Tag: finance

What I’m Watching This Week – 23 September 2024

Published on by dredheadz

The Markets (as of market close September 20, 2024)

The interest rate decrease by the Federal Reserve helped drive stocks higher last week. Each of the benchmark indexes listed here closed higher, led by the Russell 2000. Communication services, energy, and utilities were the best performing market sectors, while consumer staples, health care, and real estate lagged. Gold prices surged past $2,600.00 per ounce, hitting a new, record high on Friday. Crude oil prices advanced for the second straight week, while the dollar retreated following the drop in interest rates.

Stocks opened the week with mixed results as investors exercised some caution ahead of the Federal Reserve meeting later in the week. Nevertheless, the Dow rose 0.6%, hitting a new record high, while the Global Dow (0.5%), the Russell 2000 (0.3%), and the S&P 500 (0.1%) also advanced. The tech-heavy NASDAQ saw its rally stop after sliding 0.5%. Bond prices continued to advance with yields moving lower. Ten-year Treasury yields fell 2.9 basis points to 3.62%. Crude oil prices cracked the $70.00 per barrel threshold, closing at $70.45 per barrel. The dollar and gold prices declined.

Wall Street reflected caution last Tuesday as investors remained uncertain about the size of the anticipated interest rate cut. The small caps of the Russell 2000 led the benchmark indexes after climbing 0.7%. The NASDAQ inched up 0.2% and the S&P 500 ticked up less than 0.1%. The Global Dow and the Dow ended the session flat. Ten-year Treasury yields settled at 3.64%. Crude oil prices climbed 1.9% to $71.39 per barrel. The dollar gained 0.2%, while gold prices declined 0.5%.

Despite the Fed lowering interest rates by 50.0 basis points (see below), stocks ended last Wednesday ticking lower. The rate cut is the first in four years, and further adjustments to the Fed’s monetary policy may now focus on the employment sector, which has slowed. The Fed meets two more times this year, and the likelihood of another rate cut of this size is minimal. Among the indexes listed here, only the Russell 2000 closed marginally in the black. The remaining indexes declined, with the Dow, the S&P 500, the NASDAQ, and the Global Dow each falling about 0.3%. Following news of the rate decrease, the dollar inched higher (0.2%), while gold prices fell 0.7%. Ten-year Treasury yields gained 4.3 basis points to close at 3.68%. The rally ended for crude oil prices, which fell 1.7% to $69.99 per barrel.

The interest rate cut from a day earlier boosted stocks last Thursday. Each of the benchmark indexes enjoyed notable gains, with the Dow and S&P 500 recording new record highs. A jump in tech stocks helped propel the NASDAQ 2.5%. The Russell 2000 rose 2.1%, the S&P 500 advanced 1.7%, and both the Dow and the Global Dow increased 1.3%. Ten-year Treasury yields settled at 3.74%, an increase of 5.5 basis points. Crude oil prices advanced 1.6% to $72.07 per barrel. The dollar ticked higher, while gold prices rose 0.5%.

Friday saw stocks close mostly lower, with only the Dow advancing 0.1%. Otherwise, the post-Fed rally waned as the remaining benchmark indexes listed here ended the session in the red. The Russell 2000 fell 1.1%, the NASDAQ dropped 0.4%, while the S&P 500 and the Global Dow each declined 0.2%. The yield on 10-year Treasuries slipped to 3.72%. Crude oil prices dipped 0.3% to $71.77 per barrel. The dollar inched up 0.1%, while gold prices advanced 1.2%.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 9/20Weekly ChangeYTD Change
DJIA37,689.5441,393.7842,063.361.62%11.60%
NASDAQ15,011.3517,683.9817,948.321.49%19.56%
S&P 5004,769.835,626.025,702.551.36%19.55%
Russell 20002,027.072,182.492,227.892.08%9.91%
Global Dow4,355.284,882.104,946.281.31%13.57%
fed. funds target rate5.25%-5.50%5.25%-5.50%4.75%-5.00%-50 bps-50 bps
10-year Treasuries3.86%3.65%3.72%7 bps-14 bps
US Dollar-DXY101.39101.13100.79-0.34%-0.59%
Crude Oil-CL=F$71.30$69.26$71.773.62%0.66%
Gold-GC=F$2,072.50$2,608.70$2,644.901.39%27.62%

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

Last Week’s Economic News

  • The Federal Open Market Committee, by an 11-1 vote, moved to lower the fed funds target rate range by 50.0 basis points to 4.75%-5.00%. The lone dissenting vote was by Governor Michelle Bowman who preferred a 25.0-basis point reduction. The Committee’s statement indicated that economic activity has continued to expand at a solid pace. Job gains have slowed and, while the unemployment rate has advanced, it remained low. In further support of the rate reduction, the Committee noted that it has gained greater confidence that inflation is moving sustainably toward the 2.0% target and that the risks to achieving its employment and inflation goals are roughly in balance. Further adjustments to the target range for the federal funds rate will be based on an assessment of incoming data, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
  • Retail sales inched up 0.1% last month and advanced 2.1% since August 2023. Retail trade sales were up 0.1% in August and up 2.0% over the last 12 months. Nonstore (online) retailer sales were up 1.4% in August and rose 7.8% from last year, while food services and drinking places, which, while unchanged last month, were up 2.7% from August 2023.
  • In August, industrial production rose 0.8% after falling 0.9% in July. Manufacturing output increased 0.9% in August after decreasing 0.7% during the previous month. This pattern was due in part to a recovery in the index of motor vehicles and parts, which jumped nearly 10.0% in August after dropping roughly 9.0% in July. Manufacturing excluding motor vehicles and parts moved up 0.3% in August. Mining climbed 0.8%, while the utilities index was unchanged from July. Total industrial production in August was the same as its year-earlier level. Capacity utilization moved up to 78.0% in August, a rate that is 1.7% below its long-run average.
  • The number of issued residential building permits rose 4.9% in August. Single-family building permits increased 2.8% last month. However, since August 2023, residential building permits have fallen 6.5%. Housing starts in August advanced 9.6% and moved up 3.9% over the last 12 months. Single-family housing starts jumped 15.8% last month. Housing completions rose 9.2% in August and 30.2% above the August 2023 rate. Single-family housing completions declined 5.6% last month.
  • August saw sales of existing homes fall 2.5% from July. Year over year, existing-home sales were down 4.2%. According to the report released by the National Association of Realtors®, despite the recent retraction in sales, lower mortgage rates and increasing inventory should drive sales higher in future months. Housing inventory sat a 4.2-month supply in August, up from the July estimate of 4.1 months. The median existing-home price in August was $416,700, down from July’s price of $421,400 but up from the August 2023 value of $404,200. Single family home sales decreased 2.8% last month and declined 3.3% from the previous year. The median existing-single family home price was $422,100 in August, lower than the July price of $427,200 but well above the August 2023 price of $410,200. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.20% as of September 12, down from 6.35% one week ago and 7.18% one year ago.
  • The national average retail price for regular gasoline was $3.180 per gallon on September 16, $0.056 per gallon under the prior week’s price and $0.698 per gallon less than a year ago. Also, as of September 16, the East Coast price fell $0.064 to $3.085 per gallon; the Midwest price decreased $0.093 to $3.005 per gallon; the Gulf Coast price dipped $0.072 to $2.728 per gallon; the Rocky Mountain price rose $0.043 to $3.400 per gallon; and the West Coast price increased $0.032 to $4.136 per gallon.
  • For the week ended September 14, there were 219,000 new claims for unemployment insurance, a decrease of 12,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended September 7 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 7 was 1,829,000, a decrease of 14,000 from the previous week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates for the week ended August 31 were New Jersey (2.7%), Rhode Island (2.2%), California (2.0%), Puerto Rico (1.9%), Minnesota (1.7%), New York (1.7%), Washington (1.7%), Massachusetts (1.6%), Nevada (1.6%), Connecticut (1.5%), Illinois (1.5%), and Pennsylvania (1.5%). The largest increases in initial claims for unemployment insurance for the week ended September 7 were in Nebraska (+628), Wisconsin (+504), Iowa (+403), Virginia (+303), and Minnesota (+248), while the largest decreases were in New York (-2,878), California (-1,370), Ohio (-1,086), Michigan (-1,042), and Georgia (-891).

Eye on the Week Ahead

The final estimate for second quarter GDP is out this week. The prior estimate had the economy expanding at an annualized rate of 3.0%. The report on Personal Income and Outlays for August is also available this week. July saw personal income rise 0.3%, while personal consumption expenditures advanced 0.5%. Consumer prices rose 0.2% for July and 2.5% over the last 12 months ended in July.

What I’m Watching This Week – 16 September 2024

Published on by dredheadz

The Markets (as of market close September 13, 2024)

Equities rallied notably last week as investors awaited this week’s Federal Reserve meeting in anticipation of at least a 25.0-basis-point reduction in interest rates. Nine of the 11 market sectors ended last week higher, led by information technology. Only financials and energy lagged. The yield on 10-year Treasuries slipped to its lowest level since May 2023. Crude oil prices posted the first weekly advance in over a month. The dollar fell amid expectations of the aforementioned interest rate cut.

Investors took advantage of devalued stocks last Monday, sending values higher. Each of the benchmark indexes listed here gained ground, with the Dow, the NASDAQ, and the S&P 500 all climbing 1.2%. The Global Dow advanced 0.4%, while the Russell 2000 ticked up 0.3%. Ten-year Treasury yields continued the prior week’s tailspin, falling to 3.69%. Prices for crude oil gained 1.5% to close at $68.68 per barrel. The dollar and gold prices each increased 0.4%.

Equities closed mixed last Tuesday. For the second straight day, tech shares helped drive the NASDAQ (0.8%) and the S&P 500 (0.5%) higher, while bank and energy stocks dragged the Dow (-0.2%) lower. The Global Dow dipped 0.2%, while the small caps of the Russell 2000 ended the session flat. Investors were occupied with the presidential debate that evening, plus the Consumer Price Index report released on Wednesday. Bond prices continued to move higher, pulling yields down. Ten-year Treasury yields fell 5.1 basis points to 3.64%. Crude oil prices declined to $66.24 per barrel, the lowest price since 2021. For the last several months, oil prices have been impacted by weakening demand in China, coupled with OPEC’s 2024 and 2025 downwardly revised demand projections. The dollar edged up 0.1%, and gold prices rose 0.5%.

Stocks climbed higher last Wednesday following the presidential debate and a favorable CPI report. Once again, tech stocks led the charge, helping to propel each of the benchmark indexes listed here. The NASDAQ rose 2.2%, followed by the S&P 500 (1.1%), the Russell 2000 and the Dow (0.3%), and the Global Dow (0.1%). Crude oil prices rallied, climbing 2.2% to $67.19 per barrel. Yields on 10-year Treasuries ticked up to 3.65%. The dollar inched up 0.1%, while gold prices slipped 0.1%. Investors were encouraged by the CPI, which came in at an annual rate of 2.5%, the lowest since February 2021.

Wall Street enjoyed a second straight positive day of trading last Thursday. Stocks saw gains in most sectors, with technology, megacaps, and AI shares moving higher. The small caps of the Russell 2000 (1.2%) led the benchmark indexes, followed by the Global Dow (1.1%), the NASDAQ (1.0%), the S&P 500 (0.8%), and the Dow (0.6%). Ten-year Treasury yields inched up to 3.68%. Crude oil prices rose 2.8% to $69.18 per barrel. The dollar lost 0.4%, while gold prices advanced 1.8%.

