What I’m Watching This Week – 13 September 2021

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

What I’m Watching This Week – 7 September 2021

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

Monthly Market Review – August 2021

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

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

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

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

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

Stock Market Indexes

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

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

Latest Economic Reports

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

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

What I’m Watching This Week – 30 August 2021

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

What I’m Watching This Week – 23 August 2021

The Markets (as of market close August 20, 2021)

Stocks closed the week lower over concerns about the pace of global economic growth. China, the world’s second-largest economy, saw retail sales and industrial production slow as that country tries to contain the fallout from the latest resurgence in COVID cases. In addition, the minutes from the July Federal Open Market Committee meeting indicated that at least some of the members are considering tapering the Fed’s asset-purchase program sooner rather than later. Each of the benchmark indexes listed here lost value. The Global Dow fell 3.3%, the Russell 2000 dipped 2.5%, and the Dow dropped 1.1%. The dollar and gold prices advanced, while crude oil prices declined 8.5%. The yield on 10-year Treasuries marginally decreased. The market sectors were mixed for the week, with utilities, consumer staples, health care, information technology, and real estate gaining ground, while energy, materials, financials, industrials, and consumer discretionary fell.

Stocks were mixed last Monday, with the Dow and the S&P 500 reaching record highs, while the Nasdaq, the Russell 2000, and the Global Dow slipped lower. Crude oil prices dipped, the dollar was mixed, and the yield on 10-year Treasuries fell nearly 3.0%. Health care, consumer staples, and utilities led the market sectors, while energy slid 1.8%.

A string of five consecutive record finishes for the Dow and the S&P 500 ended last Tuesday, as each benchmark index suffered its largest decline since July 19. Stocks closed lower following a weaker-than-expected retail sales report and concerns about the economic impact of the Delta variant. The Nasdaq (-0.9%), the Russell 2000 (-1.2%), and the Global Dow (-0.9%) also dipped lower. Treasury yields and crude oil prices decreased, while the dollar advanced. The market sectors generally fared poorly, with only health care and real estate advancing. Consumer discretionary (-2.3%), materials (-1.2%), industrials (-1.1%), and communication services (-1.0%) fell the most.

Last Wednesday saw Wall Street continue to falter as each of the benchmark indexes lost value, led by the large caps of the Dow and the S&P 500, which dipped 1.1%. The Nasdaq fell 0.9%, the Russell 2000 declined 0.8%, and the Global Dow decreased 0.5%. Energy fell 2.4%, followed by health care (-1.5%), information technology (-1.4%), and consumer staples (-1.3%). Crude oil prices dropped to $64.59 per barrel, their lowest closing price since mid-May. The yield on 10-year Treasuries increased 1.2%, while the dollar was little changed from the prior day. The slide in stock values may be in response to minutes from last month’s Federal Reserve meeting, which indicated that a decision on a reducing its bond-purchasing program could happen in 2021.

Stocks were largely mixed last Thursday, with the Nasdaq and the S&P 500 eking out gains (0.1%), while the Global Dow (-1.7%), the Russell 2000 (-1.2%), and the Dow (-0.2%) dipped lower. Treasury yields and crude oil prices fell, while the dollar advanced. Asian and European markets fell on COVID concerns. Consumer staples, information technology, and real estate led the sectors, while consumer discretionary, industrials, and energy faded.

Last Friday proved to be Wall Street’s best day of the week. Each of the benchmark indexes advanced, led by the Russell 2000 (1.6%) and the Nasdaq (1.2%). The S&P 500 (0.8%) and the Dow (0.7%) pushed higher. The Global Dow inched up 0.1%. Each of the market sectors gained ground, with information technology, utilities, and communication services leading the pack. Ten-year Treasury yields rose, while the dollar and crude oil prices dipped.

The national average retail price for regular gasoline was $3.174 per gallon on August 16, $0.002 per gallon more than the prior week’s price and $1.008 higher than a year ago. Gasoline production increased during the week ended August 13, averaging 10.0 million barrels per day. U.S. crude oil refinery inputs averaged 16.0 million barrels per day during the week ended August 13; this was 191,000 barrels per day less than the previous week’s average. For the week ended August 13, refineries operated at 92.2% of their operable capacity, up from the prior week’s level of 91.8%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 8/20Weekly ChangeYTD Change
DJIA30,606.4835,515.3835,120.08-1.11%14.75%
Nasdaq12,888.2814,822.9014,714.66-0.73%14.17%
S&P 5003,756.074,468.004,441.67-0.59%18.25%
Russell 20001,974.862,223.112,166.81-2.53%9.72%
Global Dow3,487.524,098.923,963.46-3.30%13.65%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.29%1.26%-3 bps35 bps
US Dollar-DXY89.8492.5193.441.01%4.01%
Crude Oil-CL=F$48.52$68.02$62.25-8.48%28.30%
Gold-GC=F$1,893.10$1,779.90$1,784.000.23%-5.76%

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 dipped 1.1% in July from the previous month but stand 15.8% above the July 2020 totals. Retail trade sales also slowed, falling 1.5% last month. Contributing to the dip in overall retail sales were motor vehicle and parts dealers (-3.9%); building material and garden equipment and supplies dealers (-1.2%); clothing and clothing accessories stores (-2.6%); sporting goods, hobby, musical instrument, and book stores (-1.9%); and online sales (-3.1%). Sales increased at food services and drinking places (1.7%), miscellaneous store retailers (3.5%), and gasoline stations (2.4%).
  • According to the latest report from the Federal Reserve, industrial production rose 0.9% in July. Manufacturing output increased 1.4%, largely due to an 11.2% increase in motor vehicles and parts. The output of utilities decreased 2.1% in July, while mining rose 1.2%. Overall, total industrial production in July was 6.6% above its year-earlier level but 0.2% below its pre-pandemic (February 2020) level.
  • Building permits and home completions increased in July, according to the latest report from the Census Bureau. The number of building permits issued rose by 2.6% above the June rate and is up 6.0% from July 2020. Building permits issued for single-family homes dipped 1.7% in July. Home completions in July advanced 5.6% from the previous month. Single-family home completions increased 3.6% last month. Housing starts dipped 7.0% in July but are 2.5% above the July 2020 rate. In July, housing starts for single-family homes were 4.5% lower than June’s totals.
  • For the week ended August 14, there were 348,000 new claims for unemployment insurance, a decrease of 29,000 from the previous week’s level, which was revised up by 2,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended August 7 was 2.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended August 7 was 2,820,000, a decrease of 79,000 from the prior week’s level, which was revised up by 33,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 920,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 9.7%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 31 were Puerto Rico (4.9%), California (3.8%), Illinois (3.6%), the District of Columbia (3.2%), New York (3.2%), Connecticut (3.1%), Rhode Island (3.1%), New Jersey (3.0%), the Virgin Islands (3.0%), and Nevada (2.8%). States and territories with the largest increases in initial claims for the week ended August 7 were Virginia (+4,197), California (+3,267), Maryland (+1,738), Oregon (+1,602), and Illinois (+1,430), while the largest decreases were in Michigan (-4,093), New York (-2,921), Georgia (-2,623), Indiana (-2,577), and Missouri (-2,401).

