What I’m Watching This Week – 8 August 2022

The Markets (as of market close August 5, 2022)

Stocks closed last week generally higher. A surprisingly strong labor report for July helped alleviate recession fears, but opened the door to more interest-rate hikes from the Federal Reserve as it continues to slow inflation. The S&P 500 and the Nasdaq finished higher for the third straight week, the longest weekly rally since April. The Russell 2000 also enjoyed a solid week. The Dow and the Global Dow dipped lower. The apparent strength of the labor sector seemingly lends credence to the Fed’s premise that the economy is resilient enough to withstand larger interest-rate increases. A 75-basis point rate increase is now more likely when the Fed meets next in September. More rate hikes may pose a challenge for interest-sensitive stocks, like tech shares. Nevertheless, recent strong corporate earnings reports, coupled with strength in the labor sector, should bolster economic sentiment. Last week, crude oil prices posted the largest weekly loss since April after decreasing nearly $10.00 per barrel. Signs of a global economic slowdown has curbed demand, sending prices to their lowest level in six months. Falling crude oil prices are helping drive gasoline prices lower, with several states now posting average regular gasoline prices below $4.00 per gallon.

Last Monday saw stocks dip lower, unable to maintain a three-day rally. Wall Street enjoyed a strong July, partly on the speculation that the Federal Reserve would scale back its program of interest-rate increases. However, some Fed officials hinted that the central bank will need to raise rates further to bring inflation under control. Of the benchmark indexes listed here, only the Global Dow advanced, gaining 0.3%. The S&P 500 slid 0.3%, followed by the Nasdaq, which lost 0.2%. The Dow and the Russell 2000 fell 0.1%. Ten-year Treasury yields also fell, dropping 3.6 basis points to close last Monday at 2.60%. Weak demand sent crude oil prices down $4.70 to end the day at about $93.92 per barrel. The dollar fell, while gold prices advanced.

Stocks closed lower last Tuesday, while long-term Treasury yields climbed higher. Investors retreated from stocks following more rhetoric from Federal Reserve officials indicating that they’re “nowhere near” done with efforts to tamp down on inflation, coupled with China’s response to House Speaker Nancy Pelosi’s visit to Taiwan. Among the benchmark indexes listed here, the Global Dow (-1.3%) and the Dow (-1.2%) dipped the furthest, followed by the S&P 500 (-0.7%), the Nasdaq (-0.2%), and the Russell 2000 (-0.1%). Ten-year Treasury yields spiked 13.5 basis points to hit 2.74% by the close of trading. The dollar and crude oil prices edged higher, while gold prices fell.

Wall Street surged higher last Wednesday, reversing course from the previous couple of days. The Nasdaq gained 2.6%, ending at a three-month high. Strong profit forecasts from some major companies helped lift investors’ spirits. The S&P 500 and the Russell 2000 climbed 1.5%, the Dow rose 1.3%, and the Global Dow added 0.5%. Yields on 10-year Treasuries ended the day where they began. Crude oil prices fell $3.57 to $90.85 per barrel. The dollar increased marginally, while gold prices slid lower.

Stocks ended last Thursday mixed as investors awaited Friday’s jobs report. The Nasdaq (0.4%) and the Global Dow (0.2%) gained ground, while the Dow (-0.3%), the S&P 500 (-0.1%), and the Russell 2000 (-0.1%) slid lower. Bond prices advanced, pulling yields lower. Ten-year Treasury yields lost 7.2 basis points to close at 2.67%. Crude oil prices fell below $90.00 per barrel for the first time since February, which should help drive prices at the pump lower. The dollar dipped lower. Gold prices reversed a negative trend, gaining $33.20 to reach $1,809.60 per ounce. Last Friday saw Wall Street end the day with mixed returns. The Russell 2000 (0.8%), the Dow (0.2%), and the Global Dow (0.1%) posted gains, while the Nasdaq (-0.5%) and the S&P 500 (-0.2%) fell. Bond prices declined, sending yields higher. The yield on 10-year Treasuries gained 16.4 basis points to reach 2.84%. Crude oil prices continued to fall, hitting $88.36 per barrel. The dollar rose, while gold prices sank.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 8/5Weekly ChangeYTD Change
DJIA36,338.3032,845.1332,803.47-0.13%-9.73%
Nasdaq15,644.9712,390.6912,657.552.15%-19.10%
S&P 5004,766.184,130.294,145.190.36%-13.03%
Russell 20002,245.311,885.731,921.821.91%-14.41%
Global Dow4,137.633,639.483,625.72-0.38%-12.37%
Fed. Funds target rate0.00%-0.25%2.25%-2.50%2.25%-2.50%75 bps225 bps
10-year Treasuries1.51%2.64%2.84%20 bps133 bps
US Dollar-DXY95.64105.83106.570.70%11.43%
Crude Oil-CL=F$75.44$98.23$88.36-10.05%17.13%
Gold-GC=F$1,830.30$1,778.80$1,790.400.65%-2.18%