Stocks closed the week higher last Friday. Each of the benchmark indexes posted solid gains, with the Russell 2000 leading the charge after climbing 2.5%. The Dow and the NASDAQ added 0.7%, the Global Dow rose 0.6%, and the S&P 500 advanced 0.5%. Yields on 10-year Treasuries fell to 3.65%. Crude oil prices ticked up 0.4% to $69.26 per barrel. The dollar dipped 0.2%, while gold prices rose 1.1%.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 9/13Weekly ChangeYTD Change
DJIA37,689.5440,345.4141,393.782.60%9.83%
NASDAQ15,011.3516,690.8317,683.985.95%17.80%
S&P 5004,769.835,408.425,626.024.02%17.95%
Russell 20002,027.072,091.412,182.494.35%7.67%
Global Dow4,355.284,782.564,882.102.08%12.10%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%3.71%3.65%-6 bps-21 bps
US Dollar-DXY101.39101.18101.13-0.05%-0.26%
Crude Oil-CL=F$71.30$68.14$69.261.64%-2.86%
Gold-GC=F$2,072.50$2,524.00$2,608.703.36%25.87%

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

Last Week’s Economic News

  • The Consumer Price Index increased 0.2% in August and 2.5% over the last 12 months. This is the smallest 12-month increase since February 2021. Excluding food and energy prices, the CPI rose 0.3% last month (0.2% in July) and 3.2% since August 2023. The index for shelter rose 0.5% in August and was the main factor in the all items increase. The food index increased 0.1% in August after rising 0.2% in July. The energy index fell 0.8% over the month after being unchanged the preceding month. Over the last 12 months, prices for food rose 2.1%, energy fell 4.0%, and shelter rose 5.2%.
  • Prices at the producer level increased 0.2% in August, in line with expectations. Over the last 12 months, producer prices rose 1.7%. The August increase was attributable to a rise in prices for services. Nearly 60.0% of the increase in prices for services was due to a 0.3% advance in prices for services less trade, transportation, and warehousing. Prices for goods were unchanged last month. Goods prices less foods, energy, and trade services advanced 0.3% in August, the same as in July. For the 12 months ended in August, prices less foods, energy, and trade services moved up 3.3%.
  • According to the monthly Treasury statement of receipts and outlays, the August deficit was $380.00 billion, well above the $244.00 billion deficit for July and higher than the August 2023 surplus of $89.00 billion. With only one more month left in the fiscal year, the total deficit sat at $1,897.00 trillion, $373.00 billion above the deficit over the same period last fiscal year.
  • U.S. import prices declined 0.3% in August after increasing 0.1% in both June and July. The August monthly decline was the largest drop since December 2023, when prices fell 0.7%. Most of the August decrease in import prices is attributable to import fuel prices, which decreased 3.0% in August after increasing 1.1% the previous month. The August drop in fuel prices was the largest one-month decline since prices fell 8.0% in December 2023. Despite the August decline, import prices rose 0.8% over the past 12 months. Prices for U.S. exports fell 0.7% in August after advancing 0.5% the previous month. Lower prices for nonagricultural and agricultural exports each contributed to the decrease in export prices in August. Over the last 12 months, export prices declined 0.7%, the first year-over-year price drop since April 2024.
  • The national average retail price for regular gasoline was $3.236 per gallon on September 9, $0.053 per gallon under the prior week’s price and $0.586 per gallon less than a year ago. Also, as of September 9, the East Coast price fell $0.084 to $3.149 per gallon; the Midwest price decreased $0.073 to $3.098 per gallon; the Gulf Coast price dipped $0.044 to $2.800 per gallon; the Rocky Mountain price declined $0.044 to $3.357 per gallon; and the West Coast price rose $0.003 to $4.104 per gallon.
  • For the week ended September 7, there were 230,000 new claims for unemployment insurance, an increase of 2,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 31 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 31 was 1,850,000, an increase of 5,000 from the previous week’s level, which was revised up by 7,000. States and territories with the highest insured unemployment rates for the week ended August 24 were New Jersey (2.8%), Rhode Island (2.6%), California (2.1%), Puerto Rico (2.0%), Connecticut (1.9%), Minnesota (1.9%), Massachusetts (1.8%), New York (1.8%), Nevada (1.7%), Pennsylvania (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended August 31 were in Massachusetts (+2,230), Wisconsin (+820), Ohio (+806), Pennsylvania (+724), and Washington (+399), while the largest decreases were in Texas (-1,396), New York (-1,185), North Dakota (-919), California (-833), and Indiana (-796).

Eye on the Week Ahead

The focus will be squarely on the Federal Open Market Committee, which meets this week for the first time since July. Many observers predict that the Fed will cut rates by 50.0 basis points in light of inflation moving closer to the 2.0% Fed target and the slowdown in employment.

What I’m Watching This Week – 12 August 2024

Published on by dredheadz

The Markets (as of market close August 9, 2024)

Market volatility continued last week as stocks tumbled Monday and Wednesday, only to rebound at the end of last week, but not enough to avoid closing in the red for the second week in a row. Each of the benchmark indexes listed here lost value, with the small caps of the Russell 2000 falling the furthest. Despite the recent downturn, the indexes remain ahead year to date. Among the market sectors, only industrials and communication services closed higher, while materials and utilities shed the most value. Crude oil prices ended a losing streak, gaining nearly 4.0% last week. The dollar was flat, while gold prices slipped lower. Bond prices fluctuated throughout the week, ultimately settling lower, which drove yields higher.

The stock sell-off continued last Monday on increasing worries over a U.S. economic slowdown. Markets worldwide took a hit as investors feared that weak economic data and mediocre corporate earnings could be signs of a recession. The S&P 500 (-3.0%) and the Dow (-2.6%) had their worst day in over two years. The Nasdaq (-3.4%) endured its worst start to a month since 2008. The Global Dow (-3.4%) and the Russell 2000 (-3.3%) also slid lower. Ten-year Treasury yields headed to their lowest levels in a year after settling at 3.78%. Crude oil prices closed at $72.94 per barrel. The dollar slid 0.4%, while gold prices fell 0.8%.

The markets moved higher last Tuesday as investors took advantage of equities that had fallen in value. The Russell 2000 led the benchmark indexes, gaining 1.2%, followed by the Global Dow (1.1%), the Nasdaq (1.0%), and the Dow (0.8%). Bond prices fell, driving yields higher, with 10-year Treasuries gaining 10.3 basis points to close at 3.88%. Crude oil prices settled at $73.09 per barrel. The dollar edged higher, while gold prices fell 0.6%.

Tuesday’s market rebound proved to be short-lived as stocks trended lower by the close of trading last Wednesday. The Russell 2000 lost about 1.4% and the Nasdaq fell 1.1%. The S&P 500 declined 0.8% and the Dow dipped 0.6%. The Global Dow rose 0.5%. Ten-year Treasury yields marched toward 4.00%, ending the session just short at 3.96%. Crude oil prices advanced nearly 3.0% to $75.37 per barrel. The dollar gained 0.2%, while gold prices fell 0.2%.

In what turned into a roller coaster of a week, stocks jumped higher last Thursday, led by a 2.9% increase by the Nasdaq. The Russell 2000 advanced 2.4%, the S&P 500 gained 2.3%, the Dow rose 1.8%, and the Global Dow increased 1.0%. Weekly jobless claims unexpectedly fell 17,000 (see below), which brightened the mood of investors. Yields on 10-year Treasuries settled at 3.99% after gaining 0.3 basis points. Crude oil prices rose 1.1% to $76.04 per barrel. The dollar was unchanged. Gold prices gained 1.3%.

Large caps and tech shares rose higher, while small caps lagged to close out last week. There was no economic data released last Friday, so investors could focus on inflation data set to be released this week. The Global Dow led the indexes, gaining 0.6%, followed by the Nasdaq and the S&P 500, which both advanced 0.5%. The Dow inched up 0.1%, while the Russell 2000 fell 0.2%. The market sectors mostly advanced, with only industrials and materials falling lower. Ten-year Treasury yields fell to 3.94% as bond prices climbed higher. Crude oil prices advanced 1.0% to $76.97 per barrel. Gold prices edged up 0.3%, while the dollar inched lower.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 8/9Weekly ChangeYTD Change
DJIA37,689.5439,737.2639,497.54-0.60%4.80%
Nasdaq15,011.3516,776.1616,745.30-0.18%11.55%
S&P 5004,769.835,346.565,344.16-0.04%12.04%
Russell 20002,027.072,109.312,080.92-1.35%2.66%
Global Dow4,355.284,639.084,629.29-0.21%6.29%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%3.79%3.94%15 bps8 bps
US Dollar-DXY101.39103.22103.15-0.07%1.74%
Crude Oil-CL=F$71.30$74.11$76.973.86%7.95%
Gold-GC=F$2,072.50$2,480.00$2,469.50-0.42%19.16%

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

  • While the manufacturing sector may have slowed in July, the services sector saw an expansion of business activity last month. A rise in new orders has encouraged companies to take on extra staff. Input cost inflation accelerated, but the increased costs were passed on to consumers. The S&P Global US Services PMI® business Activity Index posted a reading of 55.0, signaling monthly expansion in services activity, which has continued for 18 months.
  • The goods and services trade deficit was $73.1 billion in June (the most recent data available), down $1.9 billion, or 2.5%, from the previous month. Exports, at $265.9 billion, increased by 1.5%, while imports, at $339.0 billion, advanced 0.6%. The June decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.5 billion to $97.4 billion and a decrease in the services surplus of $0.6 billion to $24.2 billion. Year to date, the goods and services deficit increased $22.7 billion, or 5.6%, from the same period in 2023. Exports increased $58.0 billion, or 3.8%. Imports increased $80.7 billion, or 4.2%.
  • The national average retail price for regular gasoline was $3.448 per gallon on August 5, $0.036 per gallon under the prior week’s price and $0.380 per gallon less than a year ago. Also, as of August 5, the East Coast price fell $0.020 to $3.375 per gallon; the Midwest price decreased $0.048 to $3.428 per gallon; the Gulf Coast price dipped $0.084 to $3.010 per gallon; the Rocky Mountain price advanced $0.040 to $3.435 per gallon; and the West Coast price decreased $0.026 to $4.080 per gallon.
  • For the week ended August 3, there were 233,000 new claims for unemployment insurance, a decrease of 17,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 27 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 27 was 1,875,000, an increase of 6,000 from the previous week’s level, which was revised down by 8,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended July 20 were New Jersey (2.8%), Rhode Island (2.6%), Puerto Rico (2.4%), California (2.3%), Minnesota (2.0%), Pennsylvania (1.9%), Connecticut (1.8%), Illinois (1.7%), Massachusetts (1.7%), New York (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended July 27 were in Michigan (+4,027), Missouri (+3,410), Massachusetts (+2,127), Virginia (+637), and Minnesota (+487), while the largest decreases were in Texas (-6,607), New York (-2,396), Ohio (-2,377), Florida (-1,587), and Tennessee (-1,488).

Eye on the Week Ahead

Inflation data for July is released this week. The Consumer Price Index dipped 0.1% in June, and investors will be looking for similar results in July. Prices producers paid, on the other hand, rose 0.2% in June.

