advanced 66.5% for the year ended in July (85.1% for the year ended in June). Nonfuel import prices were unchanged in July following a 0.7% advance in June. Export prices increased 1.3% in July after climbing 1.2% in June. For the year ended in July, the price index for exports rose 17.2%. Agricultural export prices fell 1.7% in July following a 1.5% advance in June. Nonagricultural exports rose 1.6% in July after increasing 1.1% in June.
  • The international trade in goods deficit was $86.4 billion in July, down $5.7 billion, or 6.2%, from June. In July, exports increased $2.2 billion, or 1.5%, while imports fell $3.4 billion, or 1.4%. For the 12 months ended in July, exports have risen 27.6%, while imports have increased 19.6%.
  • 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 increased by 6.7% to $75.7 billion. June exports rose 0.6%, while imports increased 2.1%. At $284.0 billion, imports of goods and services were the highest on record. Year over year, the goods and services deficit increased $135.8 billion, or 46.4%, from June 2020. Exports increased $150.9 billion, or 14.3%. Imports increased $286.7 billion, or 21.3%.
  • International markets: Inflationary pressures may be slowing at home and around the world. China’s Consumer Price Index rose 0.3% in July and is up only 1.0% year over year. Prices were flat in the United Kingdom in July and have increased 2.0% since July 2020. However, prices in the Eurozone picked up in August, climbing 0.4% for the month and 3.0% over the past 12 months. Overall economic growth is trending upward as well. Second-quarter GDP for the Eurozone rose 2.0% and is up 13.6% year over year. The United Kingdom’s GDP advanced 4.8% in the second quarter and 22.2% for the year. China’s economy continues to rebound, as its GDP rose 7.9% in the second quarter from a year ago. For August, the STOXX Europe 600 Index gained about 1.2%; the United Kingdom’s FTSE inched up 0.3%; Japan’s Nikkei 225 Index rose 1.1%; and China’s Shanghai Composite Index increased nearly 2.3%.
  • Consumer confidence: According to the latest report from The Conference Board, consumer confidence declined in August for the second consecutive month. The Consumer Confidence Index® stands at 113.8, down marginally from 125.1 in July. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 147.3 in August from 157.2 in July. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, registered 91.4 in August, down from 103.8 in July. According to the report, concerns about the Delta variant, coupled with rising gas and food prices, resulted in a less favorable view of current economic conditions.

Eye on the Month Ahead September could see the economy and the stock market slow down a tad. The number of coronavirus cases continues to rise prompting several foreign countries to consider re-instituting travel restrictions. In addition, the Federal Reserve has indicated that it is likely to begin tapering the bond purchase program in 2021, which could make investors a bit skittish in anticipation of such a move

What I’m Watching This Week – 30 August 2021

The Markets (as of market close August 27, 2021)

The S&P 500 and the Nasdaq recorded multiple record highs last week. Each of the benchmark indexes listed here posted solid gains, led by the small caps of the Russell 2000, which climbed more than 5.0%. Following the conclusion of the Federal Reserve’s much-anticipated Jackson Hole symposium, Fed Chair Jerome Powell reiterated the message that tapering bond purchases would likely begin this year, while interest rates would remain in place for some time. The market sectors generally advanced, with energy climbing 7.4% and financials adding 3.5%. Ten-year Treasury yields rose 5 basis points to 1.31%. Crude oil prices rebounded from the prior week’s dip, rising over 10.0% to $68.72 per barrel. The dollar slid against a basket of currencies, while gold prices advanced for the second consecutive week.

Wall Street rallied to open the week last Monday, as sentiment was bolstered by the Food and Drug Administration approval of the Pfizer COVID-19 vaccine. The Nasdaq closed at a record high after advancing 1.6%. The Russell 2000 climbed 1.9%, the Global Dow rose 1.2%, the S&P 500 gained 0.9%, and the Dow added 0.6%. Energy led the market sectors as growing demand sent crude oil prices up 5.3% to $65.46 per barrel. Treasury yields and the dollar slipped.

Stocks continued to push higher last Tuesday. The S&P 500 reached its 50th record high this year, while the Nasdaq finished above the 15,000 mark for the first time in its history. The Russell 2000 advanced 1.0%, the Global Dow climbed 0.7%, and the Dow inched ahead 0.1%. The energy sector jumped 1.6% to lead the market sectors. Ten-year Treasury yields closed at 1.29%, up 4 basis points from the previous day’s figure. Crude oil prices rose to $67.70 per barrel, while the dollar dipped lower.

Wall Street closed higher for the third consecutive session last Wednesday as the Nasdaq and the S&P 500 reached fresh records. Once again, the Russell 2000 led the market indexes after gaining 0.5%, followed by the Global Dow, the S&P 500, the Nasdaq, and the Dow. The yield on 10-year Treasuries added 5 basis points to reach 1.34%, crude oil prices rose higher, while the dollar dipped lower. Financials, energy, and industrials led the market sectors, which were otherwise mixed.

Stocks reversed course last Thursday with the S&P 500 ending a streak of five straight sessions of gains. Concerns about the attacks in Afghanistan may have prompted the market sell-off. In addition, investors awaited the start of the Federal Reserve’s Jackson Hole symposium, with the expectation that it might shed more light on the time line for the Fed’s tapering of the pandemic-related asset purchase program. The Russell 2000, which had been soaring, lost 1.1%, followed by the Nasdaq, the S&P 500, and the Global Dow, which lost 0.6%. The Dow slipped 0.5%. Treasury yields were unchanged from the day before, crude oil prices fell, while the dollar gained. Each of the market sectors fell, with energy declining 1.5%.