Eye on the Week Ahead

There’s plenty of important economic data available this week. July figures on sales of existing and new homes are out. The housing sector has slowed from the torrid pace set earlier in the year. Durable goods orders have been rising, with new orders increasing 0.8% in June. July is expected to see a similar advance in new orders. The second estimate of gross domestic product for the second quarter is also out this week. The first estimate showed that the economy expanded at a 6.5% annualized rate.

What I’m Watching This Week – 16 August 2021

The Markets (as of market close August 13, 2021)

Stocks closed mostly higher last week, with only the Nasdaq unable to end in the black. The Dow and the S&P 500 each closed the week at record highs, buoyed by a strong corporate earnings season. Treasury yields finished the week where they began, crude oil prices fell for the second consecutive week, the dollar and gold prices weakened. Consumer staples, financials, materials, industrials, and utilities led the sectors. All the benchmark indexes listed here remain well above their 2020 year-end closing values. The S&P 500, up nearly 19.0% since the beginning of the year, has nearly doubled since the pandemic lows of March 2020, with the energy sector the biggest climber during that period.

Equities opened last week mixed, with only the Nasdaq able to post a gain. The Dow (-0.3%), the S&P 500 (-0.1%), the Russell 2000 (-0.6%), and the Global Dow (-0.2%) each dipped lower. Several of the market sectors fell, led by energy, which declined 1.5%. Only health care, financials, and consumer staples advanced. Crude oil prices decreased nearly 3.0%, falling to $68.47 per barrel. The dollar and Treasury yields moved higher.

Stocks rebounded last Tuesday, with the S&P 500 and the Dow climbing to record highs. Energy, materials, financials, and industrials led the market sectors, each gaining more than 1.0%. Information technology slumped, dragging the Nasdaq down 0.5%. Crude oil prices, Treasury yields, and the dollar increased.

The S&P 500 and the Dow rose to new record highs last Wednesday on news that consumer price increases slowed in July, possibly reducing the urgency to ease stimulus measures currently in place. The Russell 2000 and the Global Dow also climbed higher. Only the Nasdaq slipped marginally. The yield on 10-year Treasuries and the dollar fell, while crude oil prices increased. Among the market sectors, materials, industrials, and financials continued to advance.

Wall Street ended last Thursday mostly higher, with the S&P 500 reaching a record high for the third consecutive session. The Nasdaq and the Dow also closed higher, while the Global Dow and the Russell 2000 edged lower. Passage of a $1 trillion infrastructure bill in the U.S. Senate helped boost industrials and materials, which would likely benefit from increased government spending on physical structures. The dollar and Treasury yields advanced, while crude oil prices slid.

Equities hovered near record highs in light trading last Friday. The Dow and the Nasdaq were flat, the S&P 500 inched up 0.2%, and the Global Dow rose 0.3%. The Russell 2000 dipped 0.9%. Yields on 10-year Treasuries, the dollar, and crude oil prices fell. The sectors closed mixed on the day, with consumer staples, health care, real estate, information technology, communication services, materials, and utilities gaining, while consumer discretionary, energy, financials, and industrials declined.

The national average retail price for regular gasoline was $3.172 per gallon on August 9, $0.013 per gallon more than the prior week’s price and $1.006 higher than a year ago. Gasoline production decreased during the week ended August 6, averaging 10.0 million barrels per day, down from the prior week’s average of 10.2 million barrels per day. U.S. crude oil refinery inputs averaged 16.2 million barrels per day during the week ended August 6; this was 277,000 barrels per day more than the previous week’s average. For the week ended August 6, refineries operated at 91.8% of their operable capacity, up from the prior week’s level of 91.3%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 8/13Weekly ChangeYTD Change
DJIA30,606.4835,208.5135,515.380.87%16.04%
Nasdaq12,888.2814,835.7614,822.90-0.09%15.01%
S&P 5003,756.074,436.524,468.000.71%18.95%
Russell 20001,974.862,200.582,223.111.02%12.57%
Global Dow3,487.524,034.744,098.921.59%17.53%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.29%1.29%0 bps38 bps
US Dollar-DXY89.8492.7892.51-0.29%2.97%
Crude Oil-CL=F$48.52$68.47$68.02-0.66%40.19%
Gold-GC=F$1,893.10$1,813.60$1,779.90-1.86%-5.98%