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

Last Week’s Economic News

  • July’s labor data showed strength in that sector. There were 528,000 new jobs added, well above the 398,000 added in June and larger than the average monthly gain over the prior four months (388,000). Last month, the unemployment rate dipped 0.1 percentage point to 3.5%, and the total number of unemployed persons decreased 242,000 to 5.7 million. In July, job growth occurred in several areas, led by leisure and hospitality, professional and business services, and health care. Among the unemployed, the number of persons who permanently lost jobs, at 1.2 million in July, continued to trend down over the month and is 129,000 lower than in February 2020 prior to the pandemic. Last month, 2.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. In July, the labor force participation rate, at 62.1%, and the employment-population ratio, at 60.0%, were little changed over the month. In July, 7.1% of employed persons teleworked because of the pandemic, unchanged from the prior month. In July, average hourly earnings rose by $0.15, or 0.5%, to $32.27. Over the past 12 months, average hourly earnings have increased by 5.2%. In July, the average work week was 34.6 hours, unchanged for the fifth month in a row.
  • According to the survey of purchasing managers, manufacturing further weakened in July. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 52.2 in July, down from 52.7 in June. Contributing to the drop in manufacturing was the first decline in output since June 2020. Demand weakened as new orders fell at the fastest pace in over two years. Input costs paid by manufacturers rose in July, but at a slower pace than in previous months. The increase in manufacturers’ costs was largely attributable to greater transportation, fuel, and raw material prices. Firms generally passed higher costs to consumers, as output charges rose at an historically elevated pace.
  • Business activity in the services sector decreased in July, the first decline since June 2020. The S&P Global US Services PMI Business Activity Index registered 47.3 in July, down from 52.7 in June, marking the fourth successive decline in the services index. Survey respondents reported a contraction in output that was linked to subdued demand, worsening financial conditions, and higher prices.
  • According to the latest Job Openings and Labor Turnover report for June, the number of job openings fell 605,000 to 10.7 million. The largest decreases in job openings were in retail trade (-343,000), wholesale trade (-82,000), and state and local government education (-62,000). In June, the number of hires was little changed at 6.4 million. Also in June, total separations, which include quits, layoffs, and discharges, were little changed at 5.9 million. Quits, which are a measure of workers’ willingness or ability to leave jobs, were 4.2 million, little changed from the previous month.
  • The international trade in goods and services trade deficit decreased in June for the third consecutive month. The trade deficit was $79.6 billion in June, down 6.2% from the May deficit. In June, exports increased 1.7%, while imports decreased 0.3%. Year to date, the goods and services deficit increased $134.1 billion, or 33.4%, from the same period in 2021. Over that same period, exports increased 20.0% and imports rose 23.3%.
  • The national average retail price for regular gasoline was $4.192 per gallon on August 1, $0.138 per gallon below the prior week’s price but $1.033 higher than a year ago. Also as of August 1, the East Coast price decreased $0.112 to $4.094 per gallon; the Gulf Coast price fell $0.138 to $3.693 per gallon; the Midwest price dropped $0.191 to $4.036 per gallon; the West Coast price slid $0.107 to $5.159 per gallon; and the Rocky Mountain price fell $0.145 to $4.511 per gallon. Residential heating oil prices averaged $3.625 per gallon on July 29, about $0.169 per gallon more than the prior week’s price. According to the U.S. Energy Information Administration, the breakdown of what we pay for a gallon of regular gasoline is as follows: 10% for taxes, 8% for distribution and marketing, 27% for refining, and 55% for crude oil.
  • For the week ended July 30, there were 260,000 new claims for unemployment insurance, an increase of 6,000 from the previous week’s level, which was revised down by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 23 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 23 was 1,416,000, an increase of 48,000 from the previous week’s level which was revised up by 9,000. States and territories with the highest insured unemployment rates for the week ended July 16 were Puerto Rico (2.2%), New Jersey (2.1%), California (1.9%), Connecticut (1.9%), Rhode Island (1.8%), New York (1.6%), Massachusetts (1.5%), Pennsylvania (1.5%), Alaska (1.2%), Illinois (1.2%), and Nevada (1.2%). The largest increases in initial claims for the week ended July 23 were in Kentucky (+1,051), Virginia (+283), New Mexico (+51), the Virgin Islands (+21), and South Dakota (+7), while the largest decreases were in Massachusetts (-7,490), New York (-5,769), South Carolina (-3,170), California (-3,122), and Alabama (-2,125).