Monthly Market review – July 2024

Published on by dredheadz

The Markets (as of market close July 31, 2024)

Stocks closed mostly higher in July. Tech shares, including AI stocks, which had been a bellwether for much of the year, retreated in July, dragging the Nasdaq to its worst July performance since 2014. The remaining indexes fared better, with the Russell 2000 enjoying its best month since December 2023 and its best July since 2022. The Dow also had its best month of the year. Most of the market sectors advanced in July, with the notable exceptions of communication services (-4.5%) and information technology (-2.4%). Real estate (7.5%), financials (6.0%), and utilities (5.9%) outpaced the remaining sectors.

Inflationary data showed price pressures stabilized in June. The 12-month interest rates of the Consumer Price Index and the Personal Consumption Expenditures (PCE) Price Index declined. Prices for commodities that are prevalent for most households, such as food at home, gasoline, new and used motor vehicles, and apparel, changed very little over the year. The PCE price index, the preferred barometer of the Federal Reserve, slowed to 2.5% for the year ended in June (see below) as it inches closer to the Fed’s 2.0% target inflation rate.

Growth of the U.S. economy continued at a modest pace, despite the Fed’s restrictive monetary policy. The gross domestic product (GDP) exceeded expectations after increasing 2.8% in the second quarter, following a 1.4% increase in the first quarter (see below). Consumer spending, the largest contributor in the calculation of GDP, rose 2.8%, with spending rising in durable goods, nondurable goods, and services. Private investments, another key component of GDP, also increased. Consumer confidence (see below) grew in July after trending lower in May.

Job growth notably slowed over the past several months. Although job gains exceeded expectations in June (see below), downward revisions to estimates for April and May clearly show that average monthly gains in the second quarter of the year (177,000) are well below the average gains in the first quarter (267,000). Wage growth has changed little throughout the year. The 12-month rate for the period ended in June (3.9%) was only 0.2 percentage points lower than the rate for the period ended in May. New weekly unemployment claims decreased from a year ago, while total claims paid increased (see below).

Nearing the midpoint of Q2 corporate earnings season, S&P 500 companies are reporting mixed results. About 41% of the S&P 500 companies have reported results. Of those companies, 78% reported earnings per share (EPS) above estimates, which is in line with the five-year average of 77% and higher than the 10-year average of 74%. Overall, as of July 26, the index reported an earnings growth rate of 9.8%, which is above the 8.9% growth rate for the three months ended in June. Eight of the 11 sectors are reporting year-over-year growth, with four of these eight sectors reporting double-digit growth: communication services, information technology, financials, and health care. On the other hand, three sectors are reporting a year-over-year decline in earnings, led by the Materials sector.

Sales of both existing homes and new homes declined in July (see below). Higher mortgage rates have slowed sales, with inventory expanding and the sales process lengthening. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.77% as of July 18. That’s down from 6.89% one week ago and 6.78% one year ago.

Industrial production expanded in June for the second straight month (see below). Manufacturing output increased in June and was 1.1% above its year-earlier level. Within manufacturing, durable manufacturing was unchanged in June, while nondurable manufacturing increased 0.8%. According to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, the manufacturing sector perked up in June, while the services sector saw business accelerate at a quicker pace than in May.

Bond yields gained as bond prices declined in July. Ten-year Treasury yields generally closed the month lower. The two-year Treasury yield fell nearly 50 basis points to about 4.26% on the last day of July. The dollar slipped lower against a basket of world currencies. Gold prices climbed higher. Crude oil prices declined, influenced by ongoing unrest in the Middle East and waning Chinese demand. The retail price of regular gasoline was $3.484 per gallon on July 29, $0.046 above the price a month earlier but $0.273 less than the price a year ago.

Stock Market Indexes

Market/Index2023 ClosePrior MonthAs of July 31Monthly ChangeYTD Change
DJIA37,689.5439,118.8640,842.794.41%8.37%
Nasdaq15,011.3517,732.6017,599.40-0.75%17.24%
S&P 5004,769.835,460.485,522.301.13%15.78%
Russell 20002,027.072,047.692,254.4810.10%11.22%
Global Dow4,355.284,677.144,811.502.87%10.48%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%4.34%4.10%-24 bps24 bps
US Dollar-DXY101.39105.88104.09-1.69%2.66%
Crude Oil-CL=F$71.30$81.51$78.53-3.66%10.14%
Gold-GC=F$2,072.50$2,335.00$2,494.206.82%20.35%

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

Latest Economic Reports

  • Employment: June jobs data came in above expectations. Total employment increased by 206,000 in June, similar to the average monthly gain of 220,000 over the prior 12 months. The June increase followed downward revisions in both April and May, which totaled 111,000. In June, job gains occurred in government, health care, social assistance, and construction. In June, the unemployment rate increased 0.1 percentage point to 4.0% and was 0.3 percentage point above the rate from a year earlier (3.7%). The number of unemployed persons was relatively unchanged at 6.6 million. In June, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.5 million, rose by 166,000 and accounted for 22.2% of all unemployed people. The labor force participation rate, at 62.6%, was 0.1 percentage point above the prior month’s estimate, while the employment-population ratio, at 60.1%, was unchanged from the previous month. In June, average hourly earnings increased by $0.10, or 0.3%, to $35.00. Since June 2023, average hourly earnings rose by 3.9%, which is down from the May figure of 4.1%. The average workweek was unchanged at 34.3 hours in June for the third straight month.
  • There were 235,000 initial claims for unemployment insurance for the week ended July 20, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,851,000. A year ago, there were 231,000 initial claims, while the total number of workers receiving unemployment insurance was 1,765,000.
  • FOMC/interest rates: The Federal Open Market Committee met at the end of July. Following that meeting, the Committee kept interest rates at their current levels. However, the meeting statement indicated that, although economic activity continued to expand at a solid pace, job gains had moderated, and the unemployment rate had moved up but remained low. In addition, inflation had eased but remained somewhat elevated. The FOMC noted that while some further progress had been made toward achieving the Committee’s 2.0% target, they are still looking for further evidence that inflation is moving sustainably toward 2.0%. Nevertheless, it appears that, unless inflationary pressures spike, the Committee is likely to consider reducing interest rates following its September meeting.
  • GDP/budget: The economy, as measured by gross domestic product, accelerated at an annualized rate of 2.8% in the second quarter of 2024, according to the initial estimate from the Bureau of Economic Analysis. GDP increased 1.4% in the first quarter. While the second-quarter estimate is based on incomplete data, it, nevertheless, rose by more than expected. Personal consumption expenditures rose 2.3% in the second quarter compared to a 1.5% increase in the previous quarter. Consumer spending on goods increased 2.5%, while spending on services rose 2.2%. Gross domestic investment advanced 8.4% in the second quarter, well above the 4.4% increase in the first quarter. Nonresidential (business) fixed investment advanced 5.2% in the second quarter (4.4% in the first quarter), while residential fixed investment decreased 1.4% compared to a 16.0% increase in the first quarter. Exports climbed 2.0%, while imports, which are a negative in the calculation of GDP, increased 6.9%. Consumer prices rose 2.6% in the second quarter, compared with an increase of 3.4% in the previous quarter. Excluding food and energy prices, the PCE price index increased 2.9% compared with an increase of 3.7% in the first quarter.
  • The federal budget deficit in June was $66.0 billion following May’s surplus of $347.0 billion. In June, government receipts totaled $466.0 billion, while government outlays were $532.0 billion. Through the first nine months of fiscal year 2024, the total deficit sits at $1,268.0 trillion, which is roughly $125.0 billion lower than the deficit through the first nine months of the previous fiscal year.
  • Inflation/consumer spending: Personal income increased 0.2% in June (0.4% in May). Disposable personal income (less taxes) also rose 0.2% (0.4% in May). Personal spending, as measured by personal consumption expenditures, rose 0.3% in June (0.4% in May). The PCE price index, a measure of inflation, increased 0.1% in June after registering no gain in May. Excluding food and energy, the PCE price index increased 0.2% (0.1% in May). From a year ago, the PCE price index rose 2.5% (0.1% less than the May estimate) and 2.6% when excluding food and energy.
  • The Consumer Price Index (CPI) declined 0.1% in June after being unchanged in May. Over the 12 months ended in June, the CPI rose 3.0%, down 0.3 percentage point from the 12-month period ended in May. Excluding food and energy, the CPI rose 0.1% in June, (0.2% in May), and 3.3% from June 2023, which is the smallest 12-month increase since April 2021. In June, prices for food rose 0.2% (2.2% for the year), while prices for shelter increased 0.2% (the smallest monthly increase since August 2021) and 5.2% over the past 12 months, which is the lowest year-over-year increase since the period ended in April 2022. Energy prices declined 2.0% in June, while gasoline prices decreased 3.8%. The Fed should pay particular attention to the decline in shelter costs, which compose about one-third of the CPI basket of goods and services.
  • While prices paid by consumers may have moderated in June, prices that producers received for goods and services increased 0.2% in June after being unchanged in May. The June increase was attributable to a 0.6% jump in prices for services. Prices for goods fell 0.5% in June after declining 0.8% in May. Nearly all of the June increase in prices for services was attributable to a 1.9% increase in margins for trade services, which measure changes in margins received by wholesalers and retailers. Prices for gasoline declined 5.8% in June. Over the last 12 months, producer prices have increased 2.6%, up from 2.4% for the 12 months ended in May. Excluding food and energy, producer prices increased 3.0% for the year ended in June, which is the highest 12-month increase since April 2023.
  • Housing: Sales of existing homes fell 5.4% in June and 5.4% over the last 12 months. According to the National Association of Realtors® (NAR), the market for existing homes is slowly shifting from a seller’s market to a buyer’s market. The pace of sales is waning slightly and sellers are receiving fewer offers. Inventory is rising on a national basis. Unsold inventory of existing homes in June represented a 4.1-month supply at the current sales pace, up from 3.7 months in May. The median existing-home price was at an all-time high of $426,900 in June, up from the May estimate of $417,200, and 4.1% above the June 2023 price of $410,100. Sales of existing single-family homes decreased 5.1% in June and 4.3% from the prior year. The median existing single-family home price was $432,700 in June, up from $422,400 in May and well above the June 2023 estimate of $415,700.
  • New single-family home sales also declined in June, falling 0.6% below the May estimate and 7.4% under the June 2023 rate. The median sales price of new single-family houses sold in June was $417,300 ($407,100 in May). The June average sales price was $487,200 ($504,500 in May). The inventory of new single-family homes for sale in June represented a supply of 9.3 months at the current sales pace, up from 9.1 months in May.
  • Manufacturing: Industrial production rose 0.6% in June, following a 0.9% advance in May. Manufacturing output increased 0.4% in June after climbing 1.0% in May. Mining increased 0.3% in June, while utilities advanced 2.8%. For the 12 months ended in June, total industrial production advanced 1.6% from its year-earlier level. Over the same period, manufacturing increased 1.1%, mining decreased 0.6%, while utilities increased 7.9%.
  • New orders for durable goods declined 6.6% in June, following four consecutive monthly increases. Excluding transportation, new orders increased 0.5% in June. Excluding defense, new orders fell 7.0%. Transportation equipment, down 20.5%, drove the overall decrease in new orders. Cancellations of new orders for private aircraft largely contributed to the drop in transportation equipment. In fact, new orders for nondefense aircraft and parts fell 127.2% in June.
  • Imports and exports: U.S. import prices were unchanged in June after decreasing 0.2% in May. Lower import fuel prices (-1.0%) in June offset higher nonfuel prices (0.2%). Import prices advanced 1.6% over the last 12 months, the largest 12-month increase since December 2022. Export prices decreased 0.5% in June after declining 0.7% the previous month. The June and May drops were the first one-month decreases since December 2023. Lower prices for nonagricultural exports in both months more than offset higher agricultural prices. Despite the recent declines, prices for exports advanced 0.7% over the past 12 months.
  • The international trade in goods deficit was $96.8 billion in June, down $2.5 billion, or 2.5%, from May. Exports of goods were $172.3 billion in June, $4.3 billion, or 2.5%, more than in May. Imports of goods were $269.2 billion in June, $1.7 billion, or 0.7%, above the May estimate. Since June 2023, exports increased 5.7%, while imports increased 6.9%.
  • The latest information on international trade in goods and services, released July 3, is for May and revealed that the goods and services trade deficit was $75.1 billion, up $0.6 billion, or 0.8%, from the April deficit. May exports were $261.7 billion, 0.7% less than April exports. May imports were $336.7 billion, 0.3% below April’s estimate. Year to date, the goods and services deficit increased $14.4 billion, or 4.2%, from the same period in 2023. Exports increased $42.8 billion, or 3.4%. Imports increased $57.2 billion, or 3.6%.
  • International markets: Global inflation seems to be trending lower and some central banks are beginning to ease interest rate restrictions in response. The national banks of China and Canada cut interest rates in July, while there’s an increasing likelihood that the Bank of England will follow suit in early August. On the other hand, the Bank of Japan raised its benchmark interest rate, but not in response to growing inflationary concerns. Instead, the decision to hike rates was due to concerns over the historically weak yen. Japanese officials are hopeful that raising interest rates could push up the yen and spur economic growth. For July, the STOXX Europe 600 Index rose 0.72%; the United Kingdom’s FTSE gained 2.3%; Japan’s Nikkei 225 Index fell 3.6%; and China’s Shanghai Composite Index declined 1.5%.
  • Consumer confidence: Consumer confidence rose in July to 100.3, from a downwardly revised 97.8 in June, according to the Conference Board Consumer Confidence Index®. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 133.6 in June, down from 135.3 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, increased to 78.2 in July, up from 72.8 in June. The Expectations Index has been below 80 (the threshold which usually signals a recession ahead) for six consecutive months.