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

Last Week’s Economic News

  • Inflationary pressures continued to expand in July but at a slower pace. The Consumer Price Index advanced 0.5% last month after increasing 0.9% in June. Over the last 12 months, the CPI has risen 5.4%. Prices less food and energy rose 0.3% in July, its smallest monthly increase in four months. In July, food prices rose 0.7% and energy prices climbed 1.6%. Shelter prices rose 0.4% in July and 2.8% over the last 12 months. In addition, prices for new vehicles increased 1.7% in July and 6.4% over the last 12 months. Prices for used cars and trucks rose 0.2% last month but have increased 41.7% since July 2020.
  • Producer prices rose 1.0% in July, the same advance as in June. Over the 12 months ended in July, producer prices have risen 7.8%, the largest 12-month increase since November 2010. Prices less foods, energy, and trade services moved up 0.9% in July, the largest advance since climbing 1.0% in January. For the 12 months ended in July, producer prices less foods, energy, and trade services rose 6.1%, the largest increase since 12-month data was first calculated in August 2014. Prices for services rose 1.1% in July, the largest one-month increase since data was first calculated in December 2009. Nearly half of the advance in July is attributable to margins for trade services, which jumped 1.7%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for goods rose 0.6% in July.
  • The number of job openings increased to a series high of 10.1 million on the last business day of June, according to the latest information from the U.S. Bureau of Labor Statistics. The job openings rate rose to 6.5%. Job openings increased in several industries, with the largest increases appearing in professional and business services (+227,000), retail trade (+133,000), and accommodation and food services (+121,000). Hires rose 697,000, or 4.6%, to 6.7 million. Total separations edged up 254,000 to 5.6 million. In June, the number of layoffs and discharges was little changed at 1.3 million, a series low. Within separations, the quits rate increased 2.7% to 3.9 million. Over the 12 months ended in June, hires totaled 72.1 million and separations totaled 65.2 million, yielding a net employment gain of 6.9 million.
  • Prices for U.S. imports increased 0.3% in July after advancing 1.1% the previous month. Much of the monthly increase in imports was driven by higher fuel prices. The July increase in imports was the smallest monthly advance since a 0.1% increase in November 2020. Import prices climbed 10.2% for the 12 months ended in July. Fuel import prices rose 2.9% in July following increases of 5.5% in June. Prices for fuel imports increased 66.5% since July 2020. Import prices excluding fuel were unchanged in July. Export prices rose 1.3% in July following a 1.2% advance in June. Higher nonagricultural export prices in July more than offset lower agricultural export prices. Export prices advanced 17.2% for the year ended in July.
  • The government deficit expanded by 7.3% in July to $302.1 billion. Receipts fell $187.2 billion to $262.0 billion, and government expenditures declined $59.3 billion to $564.1 billion. Through the first 10 months of the 2021 fiscal year, the total government deficit sits at $2.540.0 trillion, 10.5% lower than the government deficit over the same period in fiscal year 2020. Compared to the last fiscal year, total government receipts are up $494.5 billion, while government outlays increased $227.2 billion.
  • For the week ended August 7, there were 375,000 new claims for unemployment insurance, a decrease of 12,000 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 31 was 2.1%, a decrease of 0.1 percentage point from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended July 31 was 2,866,000, a decrease of 114,000 from the prior week’s level, which was revised up by 50,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 883,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 10.5%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 24 were Puerto Rico (4.7%), Illinois (3.8%), New Jersey (3.6%), California (3.5%), New York (3.3%), Connecticut (3.2%), Rhode Island (3.2%), the District of Columbia (3.1%), Louisiana (2.7%), and Nevada (2.7%). The states and territories with the largest increases in initial claims for the week ended July 31 were Indiana (+3,572), Georgia (+1,421), Rhode Island (+1,285), Alabama (+1,226), and Illinois (+1,160), while the largest decreases were in Pennsylvania (-6,113), Texas (-3,745), Michigan (-3,060), Tennessee (-3,000), and Puerto Rico (-2,979).

Eye on the Week Ahead

The housing sector is slowing somewhat. June saw the number of issued building permits lag from May’s total, although housing starts increased. On the other hand, industrial production has risen fairly steadily since February and is expected to continue to rising accommodate increasing demand.

What I’m Watching This Week – 9 August 2021

The Markets (as of market close August 6, 2021)

Stocks closed last week generally higher on the heels of a solid jobs report, which may have quelled worries that economic growth was slowing. Nevertheless, equity returns were volatile for much of the week, reflecting ongoing uncertainty as variant strains of the virus spread and concerns rose over the possibility that the Federal Reserve may begin reeling in its asset-purchasing program sooner than expected. Financials led the market sectors, advancing 3.6% for the week, followed by utilities, which rose 2.3%. Most of the remaining sectors increased less than 1.0%, while consumer staples dipped 0.6%. The benchmark indexes listed here generally posted weekly gains, other than the Russell 2000, which fell 1.2%. Crude oil prices closed the week at $68.50 per barrel, down more than 7.0% from the prior week’s closing price. Gold slipped, the dollar rose, and the yield on 10-year Treasuries climbed higher.

Wall Street erased earlier gains to close lower last Monday. Increasing demand sent the yield on 10-year Treasuries down as low as 1.15%, possibly raising investor concerns about the pace of economic growth. The Nasdaq inched 0.1% higher and the Global Dow rose 0.4%. The Russell 2000 (-0.5%), the Dow (-0.3%), and the S&P 500 (-0.2%) lost value. Materials, industrials, and energy fell, while utilities, health care, and consumer discretionary were market sectors that rose. Crude oil prices and the dollar dipped lower.

Stocks rebounded last Tuesday as strong corporate earnings data offset concerns about the Delta virus variant and China’s deepening regulatory scrutiny of megatech companies. Ten of the 11 market sectors traded higher, pushing the S&P 500 to a record closing high. The Dow, the Nasdaq, the Global Dow, and the Russell 2000 also posted solid gains. Treasury yields and the dollar inched higher, while crude oil prices dipped lower but remained over $70.00 per barrel.

Energy shares fell nearly 3.0% last Wednesday and stocks retreated from the previous day’s strong showing. Among the benchmark indexes, only the Nasdaq eked out a 0.1% gain. The Russell 2000 fell 1.2%, the Dow lost 0.9%, while the Global Dow and the S&P 500 dropped 0.5%. Treasury yields and the dollar climbed higher, while crude oil prices dipped below $70.00 per barrel, closing at roughly $68.47 per barrel — the lowest price since mid July.

Despite hawkish comments from a few members of the Federal Reserve who suggested policy accommodations may be pulled back sooner than expected, the S&P 500 and the Nasdaq closed last Thursday at record highs, and the stock market ended the day with solid returns. The Russell 2000 led the way, gaining 1.8%, while the Dow and the Nasdaq advanced 0.8%. The S&P 500 and the Global Dow climbed 0.6%. The yield on 10-year Treasuries climbed back over 1.21%, crude oil prices continued to fall, and the dollar was generally unchanged. Among the market sectors, energy, financials, and utilities rose more than 1.0%, followed by communication services and consumer discretionary, which increased 0.9%.

Stocks closed last Friday mixed, with the large caps of the Dow (0.4%) and the S&P 500 (0.2%) reaching record highs, while the Nasdaq (-0.4%) and the Russell 2000 (-1.0%) lost value. The Global Dow inched ahead 0.2%. Yields on 10-year Treasuries gained 6.0%, the dollar climbed 0.6%, while crude oil prices dipped 3.0%. Financials, materials, and energy sectors pushed higher, while consumer discretionary and real estate edged lower.