Equities closed higher last Friday with the S&P 500 and the Nasdaq reaching record highs. Treasury yields and the dollar fell, while crude oil prices advanced. Several of the market sectors posted gains, led by energy (2.6%) and communication services (1.6%).

The national average retail price for regular gasoline was $3.145 per gallon on August 23, $0.029 per gallon less than the prior week’s price but $0.963 higher than a year ago. Gasoline production increased during the week ended August 20, averaging 10.2 million barrels per day. U.S. crude oil refinery inputs averaged 16.1 million barrels per day during the week ended August 20; this was 193,000 barrels per day less than the previous week’s average. For the week ended August 20, refineries operated at 92.4% of their operable capacity, up from the prior week’s level of 92.2%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 8/27Weekly ChangeYTD Change
DJIA30,606.4835,120.0835,454.810.95%15.84%
Nasdaq12,888.2814,714.6615,129.502.82%17.39%
S&P 5003,756.074,441.674,509.371.52%20.06%
Russell 20001,974.862,166.812,278.025.13%15.35%
Global Dow3,487.523,963.464,055.612.32%16.29%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.26%1.31%5 bps40 bps
US Dollar-DXY89.8493.4492.68-0.81%3.16%
Crude Oil-CL=F$48.52$62.25$68.7210.39%41.63%
Gold-GC=F$1,893.10$1,784.00$1,821.602.11%-3.78%

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

Last Week’s Economic News

  • The economy expanded at an annualized rate of 6.6% in the second quarter, according to the second estimate of gross domestic product. GDP increased 6.3% in the first quarter. Consumer spending, as measured by personal consumption expenditures, increased 11.9% to drive much of the overall GDP growth. Fixed investment rose 3.4% and exports increased 6.6%. Imports, which are a negative in the calculation of GDP, increased 6.7%. Consumer prices (a measure of inflation) climbed 6.5%, while prices less food and energy advanced 6.1%. Profits of domestic financial corporations increased $53.7 billion in the second quarter, compared with an increase of $1.3 billion in the first quarter.
  • Personal income and disposable (after-tax) personal income rose 1.1% in July. Consumer spending increased 0.3% last month after climbing 1.1% in June. The personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve, rose 0.4% in July after increasing 0.5% in June. Excluding food and energy, prices climbed 0.3% in July following a 0.5% jump in June. Prices for consumer goods and services have risen 4.2% since July 2020.
  • Sales of existing homes rose 2.0% in July. Sales increased 1.5% from a year ago. Inventory of available houses for sale jumped 7.3% last month, helping to drive sales higher. Unsold inventory sits at a 2.6-month supply at the present sales pace, up slightly from the 2.5-month figure recorded in June but down from 3.1 months in July 2020. The median existing-home price in July was $359,900, down from the June price of $363,300 but above the July 2020 price of $305,600. Sales of existing single-family homes increased 2.7% in July, although they are down 0.8% from July 2020. The median existing single-family home price was $367,000 in July, down from the June price of $370,600.
  • Sales of new single-family homes increased 1.0% in July after falling in each of the previous three months. The median price for new single-family homes in July was $390,500 ($370,200 in June). The average sales price was $446,000 ($429,600 in June). While new home sales advanced last month, they were 27.2% below the July 2020 pace. The estimate for new houses for sale at the end of July was 367,000, which represents a supply of 6.2 months at the current sales pace.
  • According to the latest report from the Census Bureau, new orders for durable goods slid 0.1% in July after increasing 0.8% the previous month. Transportation equipment drove the decrease, down 2.2% following two consecutive monthly increases. Excluding transportation, new orders increased 0.7%. Contributing to the decrease in transportation equipment was a 48.9% decrease in new orders for nondefense aircraft and parts. In July, shipments of durable goods rose 2.2%, unfilled orders increased 0.3%, and inventories advanced 0.6%.
  • The advance report on international trade in goods revealed the trade deficit was $86.4 billion in July, down $5.7 billion, or 6.2%, from the June figure. Exports of goods for July were $147.6 billion, $2.2 billion, or 1.5%, more than June exports. Imports of goods for July were $233.9 billion, $3.4 billion, or 1.4%, less than June imports.
  • For the week ended August 21, there were 353,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 14 was 2.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 14 was 2,862,000, a decrease of 3,000 from the prior week’s level, which was revised up by 45,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 872,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 9.5%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended August 7 were Puerto Rico (4.9%), Illinois (3.7%), New Jersey (3.7%), California (3.4%), the District of Columbia (3.2%), New York (3.1%), Connecticut (3.1%), Rhode Island (3.0%), Nevada (2.7%), and the Virgin Islands (2.7%). States and territories with the largest increases in initial claims for the week ended August 14 were Virginia (+6,367), New Mexico (+2,872), the District of Columbia (+757), Georgia (+374), and Nevada (+288), while the largest decreases were in Texas (-7,667), Illinois (-3,023), Kentucky (-2,236), Michigan (-2,026), and Massachusetts (-1,146).

Eye on the Week Ahead

The July employment figures are out this week. Nearly 1.0 million new jobs were added in June, while the unemployment rate fell to 5.4%. July’s figures are not expected to be quite as robust but should be favorable nonetheless.