Eye on the Month Ahead

All eyes will be on the inflation data released in August for July. Inflationary pressures resumed a downward trend, and if it continues, the Fed, which does not meet in August, may be more inclined to lower interest rates when it meets next in September.

What I’m Watching This Week – 29 July 2024

Published on by dredheadz

The Markets (as of market close July 26, 2024)

Stocks were mixed last week, with the Dow and the Russell 2000 adding value, while the Nasdaq, the S&P 500, and the Global Dow ended the week in the red. Tech shares took a hit as investors prepared for this week’s earnings data from four megacap giants. For the week, communication services, information technology, and energy closed lower among the market sectors. Health care and utilities posted the largest gains. The June personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, was somewhat encouraging (see below). While the data is not favorable enough for the Fed to lower interest rates next week, it is trending in the right direction to lead to a possible interest rate cut in September. Crude oil prices declined on rising expectations of a cease-fire in Gaza and growing concerns on waning demand in China.

Tech shares rebounded from last week’s sell-off last Monday as traders assessed the political landscape after President Joe Biden ended his bid for re-election. The small caps of the Russell 2000 (1.7%) and the Nasdaq (1.6%) led the benchmark indexes listed here, while the S&P 500 advanced 1.1%. The Global Dow climbed 0.5%, and the Dow added 0.3%. Yields on 10-year Treasuries ticked up 2.1 basis points to 4.26%. Crude oil prices dipped to $79.95 per barrel. The dollar and gold prices moved marginally.

Last Tuesday saw stocks edge lower as investors awaited earnings data from major tech companies. Of the benchmark indexes listed here, only the Russell 2000 added value after gaining 1.0%. The remaining indexes dipped 0.2% or less. Ten-year Treasury yields slid to 4.23%. Crude oil prices continued to fall, dropping $1.13 to close at $77.27 per barrel. The dollar inched up 0.1%, while gold prices rose 0.6%.

Stocks fell last Wednesday after underwhelming megacap earnings led to a tech sell-off. The Nasdaq (-3.6%) suffered its worst single trading day since October 2022, while the S&P 500 (-2.3%) had its worst day since December 2022. The Russell 2000 fell 2.1%, the Dow dropped 1.3%, and the Global Dow lost 0.9%. Ten-year Treasury yields rose 4.7 basis points to 4.28%. Crude oil prices ended several days of declines, rising to $77.54 per barrel. The dollar dipped 0.1%, and gold prices fell 0.3%.

The Nasdaq (-0.9%) continued its tailspin last Thursday, while the small caps of the Russell 2000 gained 1.3%. The Dow ended the session up 0.2%. The Global Dow (-0.7%) and the S&P 500 (-0.5%) declined. Bond prices rose, pulling yields lower, with the 10-year note falling 3.0 basis points to 4.25%. Crude oil prices increased for the second straight day, settling at $78.12 per barrel. The dollar was flat, while gold prices slid 2.3%.

Stocks enjoyed a solid day last Friday, with each of the benchmark indexes posting gains. The Russell 2000 advanced 1.7%, followed by the Dow (1.6%), the S&P 500 (1.1%), the Nasdaq (1.0%), and the Global Dow (0.9%). Ten-year Treasury yields slipped to 4.20%. Crude oil prices fell to $76.81 per barrel. The dollar was flat, while gold prices rose 1.4%.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 7/26Weekly ChangeYTD Change
DJIA37,689.5440,287.5340,589.340.75%7.69%
Nasdaq15,011.3517,726.9417,357.88-2.08%15.63%
S&P 5004,769.835,505.005,459.10-0.83%14.45%
Russell 20002,027.072,184.352,260.073.47%11.49%
Global Dow4,355.284,760.354,753.88-0.14%9.15%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%4.23%4.20%-3 bps34 bps
US Dollar-DXY101.39104.38104.31-0.07%2.88%
Crude Oil-CL=F$71.30$80.26$76.81-4.30%7.73%
Gold-GC=F$2,072.50$2,401.10$2,385.40-0.65%15.10%

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

Last Week’s Economic News

  • According to the first, or advanced, estimate gross domestic product increased 2.8% in the second quarter. GDP rose 1.4% in the first quarter. The increase in GDP primarily reflected increases in consumer spending (2.3%), private inventory investment (8.4%), and nonresidential fixed investment (5.2%). Imports (6.9%), which are a subtraction in the calculation of GDP, increased. The personal consumption expenditures (PCE) price index, a measure of inflation, increased 2.6%, compared with an increase of 3.4% in the first quarter. Excluding food and energy prices, the PCE price index increased 2.9%, compared with an increase of 3.7% in the previous quarter.
  • The PCE price index inched up 0.1% in June and 2.5% over the last 12 months. In May, the PCE price index was unchanged, and the 12-month rate was 2.6%. Excluding food and energy, the PCE price index rose 0.2% in June and 2.6% for the year. Last month, both personal income and disposable (after-tax) personal income rose 0.2%. Personal consumption expenditures, a measure of consumer spending, advanced 0.3% in June.
  • New orders for manufactured durable goods decreased 6.6% in June following four consecutive monthly increases. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders decreased 7.0%. Transportation equipment, down two of the last three months, drove the overall decrease, falling 20.5%. New orders for nondefense capital goods fell 22.4% last month, while new orders for defense capital goods increased 6.1%.
  • The international trade in goods deficit decreased 2.5% in June. Exports of goods in June rose 2.5%. Imports of goods in June inched up 0.7%.
  • Existing-home sales slumped in June, falling 5.4% below the May rate and 5.4% below the estimate from a year earlier. According to the National Association of Realtors®, homes are sitting on the market a bit longer, and sellers are receiving fewer offers. Total housing inventory was at a 4.1-month supply in June, up from 3.7 months in May. The last time unsold inventory posted a four-month supply was May 2020. The median existing-home sales price in June, at $426,900, reached a new record high, rising from $417,200 in May and well above the June 2023 price of $410,100. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.77% as of July 18. That’s down from 6.89% one week ago and 6.78% one year ago. Sales of existing single-family homes declined 5.1% from a month earlier and dropped 4.3% from June 2023.
  • Sales of new single-family homes fell 0.6% in June from a month earlier and were 7.4% below the June 2023 estimate. The median sales price of new houses sold in June 2024 was $417,300. The average sales price was $487,200. Inventory represented a supply of 9.3 months at the current sales rate. The median existing single-family home price in June was $432,700, up from May’s estimate of $422,400 and above the June 2023 price of $415,700.
  • The national average retail price for regular gasoline was $3.471 per gallon on July 22, $0.025 per gallon under the prior week’s price, and $0.125 per gallon less than a year ago. Also, as of July 22, the East Coast price fell $0.057 to $3.409 per gallon; the Midwest price increased $0.057 to $3.426 per gallon; the Gulf Coast price decreased $0.063 to $3.047 per gallon; the Rocky Mountain price declined $0.063 to $3.323 per gallon; and the West Coast price decreased $0.054 to $4.137 per gallon.
  • For the week ended July 20, there were 235,000 new claims for unemployment insurance, a decrease of 10,000 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 July 13 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 13 was 1,851,000, a decrease of 9,000 from the previous week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates for the week ended July 6 were New Jersey (2.8%), Rhode Island (2.7%), Puerto Rico (2.4%), California (2.3%), Minnesota (2.2%), Massachusetts (1.9%), Pennsylvania (1.9%), Connecticut (1.8%), Washington (1.8%), Illinois (1.7%), Nevada (1.7%), and New York (1.7%). The largest increases in initial claims for unemployment insurance for the week ended July 13 were in Texas (+11,927), California (+6,284), Georgia (+3,101), Missouri (+2,999), and South Carolina (+2,413), while the largest decreases were in New Jersey (-1,532), Massachusetts (-1,531), Indiana (-1,407), Tennessee (-937), and Iowa (-853).

Eye on the Week Ahead

The Federal Open Market Committee meets this week, and while it is highly unlikely that the Fed will adjust interest rates at this time, the Committee might provide a more concrete indication as to when rates may be lowered. The employment data for July is also out this week. The labor sector has been steady during the period as the Fed tries to harness inflation.

What I’m Watching This Week – 22 July 2024

Published on by dredheadz

The Markets (as of market close July 19, 2024)

The market saw stocks come in with mixed returns. The Dow and the Russell 2000 advanced, while the Nasdaq, the S&P 500, and the Global Dow lost value. The Dow reached three new records during the week, while the Nasdaq and the S&P 500 posted their worst week since April. AI stocks led a downturn in tech shares as investors moved to small caps. The CrowdStrike outage impacted flights, banks, telecoms, and media companies worldwide. The market sectors ran the gambit of highs and lows, with energy (1.7%), financials (1.3%), and real estate (1.3%) climbing, while information technology (-4.6%) and communication services (-2.8%) declined. Ten-year Treasury yields rose 5.0 basis points. Crude oil prices declined on demand worries centered on China. The dollar inched up, while gold prices dipped lower.