The national average retail price for regular gasoline was $3.159 per gallon on August 2, $0.023 per gallon more than the prior week’s price and $0.983 higher than a year ago. Gasoline production increased during the week ended July 30, averaging 10.2 million barrels per day, up from the prior week’s average of 9.8 million barrels per day. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended July 30; this was 46,000 barrels per day more than the previous week’s average. For the week ended July 30, refineries operated at 91.3% of their operable capacity, up marginally from the prior week’s level of 91.1%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 8/6Weekly ChangeYTD Change
DJIA30,606.4834,935.4735,208.510.78%15.04%
Nasdaq12,888.2814,672.6814,835.761.11%15.11%
S&P 5003,756.074,395.264,436.520.94%18.12%
Russell 20001,974.862,226.252,200.58-1.15%11.43%
Global Dow3,487.523,981.324,034.741.34%15.69%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.23%1.29%6 bps38 bps
US Dollar-DXY89.8492.1492.780.69%3.27%
Crude Oil-CL=F$48.52$73.81$68.47-7.23%41.12%
Gold-GC=F$1,893.10$1,816.70$1,813.60-0.17%-4.20%

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

Last Week’s Economic News

  • Payrolls rose by 943,000 in July following an upwardly revised 938,000 new jobs added in June. The unemployment rate fell by 0.5 percentage point to 5.4%, and the number of unemployed persons fell by 782,000 to 8.7 million. While these rates are well below their highs from the period of February-April 2020, they remain well above their levels prior to the pandemic (3.5% and 5.7 million, respectively). Employment in July is up by 16.7 million since April 2020 but is down by 5.7 million, or 3.7%, from its pre-pandemic level in February 2020. In July, notable job gains occurred in leisure and hospitality (380,000), in local government education (221,000), and in professional and business services (60,000). The number of those who permanently lost their jobs declined by 257,000 to 2.9 million in July but is 1.6 million higher than in February 2020. The labor force participation rate was little changed at 61.7% in July and has remained within a narrow range of 61.4% to 61.7% since June 2020. The participation rate is 1.6 percentage points lower than in February 2020. The employment- population ratio increased by 0.4 percentage point to 58.4% in July and is up by 1.0 percentage point since December 2020. In July, the number of persons not in the labor force who currently want a job was 6.5 million, relatively unchanged over the month but up by 1.5 million since February 2020. In July, 13.2% of employed persons teleworked because of the pandemic, down from 14.4% in the prior month. Last month, 5.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. In July, average hourly earnings increased by $0.11 to $30.54 and have risen 4.0% since July 2020. In July, the average work week was unchanged at 34.8 hours.
  • According to IHS Markit, operating conditions in the manufacturing sector continued to improved in July, with notable expansion in output and new orders, which increased at the second-fastest pace since data collection began in May 2007. Costs and backlogs continued to rise as supplier shortages and delays exerted upward pressure on input costs and hampered firms’ ability to process incoming new work. Overall, the IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ posted 63.4 in July, up from 62.1 in June.
  • The IHS Markit US Services PMI Business Activity Index registered 59.9 in July, down from 64.6 in June. A reading above 50.0 indicates growth, so the services sector continued to expand in July, but at a slower pace than the previous month. In fact, the July rate of expansion in services was the slowest since February, due primarily to a slower rise in new business. Nevertheless, input costs and output charges escalated in July despite their respective rates of inflation softening from May’s historic highs.
  • According to the latest data from the Bureau of Economic Analysis, the international goods and services trade deficit for June was $75.7 billion, an increase of 6.7% over the May deficit. June exports were $207.7 billion, $1.2 billion, or 0.6%, more than May exports. June imports were $283.4 billion, $6.0 billion, or 2.1%, more than May imports. Year to date, the goods and services deficit increased $135.8 billion, or 46.4%, from the same period in 2020. Exports increased $150.9 billion, or 14.3%. Imports increased $286.7 billion, or 21.3%. In June, there were trade in goods surpluses (in billions of dollars) with South and Central America ($4.5), Hong Kong ($1.7), Brazil ($1.5), and Singapore ($0.6). Trade in goods deficits (in billions of dollars) were recorded with China ($27.0), European Union ($19.6), Mexico ($7.2), Germany ($6.3), Canada ($5.5), Japan ($4.9), Italy ($3.7), India ($3.5), Taiwan ($3.3), South Korea ($2.8), France ($1.9), Saudi Arabia ($0.3), and the United Kingdom (less than $0.1).
  • For the week ended July 31, there were 385,000 new claims for unemployment insurance, a decrease of 14,000 from the previous week’s level, which was revised down by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 24 was 2.1%, a decrease of 0.3 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 24 was 2,930,000, a decrease of 366,000 from the prior week’s level, which was revised up by 27,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 1,043,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 10.9%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 17 were California (5.2%), Puerto Rico (5.1%), Nevada (4.1%), Rhode Island (4.0%), Illinois (3.7%), New Jersey (3.7%), Connecticut (3.3%), New York (3.3%), the District of Columbia (3.1%), and Pennsylvania (3.0%). The states and territories with the largest increases in initial claims for the week ended July 24 were California (+8,010), Tennessee (+1,694), Michigan (+449), New Jersey (+420), and Florida (+140), while the largest decreases were in Pennsylvania (-21,218), Texas (-11,154), Kentucky (-7,185), Illinois (-7,060), and Missouri (-5,351).

Eye on the Week Ahead

Inflationary pressures have been rising. Since June 2020, the Consumer Price Index has climbed 5.4% and the Producer Price Index has increased 7.3%. The data for July is available this week for both the CPI and the PPI. Those who study this data expect both indexes to increase by roughly 0.5% in July.

What I’m Watching This Week – 2 August 2021

The Markets (as of market close July 30, 2021)

Equities retreated last week despite strong corporate earnings data. European and Asian stocks slid following China’s regulatory crackdown aimed at large tech companies. Although corporate earnings generally have been solid, last Friday’s lower-than-expected earnings results from some heavily weighted megacaps may have caused some uncertainty about the pace of economic growth. By the close of last week, tech shares fell, pulling the Nasdaq down 1.1%, with the large caps of the Dow and the S&P 500 each declining 0.4%. The small caps of the Russell 2000 climbed 0.8%, while the Global Dow rose 0.4%. Crude oil prices climbed 2.4% to $73.81 per barrel. Gold prices rose nearly 1.0%, while the dollar dipped 0.8%. The yield on 10-year Treasuries decreased 5 basis points. Materials (2.8%) and energy (1.6%) led the market sectors.

Last week began with each of the benchmark indexes posting gains on Monday, as concerns over the resurgent spread of the coronavirus were outweighed by a positive start to corporate earnings season. The Global Dow added 0.7%, followed by the Russell 2000, which edged up 0.3%. The large caps of the Dow and the S&P 500 each gained 0.2%, while the Nasdaq ticked up by less than 0.1%. Treasury yields and the dollar dipped. Crude oil prices climbed marginally higher. The market sectors were mixed, with energy the clear mover after advancing 2.5%. Among the remaining sectors, communication services, consumer discretionary, and materials gained between 0.7% and 0.9%.

The market reversed course last Tuesday as megacap technology stocks tumbled. The Nasdaq posted its largest decline in nearly two months after slipping 1.2%. The S&P 500 fell 0.5%, while the Dow dipped 0.2%. The small caps of the Russell 2000 lost 1.1% and the Global Dow declined 0.2%. Several global markets dipped lower following China’s imposition of a regulatory campaign aimed at the country’s largest tech companies. The drop in tech stocks in China may be having a carryover effect on similar stocks in the United States. The sectors finished mostly lower, with information technology and energy falling 1.0%, while consumer discretionary fell 1.2%. Treasury yields, the dollar, and crude oil prices fell.