Eye on the Week Ahead

The latest inflation data is front and center this week with the releases of the July Consumer Price Index, the Producer Price Index, and import and export prices. Over the past 12 months ended in June, the CPI is up 9.1%, the PPI has advanced 11.3%, import prices have risen 10.7%, and export prices are up 18.2%.

Monthly Market Review – July 2022

The Markets (as of market close July 29, 2022)

July saw the stock market ebb and flow throughout the month. Sometimes the market reacted in response to news of some sort. Other times, stocks moved in anticipation of something that may happen. For instance, the latest quarterly corporate earnings reports generally have been better than expected, with about 75% of the S&P 500 companies beating analysts’ estimates. However, investors responded negatively following reports that a major retailer was slashing its profit outlook. On the other hand, traders moved to equities following a strong labor report early in the month. The latest Consumer Price Index rose higher than expected, indicating inflation was not close to retreating. Following that report, investors retreated from equities, anticipating that the Federal Reserve would accelerate its tightening policy and raise interest rates more than 75 basis points. In fact, at the end of the month, the Fed bumped up interest rates 75 basis points, as expected. Interestingly, the market jumped higher after the latest interest-rate hike. Investors replaced anticipation of an acceleration in rate increases with expectations that the Fed may not need to be as aggressive as some had feared. Nevertheless, rising inflation, which has led to multiple interest rate hikes, supply bottlenecks, decelerating gross domestic product, the emergence of new COVID strains, and the ongoing Russia/Ukraine war promoted fears of an economic recession. Yet, there is enough favorable economic data to offer some hope.

Inflation continued to dominate the economic news throughout the month. Not only did the CPI advance more than expected, but the personal consumption expenditures index (a preferred inflation indicator of the Federal Reserve) hit a 40-year high. The real estate sector continued to slow in July after setting a torrid pace in 2021 and early in 2022. However, the labor market showed strength, adding nearly 400,000 new jobs, while wages have increased more than 5.0% over the past 12 months. After raising the federal funds rate late in the month, Federal Reserve Chair Jerome Powell hinted that the pace of interest-rate hikes may eventually slow to assess the cumulative impact on the economy. Gross domestic product decelerated for the second straight quarter, for the three-month period ended in June. Industrial production also slowed in June, with manufacturing output falling for the second consecutive month.

Crude oil prices declined for the second consecutive month in July, something that hasn’t happened since 2020. Rising inflation has cut into consumer spending, weakening demand. Crude oil prices advanced over 10.0% to nearly $115.00 per barrel. Gas prices also continued to fall in July after reaching record highs in May and June. The national average retail price for regular gasoline was $4.330 per gallon on July 25, down from $4.872 on June 27 but $1.194 over a year ago.

Overall, stocks enjoyed the strongest month since 2020. The S&P 500 had its best month since November 2020, while the Nasdaq’s monthly performance was the best since April 2020. Investors saw strong corporate earnings reports as a positive sign for stocks, an indication that the economy may have some strength in it. Consumer discretionary, technology, and industrials led the market sectors. Ten-year Treasury yields ended the month down 33.0 basis points. Gold prices decreased nearly $30.00. The U.S. dollar road the ebbs and flows of the stock market and bond prices, ultimately ending the month higher than it started.

Stock Market Indexes

Market/Index2021 ClosePrior MonthAs of July 29Monthly ChangeYTD Change
DJIA36,338.3030,775.4332,845.136.73%-9.61%
Nasdaq15,644.9711,028.7412,390.6912.35%-20.80%
S&P 5004,766.183,785.384,130.299.11%-13.34%
Russell 20002,245.311,707.991,885.7310.41%-16.01%
Global Dow4,137.633,507.373,639.483.77%-12.04%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%2.25%-2.50%75 bps225 bps
10-year Treasuries1.51%2.97%2.64%-33 bps113 bps
US Dollar-DXY95.64104.70105.831.08%10.65%
Crude Oil-CL=F$75.44$105.82$98.23-7.17%30.21%
Gold-GC=F$1,830.30$1,808.00$1,778.80-1.62%-2.81%