Wall Street began last week on a high note, with each of the benchmark indexes listed here closing higher. The Dow reached a record high after climbing 0.5%. The Nasdaq gained 0.4%, the S&P 500 added 0.3%, while the big gainer was the Russell 2000, which advanced 1.8%. The Global Dow ticked down 0.2%. Ten-year Treasury yields rose 4.0 basis points to reach 4.81%. Crude oil prices fell $0.31 to settle at $81.90 per barrel. The dollar and gold prices rose 0.1% and 0.2%, respectively.

Stocks pushed higher for the second straight day last Tuesday. The small caps of the Russell 2000 gained 3.5%, followed by the Dow, which added 1.9% to record a new record. The S&P 500 rose 0.6%, the Global Dow advanced 0.5%, and the Nasdaq ticked up 0.2%. Industrial stocks made notable gains, while several companies reported better-than-expected second-quarter earnings. Yields on 10-year Treasuries slid to 4.16%. Crude oil prices fell again, closing at about $80.87 per barrel on weaker economic data from China. The dollar was unchanged, while gold prices rose 1.8%.

Last Wednesday saw the Dow (0.6%) continue its record streak, and the Global Dow ticked up 0.2%. The remaining benchmark indexes listed here declined, with the Nasdaq falling 2.8%, marking the worst day for that index since 2022. The S&P 500 dropped 1.4%, and the Russell 2000 lost 1.1%. Ten-year Treasury yields slid to 4.14%. Crude oil prices reversed a run of losses after gaining $2.14 to settle at $82.90 per barrel. The dollar fell 0.5%, and gold prices lost 0.3%.

Wednesday’s tech rout continued last Thursday. The small caps of the Russell 2000 lost 1.9%, while the Dow, which had a run of record highs, fell 1.3%. The S&P 500 lost 0.8%, while the Nasdaq and the Global Dow declined 0.7%. Investors took profits from tech shares in response to the potential negative impact export restrictions to China may have on the semiconductor market. Yields on 10-year Treasuries climbed to 4.18%. Crude oil prices slid to $82.29 per barrel. the dollar gained 0.42%, while gold prices fell 0.7%.

Last Friday saw stocks close mostly lower, likely impacted by the CrowdStrike IT outage, which caused major disruptions worldwide. The Global Dow fell 1.0%, while the Dow fell 0.9%. The Nasdaq (-0.8%) and the S&P 500 (-0.7%) lost value for the third straight day. The Russell 2000 dropped 0.6%. Ten-year Treasury yields added 5.0 basis points to close at 4.23%. Crude oil prices dipped $2.56 to settle at $80.26 per barrel. The dollar inched up 0.2%, while gold prices fell 2.3%.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 7/19Weekly ChangeYTD Change
DJIA37,689.5440,000.9040,287.530.72%6.89%
Nasdaq15,011.3518,398.4517,726.94-3.65%18.09%
S&P 5004,769.835,615.355,505.00-1.97%15.41%
Russell 20002,027.072,148.272,184.351.68%7.76%
Global Dow4,355.284,820.884,760.35-1.26%9.30%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%4.18%4.23%5 bps37 bps
US Dollar-DXY101.39104.09104.380.28%2.95%
Crude Oil-CL=F$71.30$82.25$80.26-2.42%12.57%
Gold-GC=F$2,072.50$2,416.40$2,401.10-0.63%15.86%

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

Last Week’s Economic News

  • Retail sales in June were virtually unchanged from the previous month but were up 2.3% from a year earlier. Retail sales less motor vehicle and parts and gasoline stations rose 0.8% in June. Retail trade sales dipped 0.1% in June but rose 2.0% from June 2023. Nonstore retail sales rose 1.9% in June and 8.9% over the last 12 months.
  • Import prices were unchanged in June after falling 0.2% in May. Lower import fuel prices in June offset higher nonfuel prices. Import fuel prices decreased 1.0% in June. Import prices advanced 1.6% for the year ended in June, the largest 12-month increase since December 2022. Export prices decreased 0.5% last month following a 0.7% drop in May. The May and June declines were the first one-month decreases since December 2023. Export prices advanced 0.7% over the past 12 months.
  • The number of residential building permits issued in June rose 3.4% from the May rate but were 3.1% below the June 2023 estimate. Building permits for single-family homes declined 2.3% last month. Housing starts increased 3.0% in June, while falling 4.4% over the last 12 months. Single-family housing starts slid 2.2% below the May figure. Housing completions in June were 10.1% above the May estimate and 15.5% over the June 2023 rate. Single-family housing completions in June were 1.8% above the prior month’s estimate.
  • Industrial production rose 0.6% in June after advancing 0.9% in May. For the second quarter, industrial production increased 4.3%. Manufacturing output advanced 0.4% last month and 1.1% for the year. In June, mining rose 0.3%, and utilities increased 2.8%. Since June 2023, mining dipped 0.6%, while utilities advanced 7.9%. Total industrial production in June was 1.6% above its year-earlier level.
  • The national average retail price for regular gasoline was $3.496 per gallon on July 15, $0.007 per gallon above the prior week’s price but $0.063 per gallon less than a year ago. Also, as of July 15, the East Coast price rose $0.016 to $3.466 per gallon; the Midwest price increased $0.002 to $3.369 per gallon; the Gulf Coast price advanced $0.052 to $3.110 per gallon; the Rocky Mountain price decreased $0.045 to $3.486 per gallon; and the West Coast price declined $0.035 to $4.191 per gallon.
  • For the week ended July 13, there were 243,000 new claims for unemployment insurance, an increase of 20,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 6 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 6 was 1,867,000, an increase of 20,000 from the previous week’s level, which was revised down by 5,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended June 29 were New Jersey (2.6%), Rhode Island (2.2%), California (2.1%), Minnesota (2.0%), Puerto Rico (2.0%), Pennsylvania (1.8%), Connecticut (1.7%), Massachusetts (1.7%), Washington (1.7%), Illinois (1.6%), Nevada (1.6%), and New York (1.6%). The largest increases in initial claims for unemployment insurance for the week ended July 6 were in Michigan (+10,578), New York (+5,247), Indiana (+2,835), Ohio (+1,604), and Tennessee (+1,166), while the largest decreases were in California (-5,672), New Jersey (-5,517), Georgia (-1,900), Texas (-1,809), and Minnesota (-1,078).

Eye on the Week Ahead

There’s plenty of market-moving economic data out this week. June reports on sales of both new and existing homes are available. May saw sales of new homes rise, while existing home sales declined. The initial report for second quarter gross domestic product follows a 1.4% advance in the first quarter. The report on personal income and expenditures is also available this week. The personal consumption expenditures price index, a measure of inflation preferred by the Federal Reserve, was flat in May.

What I’m Watching This Week – 15 July 2024

Published on by dredheadz

The Markets (as of market close July 12, 2024)

Investors were encouraged by the most recent inflation data, raising expectations of an interest rate cut in September. Each of the benchmark indexes listed here closed the week in the black, led by the Russell 2000. The small-cap index recorded its best weekly performance since October 2023, while reaching its highest level since January 2022. The expectation of falling interest rates and economic strengthening likely prompted the market shift to more interest-sensitive small- and mid-cap stocks. The Dow rose above 40,000 at one point on Friday, ultimately closing at 40,000. The S&P 500 climbed above 5,600. Crude oil prices slipped lower. While prices at the pump may have risen nationally last week, as of July 1, weekly U.S. average gasoline prices actually declined $0.19 per gallon since the 2024 high on April 22, falling to $3.48/gallon on July 1, $0.05 per gallon less than the price a year ago. Increasing gasoline inventories, relatively weak demand, and oil prices below recent peaks contributed to falling gasoline prices.

Wall Street began the week with mixed results last Monday. The Nasdaq (0.3%) and the S&P 500 (0.1%) reached new record highs. The small caps of the Russell 2000 led the benchmark indexes listed here, climbing 0.6%. The Dow and the Global Dow dipped 0.1%. Ten-year Treasury yields inched lower to 4.26%. Crude oil prices fell $0.90 to $82.26 per barrel. The dollar edged up 0.1%, while gold prices fell 1.3%. Not surprisingly, the market sectors were also mixed last Monday. Information technology outperformed, while communication services fell over 1.0%.

Stocks were mixed last Tuesday. While the Nasdaq and the S&P 500 ticked up a mere 0.1%, it was enough to reach new record highs for both indexes. The Russell 2000, which had enjoyed a solid session the previous day, was unable to maintain that momentum after falling 0.5%. The Global Dow lost 0.3%, while the Dow dipped 0.1%. Fed Chair Jerome Powell spoke before the Senate last Tuesday and noted that more favorable data showing signs of cooling inflation could prompt the Fed to lower interest rates. Yields on 10-year Treasuries edged up to 4.30%. Crude oil prices fell for the second straight day, settling at about $81.59 per barrel. The dollar and gold prices moved higher.

The Nasdaq (1.2%) and the S&P 500 (1.0%) stretched their respective streaks of record highs to five straight sessions last Wednesday. This was the 37th record close for the S&P 500 in 2024 as it climbed above 5,600 for the first time in its history. The Dow and the Russell 2000 gained 1.1%, while the Global Dow advanced 0.6%. Big tech and AI stocks helped drive the market surge, while investors took encouragement from Fed Chair Jerome Powell’s comments to the House Financial Services Committee. Ten-year Treasury yields fell to 4.28%. Crude oil prices reversed a period of declines, rising to $82.38 per barrel. The dollar slid 0.1%, while gold prices rose 0.4%.

The market was mixed last Thursday. The Russell 2000 gained 3.6%, the Global Dow rose 0.5%, and the Dow inched up 0.1%. The streak of record highs ended for the Nasdaq (-2.0%) and the S&P 500 (-0.9%). Megacap tech shares declined the furthest in over a year as investors, believing the Fed may cut interest rates as early as September, began to reshuffle their holding. Bond values increased, pulling yields lower, with the 10-year Treasury note falling to 4.19%. Crude oil prices jumped $0.74 to $82.84 per barrel. The dollar fell 0.6%, while gold prices rose 1.7%.