Stocks closed last Wednesday mixed, with the Russell 2000 (1.5%), the Nasdaq (0.7%), and the Global Dow (0.1%) edging higher, while the large caps of the Dow fell 0.4%. The S&P 500 ended the day essentially unchanged. The dollar dipped lower, while Treasury yields and crude oil prices rose. Energy and communication services led the market sectors, while consumer staples fell. Strong earnings reports and the Federal Reserve’s statement that accommodative measures will remain in place for some time helped drive stocks higher. Still, concern remains that the global spread of the COVID-19 Delta variant could slow economic recovery.

Each of the benchmark indexes listed here advanced last Thursday following a favorable gross domestic product report and declining unemployment claims. The Global Dow led the way, climbing 0.9%, followed by the Russell 2000 (0.7%), the Dow and the S&P 500 (0.4%), and the Nasdaq (0.1%). The dollar fell, while crude oil prices and the yield on 10-year Treasuries advanced. Communication services (-0.9%) and real estate (-0.2%) were the only market sectors to decline. Financials and materials led the advancing sectors, each increasing 1.1%.

Stocks fell to close the week last Friday, with each of the benchmark indexes losing ground. The Global Dow dipped 0.9%, followed by the Nasdaq (-0.7%), the Russell 2000 (-0.6%), the S&P 500 (-0.5%), and the Dow (-0.4%). The yield on 10-year Treasuries decreased, while the dollar and crude oil prices advanced. Among the sectors, consumer discretionary dropped 2.8% and energy slid 1.8%.

The national average retail price for regular gasoline was $3.136 per gallon on July 26, $0.017 per gallon less than the prior week’s price but $0.961 more than a year ago. Gasoline production increased during the week ended July 23, averaging 9.8 million barrels per day, up from the prior week’s average of 9.1 million barrels per day. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended July 23; this was 132,000 barrels per day less than the previous week’s average. For the week ended July 23, refineries operated at 91.1% of their operable capacity, down from the prior week’s level of 91.4%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 7/30Weekly ChangeYTD Change
DJIA30,606.4835,061.5534,935.47-0.36%14.14%
Nasdaq12,888.2814,836.9914,672.68-1.11%13.85%
S&P 5003,756.074,411.794,395.26-0.37%17.02%
Russell 20001,974.862,209.652,226.250.75%12.73%
Global Dow3,487.523,966.193,981.320.38%14.16%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.28%1.23%-5 bps32 bps
US Dollar-DXY89.8492.8892.14-0.80%2.56%
Crude Oil-CL=F$48.52$72.08$73.812.40%52.12%
Gold-GC=F$1,893.10$1,802.10$1,816.700.81%-4.04%

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 met last week and noted progress on vaccinations, while indicators of economic activity and employment have continued to strengthen. Inflation has been rising, largely reflecting transitory factors. Despite these positive developments, the Committee noted that financial conditions remain accommodative. In lieu thereof, the Committee decided to maintain the target range for the federal funds rate at 0.00%-0.25%. In addition, the Committee will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals.
  • The initial, or advance, estimate of second-quarter gross domestic product showed the pace of economic growth was little changed at 6.5%, up marginally from the 6.3% annualized growth rate of the first quarter. Consumer spending, up 11.8%, was the largest contributor to the second-quarter growth. Consumer spending on services (led by food services and accommodations) rose 12.0% as the economy continued to reopen. Current-dollar GDP increased 13.0% at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion. In the first quarter, current-dollar GDP increased 10.9%, or $560.6 billion. Consumer prices, as measured by the personal consumption price index, increased 6.4% in the second quarter, compared to a first-quarter increase of 3.8%. Excluding food and energy prices, the PCE price index increased 6.1%, compared to an increase of 2.7% in the first quarter. Personal income decreased 22.0% in the second quarter, reflective of a decrease in government social benefits related to pandemic relief programs.
  • Inflationary pressures may indeed prove to be transitory, but prices for consumer goods and services continue to rise. According to the latest Personal Income and Outlays report from the Bureau of Economic Analysis, consumer prices increased 0.5% in June following a similar increase the prior month. Energy prices rose 24.2%, while food prices increased 0.9%. Consumer prices have increased 4.0% since June 2020. Prices, excluding volatile food and energy, rose 0.4% in June and are up 3.5% over the past 12 months. Personal income inched up 0.1% in June after declining 2.2% in May, due in part to a decrease in pandemic-related government benefits. The June increase in personal income is reflective of an increase in employee compensation. Consumer spending rose 1.0% in June.
  • Sales of new, single-family homes dipped 6.6% in June, according to the latest figures from the Census Bureau. The median sales price of new houses sold in June 2021 was $361,800 ($380,700 in May). The average sales price was $428,700 ($434,000 in May). Inventory of new, single-family homes for sale increased to 6.3 months, up from 5.5 months in May. New home sales are 19.4% below the June 2020 estimate.
  • New orders for durable goods increased 0.8% in June, the thirteenth monthly increase out of the last 14 months. Transportation equipment, up for two consecutive months, led the increase, gaining 2.1% in June. Excluding transportation, new orders increased 0.3%. Excluding defense, new orders increased 1.0%. Shipments (+1.0%), unfilled orders (+0.9%), and inventories (+0.9%) advanced in June. New orders for nondefense capital goods, which are used in the production of other goods, increased 3.1% in June. New orders for defense capital goods decreased 1.5% in June.
  • Both imports and exports of goods increased in June, further deepening the international trade in goods deficit. The June trade deficit rose $3.0 billion from May, or 3.5%. Exports climbed $0.5 billion, or 0.3%. Imports increased $3.5 billion, or 1.5%. The trade in goods deficit has risen 28.2% since June 2020. Exports are up 40.6% and imports have advanced 35.5%.
  • For the week ended July 24, there were 400,000 new claims for unemployment insurance, a decrease of 24,000 from the previous week’s level, which was revised up by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 17 was 2.4%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 17 was 3,269,000, an increase of 7,000 from the prior week’s level, which was revised up by 26,000. For comparison, during the same period last year, there were 1,262,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 11.6%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 10 were Puerto Rico (5.2%), California (4.4%), Nevada (4.3%), New Jersey (3.8%), Rhode Island (3.8%), Illinois (3.7%), New York (3.5%), Pennsylvania (3.5%), Connecticut (3.4%), and the District of Columbia (3.2%). The states and territories with the largest increases in initial claims for the week ended July 17 were Michigan (+13,547), Texas (+10,730), Kentucky (+8,945), Missouri (+6,056), and Illinois (+3,915), while states and territories with the largest decreases were New York (-10,727), Puerto Rico (-3,904), Tennessee (-3,510), Oklahoma (-3,393), and Georgia (-1,870).

Eye on the Week Ahead

Purchasing managers surveys on the manufacturing and services sectors for July are out this week. But most attention will be paid to the July employment figures, out this Friday. There were 850,000 new jobs added in June. Overall, there were 1.7 million new jobs added over the second quarter of 2021.

Monthly Market Review – July 2021

The Markets (as of market close July 30, 2021)

Stocks closed generally higher in July, despite a downturn at the end of the month. Second-quarter corporate earnings data was generally strong, although some megacap companies posted weaker-than-expected earnings results. Economic news was mostly favorable. The economy expanded at an annualized rate of 6.5%, 850,000 new jobs were added, while the number of new unemployment claims declined. Industrial production rose, as did new orders for durable goods.

The housing market showed signs of slowing from its torrid pace earlier in the year. Inflation continued to run hot as consumer prices jumped 0.9%. The Federal Reserve indicated that, while the economy continues to show signs of growth, the interest rate target range and bond-buying measures will remain in place for some time.

The major indexes enjoyed a strong month, led by the S&P 500. Only the Russell 2000 and the Global Dow failed to post monthly gains. Each of the benchmarks are well ahead of their 2020 year-end values, led by the S&P 500, followed by the Global Dow, the Dow, the Nasdaq, and the Russell 2000.

The market sectors ended the month generally higher, with health care (4.7%), real estate (4.6%), utilities (4.2%), and information technology (3.8%) advancing, while energy (-8.4%) and financial services (-0.6%) fell. Treasury yields, crude oil prices, and the dollar slid from the June closing values. Gold prices advanced.

Stock Market Indexes

Market/Index2020 ClosePrior MonthAs of July 30Monthly ChangeYTD Change
DJIA30,606.4834,502.5134,935.471.25%14.14%
Nasdaq12,888.2814,503.9514,672.681.16%13.85%
S&P 5003,756.074,297.504,395.262.27%17.02%
Russell 20001,974.862,310.552,226.25-3.65%12.73%
Global Dow3,487.524,001.683,981.32-0.51%14.16%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.44%1.23%-21 bps32 bps
US Dollar-DXY89.8492.3492.14-0.22%2.56%
Crude Oil-CL=F$48.52$73.51$73.81-0.41%52.12%
Gold-GC=F$1,893.10$1,770.50$1,816.702.61%-4.04%