Stocks ended the week on a high note, with each of the benchmark indexes listed here posting gains last Friday. The Russell 2000 enjoyed another notable day of gains after climbing 1.1%. The Nasdaq, the S&P 500, and the Dow added 0.6%. The Global Dow gained 0.5%. Ten-year Treasury yields ticked lower for the third straight session, ending the day and the week at 4.18%. Crude oil prices fell $0.34 per barrel last Friday. The dollar and gold prices also closed the day lower.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 7/12Weekly ChangeYTD Change
DJIA37,689.5439,375.8740,000.901.59%6.13%
Nasdaq15,011.3518,352.7618,398.450.25%22.56%
S&P 5004,769.835,567.195,615.350.87%17.73%
Russell 20002,027.072,026.732,148.276.00%5.98%
Global Dow4,355.284,755.644,820.881.37%10.69%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%4.27%4.18%-9 bps32 bps
US Dollar-DXY101.39104.87104.09-0.74%2.66%
Crude Oil-CL=F$71.30$83.25$82.25-1.20%15.36%
Gold-GC=F$2,072.50$2,397.40$2,416.400.79%16.59%

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

  • In what is most likely good news for investors looking for the Fed to lower interest rates, the June Consumer Price Index declined 0.1%. This is the first time since May 2020 that the CPI registered less than 0% for a month. Prices rose 3.0% over the last 12 months, a smaller increase than the 3.3% advance for the 12 months ended May. A 0.2% increase in prices for shelter was offset by a 2.0% drop in energy prices, within which gasoline prices declined 3.8%. Prices for shelter, which accounts for about one-third of the CPI basket of goods and services, have displayed a slowdown in price increases over the past few months. For the 12 months ended in June, prices for shelter rose 5.2%, down from 5.4% for the 12 months ended in May. Food prices rose 0.2% in June. Consumer prices less food and energy rose 0.1% in June after rising 0.2% the preceding month. Prices less food and energy rose 3.3% over the last 12 months, which was the smallest 12-month increase since April 2021.
  • Prices at the producer level advanced 0.2% in June after being unchanged in the previous month. Producer prices rose 2.6% for the 12 months ended in June, the largest advance since March 2023. The June rise in producer prices could be traced to a 0.6% increase in prices for services. In contrast, prices for goods decreased 0.5%. Nearly all the June increase in prices for services was attributable to a 1.9% jump in margins for trade services (the difference between wholesale and retail prices). Prices less foods, energy, and trade services were unchanged in June following a 0.2% advance in May. For the 12 months ended in June, prices less foods, energy, and trade services moved up 3.1%.
  • The Treasury budget deficit for June was $66.0 billion, well below the May deficit of $348.0 billion. For the current fiscal year, the total deficit is $1,268.3 trillion. The deficit over the same period in the last fiscal year was $1,393.0 trillion.
  • The national average retail price for regular gasoline was $3.489 per gallon on July 8, $0.010 per gallon above the prior week’s price but $0.057 per gallon less than a year ago. Also, as of July 8, the East Coast price rose $0.061 to $3.450 per gallon; the Midwest price decreased $0.048 to $3.367 per gallon; the Gulf Coast price fell $0.013 to $3.058 per gallon; the Rocky Mountain price increased $0.080 to $3.431 per gallon; and the West Coast price declined $0.010 to $4.226 per gallon.
  • For the week ended July 6, there were 222,000 new claims for unemployment insurance, a decrease of 17,000 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 June 29 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 29 was 1,852,000, a decrease of 4,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended June 22 were New Jersey (2.4%), California (2.2%), Minnesota (2.1%), Puerto Rico (2.1%), Rhode Island (2.0%), Connecticut (1.8%), Pennsylvania (1.8%), Illinois (1.7%), Massachusetts (1.7%), and Washington (1.7%). The largest increases in initial claims for unemployment insurance for the week ended June 29 were in New York (+4,427), New Jersey (+2,557), Georgia (+1,849), California (+1,478), and Iowa (+1,270), while the largest decreases were in Connecticut (-1,831), Wisconsin (-875), Minnesota (-731), Maryland (-690), and Vermont (-534).

Eye on the Week Ahead

The retail sales report for June is available this week. Sales of goods and services to consumers ticked up 0.1% in May and 2.3% over the past 12 months. Another important report to consider this week is the Federal Reserve’s index of industrial production for June. Industrial production and manufacturing rose 0.9% in May. Overall, industrial production is up 0.4% from May 2023, while manufacturing is up 0.1%.

What I’m Watching This Week – 8 July 2024

Published on by dredheadz

The Markets (as of market close July 5, 2024)

The stock market fared quite nicely during the Fourth of July week. Each of the benchmark indexes listed here posted gains, with the Nasdaq and the S&P 500 reaching record highs a few times during the week. Only the small caps of the Russell 2000 slid lower. The June jobs report (see below) gave investors encouragement that the Fed may be inclined to cut interest rates as early as September. Information technology, consumer discretionary, and communication services outperformed among the market sectors, while energy and health care lagged. Ten-year Treasury yields dipped 7.0 basis points. Crude oil prices advanced as tensions in the Middle East escalated. Gas prices increased, while some expect prices at the pump to continue to rise.

Wall Street opened the Fourth of July week with a bang. The Nasdaq gained 0.8% largely due to a strong performance from megacaps. The S&P 500 and the Global Dow rose 0.3%, while the Dow ticked up 0.1%. The small caps of the Russell 2000 fell 0.9% following its annual reconstitution, when breakpoints between large, mid, and small caps are redefined to make certain that market changes from the preceding year are reflected accurately. This annual event often leads to one of the highest-volume trading days as investors adjust their holdings based on the updates. Ten-year Treasury yields spiked higher, climbing 13.6 basis points to close at 4.47%. Crude oil prices also advanced, settling at about $83.46 per barrel after gaining $1.92. The dollar and gold prices changed marginally.

Stocks climbed higher last Tuesday as investors took encouragement from Fed Chair Jerome Powell’s comments, which indicated that significant progress has been made in bringing down inflation. However, Powell said modest economic expansion, coupled with a healthy labor market, has allowed the Fed to be patient in deciding about the next steps in its monetary policy. By the close of trading, the Nasdaq (0.8%) and the S&P 500 (0.6%) notched new record highs. The Dow rose 0.4%, the Global Dow advanced 0.3%, and the Russell 2000 gained 0.2%. Yields on 10-year Treasuries fell 4.3 basis points to settle at 4.43%. Crude oil prices ticked down to $83.03 per barrel. The dollar declined 0.2%, while gold prices were flat.

The Dow (-0.1%) was the only benchmark index listed here to close in the red last Wednesday. The Nasdaq (0.9%) and the S&P 500 (0.5%) reached record highs for the second straight day. The Global Dow (0.6%) and the small caps of the Russell 2000 (0.1%) also closed higher. Ten-year Treasury yields settled at 4.35%. Crude oil prices rose to $83.88 per barrel. The dollar edged lower, while gold prices rose 1.5%.

Stocks closed out the holiday-shortened week with mixed results. The Nasdaq (0.9%) and the S&P 500 (0.5%) closed the day at record highs, while the Dow advanced 0.2%. The Russell 2000 (-0.4%) and the Global Dow (-0.1%) closed the day lower. Ten-year Treasury yields fell 8.3 basis points, settling at 4.27%. Crude oil prices declined $0.63 to about $83.25 per barrel. The dollar fell for the fourth straight session, while gold prices advanced 1.2%.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 7/5Weekly ChangeYTD Change
DJIA37,689.5439,118.8639,375.870.66%4.47%
Nasdaq15,011.3517,732.6018,352.763.50%22.26%
S&P 5004,769.835,460.485,567.191.95%16.72%
Russell 20002,027.072,047.692,026.73-1.02%-0.02%
Global Dow4,355.284,677.144,755.641.68%9.19%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%4.34%4.27%-7 bps41 bps
US Dollar-DXY101.39105.88104.87-0.95%3.43%
Crude Oil-CL=F$71.30$81.51$83.252.13%16.76%
Gold-GC=F$2,072.50$2,335.00$2,397.402.67%15.68%

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

  • Total employment rose by 206,000 in June, slightly under the average monthly gain of 220,000 over the prior 12 months. Last month, job gains occurred in government, health care, social assistance, and construction. Total employment proved not to be quite as robust as originally thought. The change in total employment for April was revised down by 57,000, and the change for May was revised down by 54,000. With these revisions, employment in April and May combined was 111,000 lower than previously reported. In June, the unemployment rate was 4.1%, an increase of 0.1 percentage point from the May rate. The number of unemployed rose by 162,000 in June to 6.8 million. These measures are higher than a year earlier when the jobless rate was 3.6%, and the number of unemployed was 6.0 million. The number of long-term unemployed (those jobless for 27 weeks or more) rose by 166,000 to 1.5 million in June. This measure is up from 1.1 million a year earlier. The long-term unemployed accounted for 22.2% of all unemployed people in June. The labor force participation rate rose 0.1 percentage point to 62.6%. The employment-population ratio was unchanged in June at 60.1%. In June, average hourly earnings increased by $0.10, or 0.3%, to $35.00. Over the past 12 months, average hourly earnings have increased by 3.9%. The average workweek in June was 34.3 hours for the third consecutive month.
  • The S&P Global US Manufacturing Purchasing Managers’ Index™ ticked up to a three-month high of 51.6 in June. New orders rose for the second straight month, prompting a rise in production. Survey respondents noted that employment increased at the fastest rate since September 2022. While producer costs continued to rise, the rate of input cost inflation eased in June, and selling prices rose at the slowest pace this year.
  • Business activity and new orders expanded in June, according to the S&P Global US Services PMI®. Activity in the services sector has risen in each of the past 17 months, with the latest expansion the most pronounced since April 2022. Survey respondents noted that the rising demand sparked an increase in workforce numbers for the first time in three months. Both input and output prices eased in June.
  • According to the latest Job Openings and Labor Turnover Summary, the number of job openings in May rose by 221,000 (8.1 million), the number of hires increased by 141,000 (5.8 million), and the number of total separations grew by 85,000 (5.4 million).
  • The goods and services trade deficit for May was $75.1 billion, up $0.6 billion from the April deficit, according to the latest report from the Bureau of Economic Analysis. May exports were $261.7 billion, $1.8 billion less than April exports. May imports were $336.7 billion, $1.2 billion less than April imports. Year to date, the goods and services deficit increased $14.4 billion, or 4.2%, from the same period in 2023. Exports increased $42.8 billion, or 3.4%. Imports increased $57.2 billion, or 3.6%.
  • The national average retail price for regular gasoline was $3.479 per gallon on July 1, $0.041 per gallon above the prior week’s price but $0.048 per gallon less than a year ago. Also, as of July 1, the East Coast price rose $0.026 to $3.389 per gallon; the Midwest price increased $0.092 to $3.415 per gallon; the Gulf Coast price advanced $0.055 to $3.071 per gallon; the Rocky Mountain price increased $0.055 to $3.351 per gallon; and the West Coast price fell $0.032 to $4.236 per gallon.
  • For the week ended June 29, there were 238,000 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 June 22 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 22 was 1,858,000, an increase of 26,000 from the previous week’s level, which was revised down by 7,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended June 15 were New Jersey (2.2%), California (2.1%), Minnesota (2.0%), Puerto Rico (1.9%), Pennsylvania (1.7%), Rhode Island (1.7%), Washington (1.7%), Illinois (1.6%), Nevada (1.6%), Massachusetts (1.5%), and New York (1.5%). The largest increases in initial claims for unemployment insurance for the week ended June 22 were in New Jersey (+5,371), Massachusetts (+3,785), Connecticut (+1,243), Oregon (+968), and Rhode Island (+810), while the largest decreases were in Minnesota (-2,993), Texas (-2,495), Pennsylvania (-2,454), Illinois (-2,117), and California (-1,226).

Eye on the Week Ahead

Important inflation data is on tap for this week. The Consumer Price Index for June is out. May showed no increase in the CPI and a slight reduction in the 12-month figure. Also available this week is the Producer Price Index for June. May saw producer prices fall 0.2%.