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: Job growth in June exceeded expectations following the addition of 850,000 new jobs. The May figure was revised up from 559,000 to 583,000. Overall, 1.7 million new jobs were added over the second quarter of 2021. Notable job growth in June occurred in leisure and hospitality (+343,000), with over half the job gain coming from food services and drinking places (+194,000). Job gains also occurred in public and private education (+269,000), professional and business services (+72,000), and retail trade (+67,000). In June, the unemployment rate inched up 0.1 percentage point to 5.9%, with the number of unemployed persons rising by 168,000 to 9.5 million. These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the pandemic (3.5% and 5.7 million, respectively, in February 2020). Among the unemployed, the number of persons on temporary layoff was essentially unchanged at 1.8 million. This measure is down considerably from the recent high of 18.0 million in April 2020 but is 1.1 million higher than in February 2020. The number of job leavers, that is, unemployed persons who quit or voluntarily left their previous job and began looking for new employment, increased by 164,000 to 942,000 in June. In June, the number of persons not in the labor force who currently want a job was 6.4 million, little changed over the month but up by 1.4 million since February 2020. In June, the number of employed persons who teleworked because of the pandemic fell to 14.4%, down from 16.6% in the prior month. In June, 6.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This measure is down from 7.9 million in May. in June, the labor force participation rate and the employment-population ratio were unchanged at 61.6% and 58.0%, respectively. Average hourly earnings increased by $0.10 to $30.40 in June after increasing $0.15 in May. Average hourly earnings are up 3.6% from June 2020. The average work week dipped from 34.9 hours in May to 34.7 hours in June.
  • The number of claims for unemployment insurance continue to fall gradually. According to the latest weekly totals, as of July 17 there were 3,269,000 workers receiving unemployment insurance benefits, down from the June 19 total of 3,484,000. The unemployment rate for the week ended July 17 was 2.4%, unchanged from a month earlier. During the week ended July 10, Extended Benefits were available in 12 states; 47 states and territories reported 5,246,162 continued weekly claims for Pandemic Unemployment Assistance benefits (5,950,167 in June), and 46 states and territories reported 4,233,883 continued claims for Pandemic Emergency Unemployment Compensation benefits (5,273,180 in June).
  • FOMC/interest rates: Following its meeting in July, the Federal Open Market Committee decided to keep the target range for the federal funds rate at 0.00%-0.25% and expects to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment, and inflation has risen to 2% and is on track to moderately exceed 2% for some time. The FOMC also decided to continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month.
  • GDP/budget: According to the advance estimate, the economy accelerated at an annual rate of 6.5% in the second quarter of 2021 after advancing 6.3% in the first quarter of 2021. Consumer spending, as measured by personal consumption expenditures, increased 11.8% in the second quarter after rising 11.4% in the prior quarter. In the second quarter, nonresidential (business) fixed investment climbed 8.0% following a 12.9% increase in the first quarter; residential fixed investment fell 9.8% after increasing 13.3% in the first quarter. Exports rose 6.0% in the second quarter after decreasing 2.9% in the first quarter, and imports (which are a negative in the calculation of GDP) increased 7.8% in the second quarter (9.3% in the first quarter). The personal consumption expenditures price index (cost of consumer goods and services) increased 6.4% in the second quarter, compared with a 3.8% rise in the first quarter.
  • The Treasury budget deficit was $174.2 billion in June, following the May deficit of $132.0 billion. The deficit is nearly 80.0% smaller than the pandemic-inflated deficit of June 2020. Following the latest increase, the budget deficit through the first nine months of the current fiscal year widened to $2.24 trillion, 18.0% lower than last year’s deficit over the same period. Compared to last fiscal year, government expenditures have declined 6.0%, while receipts have increased 35.0%.
  • Inflation/consumer spending: Inflationary pressures continued to advance in June. According to the latest Personal Income and Outlays report, consumer prices edged up 0.5% in June, the same increase as May. Prices have increased 4.0% since June 2020. Excluding food and energy, consumer prices rose 0.4% in June (0.5% in May) and 3.5% since June 2020. Personal income increased 0.1% in June after falling 2.2% in May. Compensation of employees rose 0.7% in June, with wages and salaries increasing 0.8%. Disposable personal income was essentially unchanged in June from May. Consumer spending rose 1.0% in June following a 0.1% dip in May.
  • The Consumer Price Index climbed 0.9% in June — the largest one-month increase since June 2008. Over the 12 months ended in June, the CPI rose 5.4% — the largest 12-month increase since a 5.4% increase for the period ended in August 2008. A 10.5% rise in prices for cars and trucks accounted for more than one-third of the overall June price increase. Food prices increased 0.8% and energy prices rose 1.5%, with gasoline prices climbing 2.5%. Core prices, excluding food and energy, climbed 0.9% in June and have advanced 4.5% over the last 12 months — the largest 12-month increase since the period ended in November 1991. Over the last 12 months, energy prices have risen 24.5% and food prices have increased 2.4%.
  • Prices that producers receive for goods and services continued to climb in June, increasing 1.0% after advancing 0.8% in May. Producer prices increased 7.3% for the 12 months ended in June, the largest yearly gain since November 2010 when 12-month data was first calculated. In June, prices for services rose 0.8% and prices for goods moved up 1.2%. Producer prices less foods, energy, and trade services advanced 0.5% in June and have risen 5.5% since June 2020, the largest 12-month increase since August 2014.
  • Housing: Over the past several months, residential sales have slowed. In June, sales of existing homes increased for the first time in the last five months, climbing 1.4% after decreasing 0.9% in May. Over the past 12 months, existing home sales increased 22.9%. The median existing-home price was $363,300 in June ($350,300 in May), up 23.4% from May 2020. Unsold inventory of existing homes represented a 3.3-month supply in June, higher than the 2.5-month supply in May. Sales of existing single-family homes rose 1.4% in June following a 1.0% drop in May. Year over year, sales of existing single-family homes rose 19.3%. The median existing single-family home price was $370,600 in June, up from $356,600 in May.
  • New single-family home sales declined in June for the third consecutive month. New home sales fell 6.6% in June after falling 5.9% in May. Sales of new single-family homes have decreased 19.4% from June 2020. The median sales price of new single-family houses sold in June was $361,800 ($374,400 in May). The June average sales price was $428,700 ($430,600 in May). The inventory of new single-family homes for sale in June represents a supply of 6.3 months at the current sales pace, up from the May estimate of 5.5 months.
  • Manufacturing: Industrial production increased 0.4% in June after advancing 0.7% the previous month. Manufacturing output edged down 0.1% in June following a 0.9% increase in May. In June, mining increased 1.4% (1.2% in May) and utilities rose 2.7% (0.2% in May). Total industrial production in June was 9.8% higher than its year-earlier level, but it was 1.2% below its pre-pandemic (February 2020) level.
  • New orders for durable goods increased 0.8% in June after climbing 3.2% in May. Transportation equipment, up for two consecutive months, led the increase, climbing 2.1% in June. Excluding transportation, new orders increased 0.3% in June. Excluding defense, new orders rose 1.0%. New orders for capital goods advanced 2.6% in June following a 6.9% increase in May. New orders for nondefense capital goods increased 3.1% in June, while new orders for defense capital goods fell 1.5%.
  • Imports and exports: Both import and export prices rose in June for the seventh consecutive month. Import prices climbed 1.0% following a 1.4% advance in May. Import prices rose 11.2% over the 12 months ended in June. Import fuel prices increased 4.7% in June following a 4.0% jump in May. Import fuel prices advanced 85.1% for the year ended in June. Nonfuel import prices climbed 0.7% in June following a 0.9% advance in May. Export prices increased 1.2% in June after climbing 2.2% in May. For the year ended in June, the price index for exports rose 16.8%. Agricultural export prices increased 1.5% in June following a 6.1% advance in May. Nonagricultural exports rose 1.1% in June after increasing 1.7% in May.
  • The international trade in goods deficit was $91.2 billion in June, up $3.0 billion, or 3.5%, from May. Exports increased $0.5 billion, or 0.3%, while imports rose $3.5 billion, or 1.5%. For the 12 months ended in June, exports have risen 40.6%, while imports have increased 35.5%.
  • The latest information on international trade in goods and services, out July 2, is for May and shows that the goods and services trade deficit increased by 3.1% to $71.2 billion. May exports rose 0.6%, while imports increased 1.3%. Year over year, the goods and services deficit increased $110.9 billion, or 45.8%, from May 2020. Exports increased $101.6 billion, or 11.4%. Imports increased $212.5 billion, or 18.7%.
  • International markets: While inflation continues to heat up in the United States, other parts of the world are not seeing that trend. Japanese consumer prices continue to hover near zero, and the Bank of Japan does not expect its 2.0% target to be met in the next few years. On the other hand, other parts of the world are seeing mounting inflationary pressures. The Producer Price Index in Germany rose in June, pushing the annual inflation rate to 8.5%. The German Consumer Price Index is up 3.8% since June 2020. Overall, global markets were mixed in June. Solid earnings data and continuing quantitive easing helped lift investor confidence in some areas, which was tempered by the spread of covid virus strains. For June, the STOXX Europe 600 Index gained about 0.9%; the United Kingdom’s FTSE dipped 0.3%; Japan’s Nikkei 225 Index fell 5.2%; and China’s Shanghai Composite Index declined nearly 3.5%.
  • Consumer confidence: According to the latest report from the Conference Board, consumer confidence was relatively unchanged in July. The Consumer Confidence Index® stands at 129.1, up marginally from 128.9 in June. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose from 159.6 in June to 160.3 in July. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, was virtually unchanged at 108.4 in July compared to 108.5 in June. According to the report, consumer confidence was flat in July but remains at its highest level since the onset of the pandemic in February 2020.

Eye on the Month Ahead

While the summer began with an easing of pandemic-related restrictions, which helped spur economic growth, the rapid spread of the coronavirus, particularly the Delta strain, raises the possibility of reinstituting some of those same restrictions in August. Job growth and industrial production, which had been steadily improving, may be stunted as we move into the later part of the summer and into the fall.

What I’m Watching This Week – 26 July 2021

The Markets (as of market close July 23, 2021)

Last week proved to be a choppy one for stocks. The week began with stocks trending lower on news of a spike in the number of coronavirus cases. However, strong corporate earnings reports helped support the perception that the economy is continuing to advance, despite the cloud of the Delta variant hanging overhead. By last Friday, both the Nasdaq and the S&P 500 reached record highs, with megacap tech stocks helping drive the indexes upward. The Nasdaq gained 2.8% to lead the major benchmark indexes, followed by the Russell 2000, the S&P 500, the Dow, and the Global Dow. Yields on 10-year Treasuries dipped 2.0 basis points lower, while the dollar and crude oil prices each ended the week higher. Gold prices, which had been climbing, took a slight step back, falling about 0.5%.