Quarterly Market Review : April – June 2024

Published on by dredheadz

The Markets (second quarter through June 28, 2024)

Wall Street got off to a slow start to begin the second quarter of 2024. Stocks lagged for much of April, rebounded in May, and were choppy in June. Investors spent the quarter watching economic data, trying to gauge whether the Federal Reserve might lower interest rates. In April, investors were discouraged by the unexpected rise in inflation, which dampened hopes of several interest rate decreases during the year. However, the latest economic data gave some indication that inflationary pressures may be scaling back. The personal consumption expenditures (PCE) price index for May rose at its slowest pace since March 2021. Nevertheless, lowering price pressures has been a slow process and inflation could push higher again. In response, the Federal Reserve has remained cautious in its assessment of inflation going forward and will look for more concrete data confirming downward price pressures before loosening its restrictive monetary policy. Several indexes reached new records throughout the quarter. The S&P 500 and the Nasdaq closed out the quarter at new highs, marking the 32nd record close of the year for the S&P 500 and the 21st for the Nasdaq. Among the market sectors, information technology outperformed, gaining 14.5% in the quarter, followed by communication services, and utilities. Materials, industrials, and real estate lagged. Rising bond yields weighed on prices, with the yield on 10-year Treasuries closing the quarter up nearly 15.0 basis points from the end of the first quarter, while the yield on the 2-year note ended the quarter about where it began. Corporate earnings got off to a good start for the year, with first-quarter earnings exceeding analyst expectations for the fifth consecutive quarter. Roughly 78.3% of S&P 500 companies reported earnings that beat expectations, as companies in consumer staples, financials, health care, real estate, and communication services bested their prior four-quarter average.

Gold rose more than 4.0% in the second quarter and nearly 13.0% in 2024 as anticipated interest rate cuts by central banks supported trading precious metals. In addition, higher demand for gold by several Asian central banks, particularly the People’s Bank of China, helped lift the price of gold, which reached a record high of $2,450 per ounce in May. Crude oil prices dipped about $1.75 per barrel by the end of the first quarter. Prices on March 28 were $83.17 per barrel, dropping as low as $74.07 per barrel in early June, and settling at about $81.51 per barrel on the last business day of June. However, fears that the unrest in the Middle East will escalate, coupled with a cut in production, could drive prices higher through the remainder of the year. The retail price for regular gasoline was $3.438 per gallon on June 24, $0.139 below the price a month earlier and $0.085 less than the price March 25 estimate. Regular retail gas prices decreased $0.113 from a year ago. The U.S. dollar ended the quarter trading at its highest price since November 2023. Home mortgage rates began the quarter at about 6.82% for the 30-year fixed rate, according to Freddie Mac. Rates jumped as high as 7.03% at the end of May, ultimately settling at 6.86% on June 27.

April saw stocks get off to a slow start as progress toward reducing inflation took a step back, heightening concerns that interest rates would remain higher for longer. Each of the benchmark indexes listed here ended the month in the red, with the S&P 500 suffering its first monthly loss in the last six months. Small-cap stocks were particularly hit hard, dragging the Russell 2000 down by over 7.0%, which caused that index to fall into negative territory since the beginning of the year. Ten of the 11 sectors of the S&P 500 recorded losses, with the exception of utilities, which eked out a marginal gain. The bond market also struggled in April, with the yield on 10-year Treasuries climbing 48 basis points, reaching its highest level since October. First-quarter earnings season kicked off in April and saw reports come in modestly above expectations. Investors paid particular attention to economic reports and the response from the Federal Reserve. Reports released in April revealed 315,000 new jobs added in March. The PCE price index rose 0.5% in March, while the Consumer Price Index (CPI) climbed 0.4%. Industrial production edged higher. The housing sector produced mixed results in March, with sales of existing homes falling, while new home sales advanced.

In May, equity markets rebounded from a moribund April, with each of the benchmark indexes listed here making notable gains. The Dow, the Nasdaq, and the S&P 500 reached all-time highs during the month. Tech shares outperformed, while energy declined with falling crude oil prices. Over half of the S&P 500’s nearly 5.0% May gain was attributed to growth of four mega tech stocks. Investors also saw economic signs that might support an interest rate reduction. Job growth was weaker than expected. First-quarter GDP lagged to 1.3% growth. April’s PCE price index (excluding food and energy prices) advanced 2.8%. April’s CPI rose 0.3%, while retail sales were weaker than expected. Corporate earnings for the first quarter were favorable, as 78% of reporting S&P 500 companies beat earnings per share (EPS) estimates. Companies in the communications services sector had a growth rate of 34%, beating the other ten market sectors. Prices at the pump fell in May from April. The dollar fell nearly 1.6%, the first monthly decline in the last five months.

June proved to be a month full of ups and downs for stocks. The month began with each of the benchmark indexes listed here posting gains (with the exception of the Russell 2000). A robust jobs report helped alleviate concerns about an economic slowdown, although it bolstered the Fed’s hawkish stance. Through the middle of June, tech stocks, particularly AI holdings, carried the market. Unfortunately, the rally came to a halt at the end of the month. Nevertheless, stocks closed June higher than it began, with several of the benchmark indexes closing in the black, with the exception of the Russell 2000 and the Global Dow, which closed the month lower. Most of the market sectors outperformed, with information technology and consumer discretionary leading the way. Utilities, materials, and energy were the only sectors to close in the red.

Stock Market Indexes

Market/Index2023 CloseAs of June 28Monthly ChangeQuarterly ChangeYTD Change
DJIA37,689.5439,118.861.12%-1.73%3.79%
Nasdaq15,011.3517,732.605.96%8.26%18.13%
S&P 5004,769.835,460.483.47%3.92%14.48%
Russell 20002,027.072,047.69-1.08%-3.62%1.02%
Global Dow4,355.284,677.14-0.76%0.02%7.39%
fed. funds target rate5.25%-5.50%5.25%-5.50%0 bps0 bps0 bps
10-year Treasuries3.86%4.34%-17 bps14 bps48 bps
US Dollar-DXY101.39105.881.21%1.27%4.43%
Crude Oil-CL=F$71.30$81.515.54%-1.87%14.32%
Gold-GC=F$2,072.50$2,335.00-0.57%4.02%12.67%

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: Total employment increased by 272,000 in May, following a net downward revision over the previous two months. The May jobs increase was well above expectations. Employment trended up in health care, government, leisure and hospitality, and professional, scientific, and technical services. In May, the unemployment rate increased 0.1 percentage point to 4.0% and was 0.3 percentage point above the rate from a year earlier (3.7%). The number of unemployed persons was relatively unchanged at 6.6 million. In May, the number of long-term unemployed (those jobless for 27 weeks or more), at 1.4 million, accounted for 20.7% of all unemployed people. The labor force participation rate, at 62.5%, was 0.2 percentage point below the prior month’s estimate, while the employment-population ratio dipped 0.1 percentage point to 60.1% in May. In May, average hourly earnings increased by $0.14, or 0.4%, to $34.91. Since May 2023, average hourly earnings rose by 4.1%, which is up from the April figure of 3.9%. The average workweek was unchanged at 34.3 hours in May.
  • There were 233,000 initial claims for unemployment insurance for the week ended June 22, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,839,000. A year ago, there were 238,000 initial claims, while the total number of workers receiving unemployment insurance was 1,750,000.
  • FOMC/interest rates: The Federal Open Market Committee met twice in the second quarter, in May and in June. Following each of those meetings, the Committee kept interest rates at their current levels. Each time, the FOMC noted that the economy in general, and the labor market in particular, had remained steady, while inflation stayed well above the Fed’s target rate of 2.0%. Overall, the FOMC maintained its hawkish stance toward lowering interest rates, with the possibility of one rate cut before the end of the year.
  • GDP/budget: The economy, as measured by gross domestic product, accelerated at an annualized rate of 1.4% in the first quarter of 2024, according to the third and final estimate from the Bureau of Economic Analysis. GDP increased 3.4% in the fourth quarter. Personal consumption expenditures rose 1.5% in the first quarter compared to a 3.3% increase in the previous quarter. Consumer spending on goods dipped 2.3%, while spending on services rose 3.3%. Gross domestic investment rose 4.4% in the first quarter, well above the 0.7% increase in the fourth quarter. Nonresidential fixed investment advanced 4.4% in the first quarter (3.7% in the fourth quarter), while residential fixed investment increased 16.0% in the first quarter compared to a 2.8% increase in the fourth quarter. Exports inched up 1.6%, while imports, which are a negative in the calculation of GDP, increased 6.1%. Consumer prices increased 3.4% in the first quarter, compared with an increase of 1.8% in the previous quarter. Excluding food and energy prices, the PCE price index increased 3.7%, compared with an increase of 2.0% in the fourth quarter.
  • The federal budget deficit in May was $347.0 billion, well above the May 2023 deficit of the $240.3 billion. April saw a budget surplus of $209.5 billion. In May, government receipts totaled $323.6 billion, while government outlays were $670.8 billion. Through the first eight months of fiscal year 2024, the total deficit sits at $1,202.3 trillion, which is roughly $37.0 billion higher than the deficit through the first eight months of the previous fiscal year.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report, personal income rose 0.5% in May (0.3% in April) and disposable personal income also increased 0.5%, up from 0.3% in April. The PCE price index was unchanged in May after rising 0.3% in each of the prior three months. The PCE price index excluding food and energy (core prices), ticked up 0.1% in May. Consumer prices rose 2.6% since May 2023, down 0.1 percentage point compared to the 12 months ended in April. Core prices increased 2.6% over the same period, 0.2 percentage points lower than the 12 months ended in April. Consumer spending rose 0.2% in May after advancing 0.1% in April.
  • The Consumer Price Index was unchanged in May after rising 0.3% in April. Over the 12 months ended in May, the CPI rose 3.3%, down 0.1 percentage point from the period ended in April. Excluding food and energy, the CPI rose 0.2% in May, (0.3% in April), and 3.4% from May 2023. Increases in prices for shelter (0.4%) and food (-0.1%), particularly food away from home (0.4%), were offset by a decrease in prices for energy (-0.2%) and gasoline (-3.6%). In addition to advances in prices for shelter and food, May saw increases in prices for medical care, used cars and trucks, and education, while prices for airline fares, new vehicles, communication, recreation, and apparel were among those that declined.
  • Prices that producers received for goods and services fell 0.2% in May after rising 0.5% in April. The May decline was attributable to a decrease in prices for goods (-0.8%), while prices for services were unchanged from the prior month. Nearly 60% of the May decrease in prices for goods can be traced to a 7.1% decline in prices for gasoline. Producer prices increased 2.2% for the 12 months ended in May, unchanged from the increase over the 12 months ended in April. Producer prices less foods, energy, and trade services were flat in May after increasing 0.5% in April. For the 12 months ended in May, prices less foods, energy, and trade services moved up 3.2%, the same increase as estimated for the 12 months ended in April.
  • Housing: Sales of existing homes fell 0.7% in May and 2.8% over the last 12 months. According to the National Association of Realtors® (NAR), existing home sales have stagnated due to low inventory, rising home prices, and high interest rates. The median existing-home price was $419,300 in May, the highest price ever recorded. The May price was 3.1% above the April price of $406,600 and 5.8% higher than the May 2023 price of $396,500. Unsold inventory of existing homes in May represented a 3.7-month supply at the current sales pace, up slightly from 3.5 months in April. Sales of existing single-family homes decreased 0.8% in May and 2.1% from the prior year. The median existing single-family home price was $424,500 in May, up from $411,100 in April and well above the May 2023 estimate of $401,500. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.87% as of June 20, down from 6.95% the previous week but up from 6.67% one year ago.
  • New single-family home sales also declined in May, falling 11.3% below the April pace and 16.5% under the May 2023 rate. The median sales price of new single-family houses sold in April was $417,400 ($417,900 in April). The May average sales price was $520,000 ($503,700 in April). The inventory of new single-family homes for sale in May represented a supply of 9.3 months at the current sales pace, up from 9.1 months in April.
  • Manufacturing: Industrial production rose 0.9% in May, after being flat in April. Manufacturing output also increased 0.9% in May after declining 0.4% in April. Mining increased 0.3% in May, while utilities advanced 1.6%. For the 12 months ended in May, total industrial production advanced 0.4% from its year-earlier level. Over the same period, manufacturing increased 0.1%, mining decreased 0.4%, while utilities increased 3.9%.
  • New orders for durable goods rose 0.1% in May following a downwardly revised 0.2% April increase. Excluding transportation, new orders decreased 0.1% in May. Excluding defense, new orders fell 0.2%. New orders for transportation equipment advanced 0.6% in May, contributing to the overall increase in new orders. New orders for nondefense capital goods in May decreased 2.8%, while new orders for defense capital goods increased 22.6%.
  • Imports and exports: U.S. import prices decreased 0.4% in May following a 0.9% advance in the previous month. The May decrease was the first monthly decline since December 2023. Import prices advanced 1.1% over the last 12 months, matching the April 12-month increase. The May and April 12-month advances were the largest 12 month increases since December 2022. Import fuel prices fell 2.0% in May after increasing 4.1% in April. Despite the May decrease, import fuel prices rose 7.9% over the past 12 months, the largest 12-month advance since December 2022. Import prices excluding fuel ticked down 0.3% in May, following a 0.7% rise the previous month. Export prices declined 0.6% in May after advancing 0.6% in April. The May decrease in exports was the first monthly decline since December 2023. Lower nonagricultural prices in May more than offset higher agricultural prices. Despite the drop in May, prices for exports rose 0.6% from May 2023 to May 2024, the first 12-month advance since January 2023.
  • The international trade in goods deficit was $100.6 billion in May, up $2.7 billion, or 2.7%, from April. Exports of goods were $166.7 billion in May, $4.6 billion, or 2.7%, less than in April. Imports of goods were $267.3 billion in May, $2.0 billion, or 0.7%, under the April estimate. Since April 2023, exports increased 4.2%, while imports increased 3.2%.
  • The latest information on international trade in goods and services, released June 6, is for April and revealed that the goods and services trade deficit was $74.6 billion, up $2.1 billion, or 8.7%, from the March deficit. April exports were $263.7 billion, 0.8% less than March exports. April imports were $338.2 billion, 2.4% more than March imports. Year to date, the goods and services deficit increased $5.5 billion, or 2.0%, from the same period in 2023. Exports increased $32.2 billion, or 3.2%. Imports increased $37.8 billion, or 2.9%.
  • International markets: The United Kingdom’s GDP expanded 0.7% in the first quarter, a little higher than expectations. It was the largest expansion in over two years, which signals an end to the economic recession that began last year. Canada’s GDP rose 0.3% in April but is expected to slow to 0.1% growth in May. Eurozone inflation rose 0.2% in May and 2.6% over the last 12 months. Core prices advanced 2.9% for the year, 0.2 percentage points above the period ended in April. In China, retail sales rose 3.7%, ahead of expectations, while industrial production inched up 0.3%. For June, the STOXX Europe 600 Index fell 1.1%; the United Kingdom’s FTSE lost 1.1%; Japan’s Nikkei 225 Index advanced 2.9%; and China’s Shanghai Composite Index fell 3.9%.
  • Consumer confidence: Consumer confidence dipped in June to 100.4, down from 101.3 in May, according to the Conference Board Consumer Confidence Index®. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased to 141.5 in June, up from 140.8 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 73.0 in June, down from 74.9 in May. The Expectations Index has been below 80 (the threshold which usually signals a recession ahead) for five consecutive months.