Stocks slumped last Monday to begin last week as a spike in coronavirus cases, both domestically and abroad, put a damper on the economic recovery. Investors shied away from stocks and moved toward bonds, driving prices higher and yields lower. Each of the market sectors fell, led by financials, industrials, and materials. The S&P 500 dropped the most in two months, the Dow had its largest decline since October, while the small caps of the Russell 2000 continued to sink, falling nearly 10% since peaking in March. The CBOE Volatility Index, which had been relatively steady for several sessions, soared nearly 22.0%. Crude oil prices fell 7.4% to $66.51 per barrel — the first time prices fell below $70.00 per barrel since early June, after major oil-producing countries agreed to boost supply into 2022.

Wall Street closed higher last Tuesday, rebounding from a multi-session losing streak. Several strong corporate earnings reports helped renew investor optimism, at least temporarily, in a reviving economy. Each of the benchmark indexes posted solid gains, led by the Russell 2000 (3.0%), which enjoyed its first positive session since July 12. The Dow and the Nasdaq each gained 1.6%, followed by the S&P 500, which advanced 1.5%, and the Global Dow, which gained 1.0%. Industrials, financials, and real estate headed the sectors, with only consumer staples dipping modestly. The yield on 10-year Treasuries reversed course from last Monday, climbing to 1.20%. The dollar and crude oil prices also advanced by the close of trading.

Stocks advanced for the second straight day last Wednesday. Robust corporate earnings reports helped fuel renewed optimism in the economy, despite increasing coronavirus cases and inflation. The Russell 2000 again led the indexes, climbing 1.7%, followed by the Global Dow (1.5%) and the Nasdaq (0.9%). Both the Dow and the S&P 500 gained 0.8%. Energy shares advanced 3.5%, and financials increased 1.7%. Crude oil prices climbed back above $70.00 per barrel. The dollar dipped, while the yield on 10-year Treasuries jumped 7.1 basis points to 1.28%.

Equities closed last Thursday mostly higher, with only the Russell 2000 losing ground among the benchmark indexes. Technology led the market sectors, with health care, consumer discretionary, and communication services also advancing. Energy and financials both fell more than 1.0%. Treasury yields dipped lower, while the dollar and crude oil prices rose higher.

Another round of robust corporate profits helped push stocks to record highs last Friday. Surging earnings are reflecting an ongoing rise in economic activity, possibly allaying fears that stocks are overvalued. The Nasdaq and the S&P 500 each gained 1.0%, while the Dow (0.7%), the Russell 2000 (0.5%), and the Global Dow (0.4%) also finished the day ahead. Yields on 10-year Treasuries, the dollar, and crude oil prices advanced. Communication services led the sectors, increasing 2.7%.

The national average retail price for regular gasoline was $3.153 per gallon on July 19, $0.020 per gallon higher than the prior week’s price and $0.967 more than a year ago. Gasoline production decreased during the week of July 19, averaging 9.1 million barrels per day, down from the prior week’s average of 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 16.0 million barrels per day during the week ended July 16; this was 87,000 barrels per day less than the previous week’s average. For the week ended July 19, refineries operated at 91.4% of their operable capacity, down from the prior week’s level of 91.8%.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 7/23Weekly ChangeYTD Change
DJIA30,606.4834,687.8535,061.551.08%14.56%
Nasdaq12,888.2814,427.2414,836.992.84%15.12%
S&P 5003,756.074,327.164,411.791.96%17.46%
Russell 20001,974.862,163.242,209.652.15%11.89%
Global Dow3,487.523,941.753,966.190.62%13.73%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.30%1.28%-2 bps37 bps
US Dollar-DXY89.8492.7192.880.18%3.38%
Crude Oil-CL=F$48.52$71.46$72.080.87%48.56%
Gold-GC=F$1,893.10$1,811.70$1,802.10-0.53%-4.81%

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 housing sector continues to slow down from its accelerated pace. Building permits issued, housing starts, and housing completions each fell in June from their respective May totals. Building permits dipped 5.1% in June but are up 23.35% from June 2020. Housing starts slid 1.3% in June but have risen 43.3% over the past 12 months. Housing completions are 6.5% over their June 2020 totals, despite falling 1.4% last month. Building permits for single-family homes fell 6.3% and single-family home completions dropped 6.1% in June. However, single-family housing starts increased 6.3% last month.
  • Sales of existing homes increased 1.4% in June, snapping a streak of four consecutive monthly declines. Overall, existing home sales are up 22.9% over June 2020. Inventory was still relatively scarce in June, however. Unsold inventory sat at a 2.6-month supply at the current sales pace in June, modestly up from May’s 2.5-month supply but down from 3.9 months in June 2020. The median existing home price in June was $363,300, up from $350,300 in May and 23.4% over the June 2020 median sales price of $294,400. Sales of existing single-family homes also rose 1.4% in June and are up 19.3% since June 2020. The median existing single-family home price was $370,600 in June, 3.9% higher than the May median price of $356,600.
  • For the week ended July 17, there were 419,000 new claims for unemployment insurance, an increase of 51,000 from the previous week’s level, which was revised up by 8,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 10 was 2.4%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 10 was 3,236,000, a decrease of 29,000 from the prior week’s level, which was revised up by 24,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. For comparison, during the same period last year, there were 1,398,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 11.2%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 3 were Virgin Islands (4.8%), Puerto Rico (4.7%), Nevada (4.1%), Rhode Island (3.9%), California (3.8%), Illinois (3.7%), New Jersey (3.7%), New York (3.6%), Connecticut (3.5%), the District of Columbia (3.1%), and Pennsylvania (3.1%). The largest increases in initial claims for the week ended July 10 were in Texas (+10,091), New York (+8,190), Pennsylvania (+4,319), Tennessee (+3,061), and Missouri (+1,793), while the largest decreases were in Georgia (-5,286), Rhode Island (-4,807), Puerto Rico (-3,934), Kentucky (-3,771), and Maryland (-2,497).

Eye on the Week Ahead

There’s plenty of important market-moving economic information available this week, starting with the latest meeting of the Federal Open Market Committee. The FOMC has maintained the federal funds interest rate and bond purchasing program for several months. However, inflation has been trending higher in conjunction with an improving economy. At some point, the Committee with begin to scale back the quantitative easing measures currently in place, which will likely have a direct impact on the market. Also, the second estimate of gross domestic product for the second quarter is available this week. The initial estimate showed that the economy expanded at an annualized rate of 6.4% in the second quarter.