Eye on the Quarter Ahead

Investors will likely focus much of their attention on the Federal Reserve during the third quarter of 2024. While the Fed has maintained interest rates at their current level for several months, they suggested that one decrease could be in the offing this year. Stock performance was choppy during the second quarter, with some indexes reaching record highs, only to fall back. Traders will look to the third quarter for more stability and steady gains in the market.

What I’m Watching This Week – 1 July 2024

Published on by dredheadz

The Markets (as of market close June 28, 2024)

Stocks closed generally higher for the week, with the Russell 2000, the Nasdaq, and the Global Dow posting gains, while the large caps of the Dow and the S&P 500 declined. Ten-year Treasury yields rose as bond prices fell. Crude oil prices gained about $1.00 per barrel. The dollar and gold prices inched higher. Investors are most likely reassessing their positions following the presidential debate between Joe Biden and Donald Trump. The majority of the market sectors declined last week, with utilities and materials falling the most. Consumer discretionary, communication services, and energy outperformed.

The week began with mixed results as the Nasdaq (-1.1%) and the S&P 500 (-0.3%) declined as a major AI company extended its losses for a third consecutive session, dragging the tech sector lower. The Dow (0.7%), the Global Dow (0.6%), and the Russell 2000 (0.5%) moved higher. Along with information technology, consumer discretionary was the only other sector to close in the red. The remaining market sectors gained ground, led by energy and utilities. Ten-year Treasury yields inched down to 4.24%. Crude oil prices closed at about $81.67 per barrel after gaining 1.2%. The dollar dipped 0.3%, while gold prices rose 0.6%.

The AI rally resumed last Tuesday, pushing the Nasdaq (1.3%) and the S&P 500 (0.4%) higher. The Dow gave back most of the prior day’s gains after falling 0.8%. The Russell 2000 (-0.4%) edged lower while the Global Dow inched lower by less than 0.1%. Yields on 10-year Treasuries dipped to 4.23%. Crude oil prices reversed the previous day’s gains after declining $0.90 to $80.77 per barrel. The dollar eked out a 0.2% gain, while gold prices fell 0.6%.

Once again, the market was mixed last Wednesday. The Nasdaq (0.5%) and the S&P 500 (0.2%) advanced for the second straight session. The Dow gained less than 0.1%. The Russell 2000 and the Global Dow fell 0.2%. Consumer discretionary outperformed among the market sectors, while energy and financials lagged. Bond prices declined, pushing yields higher, as 10-year Treasuries gained 7.8 basis points to close at 4.31%. Crude oil prices slipped to $80.66 per barrel. The dollar rose 0.4%, while gold prices dipped 0.9%.

Stocks closed higher last Thursday led by the Russell 2000, which gained 1.0%. The Nasdaq added 0.3%, while the Dow and the S&P 500 inched up 0.1%. The Global Dow dipped 0.2%. Ten-year Treasury yields dipped 2.8 basis points to settle at 4.28%. Crude oil prices rose nearly $1.00 to $81.86 per barrel. The dollar dipped 0.1%, while gold prices advanced 1.0%.

Friday’s stock performance was lackluster, with each of the benchmark indexes listed here closing lower, except for the small caps of the Russell 2000, which gained 0.4%. The Nasdaq lost 0.7%, followed by the S&P 500 (-0.4%) and the Dow (-0.1%). The Global Dow fell less than 0.1%. Ten-year Treasury yields rose 5.5 basis points to close at 4.34%. Crude oil prices fell $0.40 per barrel. The dollar was flat, while gold prices slipped 0.1%.

Stock Market Indexes

Market/Index2023 ClosePrior WeekAs of 6/28Weekly ChangeYTD Change
DJIA37,689.5439,150.3339,118.86-0.08%3.79%
Nasdaq15,011.3517,689.3617,732.600.24%18.13%
S&P 5004,769.835,464.625,460.48-0.08%14.48%
Russell 20002,027.072,022.032,047.691.27%1.02%
Global Dow4,355.284,669.094,677.140.17%7.39%
fed. funds target rate5.25%-5.50%5.25%-5.50%5.25%-5.50%0 bps0 bps
10-year Treasuries3.86%4.25%4.34%9 bps48 bps
US Dollar-DXY101.39105.81105.880.07%4.43%
Crude Oil-CL=F$71.30$80.63$81.511.09%14.32%
Gold-GC=F$2,072.50$2,334.20$2,335.000.03%12.67%

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 third and final estimate of first-quarter gross domestic product revealed that the economy accelerated at an annual rate of 1.4%. In the fourth quarter, GDP increased by 3.4%. Compared to the fourth quarter, the reduction in GDP primarily reflected decelerations in consumer spending, exports, and state and local government spending, and a downturn in federal government spending. These decreases were partly offset by an acceleration in residential fixed investment. Imports, which are a negative in the calculation of GDP, accelerated. The personal consumption expenditures (PCE) price index increased 3.4%, an upward revision of 0.1 percentage point from the fourth quarter. Excluding food and energy prices, the PCE price index increased 3.7%, also 0.1 percentage point above the fourth-quarter estimate.
  • In what will likely give rise to hopes that the Federal Reserve will lower interest rates in the third quarter, consumer prices were unchanged in May, according to the latest personal consumption expenditures (PCE) price index. Core prices (less food and energy) ticked up 0.1% last month. Year over year, both the PCE price index and the core PCE price index rose 2.6%, a reduction of 0.1% and 0.2%, respectively, from the same period ended in April. Consumer spending inched up 0.2% in May, while personal income rose 0.5%, largely attributable to a 0.7% rise in wages and salaries.
  • The advance estimate of international trade in goods showed the trade deficit rose by 2.7% in May. Exports declined 2.7%, while imports fell 0.7%.
  • New orders for durable goods inched up 0.1% in May following a downwardly revised 0.2% increase in April. Excluding transportation, orders for durable goods ticked down 0.1%. Excluding defense, new orders decreased 0.2%. Transportation equipment, up three of the last four months, drove the overall increase in new orders, increasing 0.6%.
  • Sales of new single-family homes declined 11.3% in May and 16.5% under the May 2023 estimate. The median sales price of new houses sold in May was $417,400. The average sales price was $520,000. Inventory of new single-family homes for sale in May represented a 9.3-month supply at the current sales pace.
  • The national average retail price for regular gasoline was $3.438 per gallon on June 24, $0.003 per gallon above the prior week’s price but $0.133 per gallon less than a year ago. Also, as of June 24, the East Coast price rose $0.006 to $3.363 per gallon; the Midwest price increased $0.008 to $3.323 per gallon; the Gulf Coast price advanced $0.024 to $3.016 per gallon; the Rocky Mountain price declined $0.034 to $3.296 per gallon; and the West Coast price fell $0.025 to $4.268 per gallon.
  • For the week ended June 22, there were 233,000 new claims for unemployment insurance, a decrease of 6,000 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 June 15 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 15 was 1,839,000, an increase of 18,000 from the previous week’s level, which was revised down by 7,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,878,000. States and territories with the highest insured unemployment rates for the week ended June 8 were New Jersey (2.2%), California (2.1%), Minnesota (1.8%), Washington (1.7%), Illinois (1.6%), Massachusetts (1.6%), Nevada (1.6%), Pennsylvania (1.6%), Rhode Island (1.6%), New York (1.5%), and Puerto Rico (1.5%). The largest increases in initial claims for unemployment insurance for the week ended June 15 were in Connecticut (+2,168), Wisconsin (+1,262), Texas (+1,017), New Jersey (+962), and Maryland (+756), while the largest decreases were in California (-4,298), Minnesota (-1,474), Illinois (-1,466), New York (-1,193), and Florida (-1,134).

Eye on the Week Ahead

The jobs report for May is out this week. Employment picked up in April, with 272,000 estimated new jobs added. Strength in the labor sector supports the Federal Reserve’s restrictive monetary policy, particularly relative to interest rates.