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

Latest Economic Reports

  • Employment: Employment rose by 372,000 in June, in line with the prior three-month average (383,000). Notable job gains occurred in professional and business services, leisure and hospitality, and health care. With the June increase, employment is down by only 524,000, or 0.3%, from its pre-pandemic level in February 2020. The unemployment rate remained at 3.6% for the fourth month in a row. The number of unemployed persons dipped marginally to 5.9 million. By comparison, in February 2020 prior to the coronavirus pandemic, the unemployment rate was 3.5%, and the number of unemployed persons increased by about 200,000 to 5.9 million. Among the unemployed, the number of workers who permanently lost their jobs was 1.3 million in June (1.4 million in May). The number of persons who were unable to work because their employer closed or lost business due to the pandemic rose to 2.1 million, up from 1.8 million in May. The labor force participation rate was little changed at 62.2% in June. The employment-population ratio fell by 0.3 percentage point to 59.9%. Both measures remain below their February 2020 values (63.4% and 61.2%, respectively).In June, average hourly earnings rose by $0.10 to $32.08. Over the last 12 months ended in June, average hourly earnings increased by 5.1%. The average work week was 34.5 hours in June, down 0.1 percentage point from the previous month.
  • There were 256,000 initial claims for unemployment insurance for the week ended July 23 (231,000 on June 25), while the total number of insured unemployment claims was 1,359,000 as of July 16 (1,372,000 on June 25). A year ago, there were 411,000 initial claims for unemployment insurance and 3,082,000 total insured unemployment claims.
  • FOMC/interest rates: Following its meeting in July, the Federal Open Market Committee increased the federal funds target rate range by 75.0 basis points to 2.25%-2.50%. In support of its decision, the Committee noted that it is “highly attentive to inflation risks” and that it is “strongly committed to returning inflation to its 2.0% objective.”
  • GDP/budget: Gross domestic product decreased 0.9% in the second quarter of 2022 after falling 1.6% in the first quarter. The economy has decelerated for two months in a row. A portion of the second-quarter downturn is attributable to sectors impacted by higher interest rates that are cutting into demand (e.g., housing, nonresidential fixed investment), while inflation and ongoing supply chain disruptions are impacting production. Consumer spending rose 1.0% in the second quarter after increasing 1.8% in the first quarter. Most of the increase in consumer spending is attributable to a 4.1% jump in services, while spending on durables slid 2.6%. Also dragging down GDP was a 3.9% decline in fixed investment, within which residential fixed investment dropped 14.0%, evidence of the slowdown in the housing sector. Nonresidential (business) fixed investment dipped 0.1% after rising 10.0% in the previous quarter. Exports rose 18.0% in the second quarter, while imports, which are a negative in the calculation of GDP, advanced 3.1% after jumping 18.9% in the first quarter. In the second quarter, the personal consumption expenditures price index, a measure of inflation, increased 7.1%, the same increase as in the first quarter.
  • The Treasury budget deficit came in at $88.8 billion in June, up from $66.2 in May but down from the deficit of $174.2 billion in June 2021. Through the first nine months of fiscal year 2022, the deficit sits at $515.1 billion, $1,722.9 billion lower than the deficit over the same period in fiscal year 2021, as outlays dropped $943.6 billion while receipts increased $779.3 billion. So far in this fiscal year, individual income tax receipts have risen 34.3% and corporate income tax receipts have increased 15.4%.
  • Inflation/consumer spending: Overall, inflationary pressures continued to advance in June. According to the latest Personal Income and Outlays report, the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve, climbed 1.0% in June after advancing 0.6% in May. Consumer prices have risen 6.8% since June 2021. Personal income increased 0.6% in June, the same increase as in the previous month. Disposable personal income rose 0.7% in June (0.6% in May). Consumer spending jumped 1.1% in June following a 0.3% increase in May.
  • The Consumer Price Index climbed 1.3% in June after climbing 1.0% in the previous month. The June increase was broad-based, with advances in prices for shelter, gasoline, and food being the largest contributors. The energy index rose 7.5% in June, with prices for gasoline climbing 11.2%. Prices for food rose 1.3% in June (1.0% in May), and the index for shelter increased 0.6% for the second consecutive month. New vehicle prices rose 0.6% in June, while used-vehicle prices jumped 1.6% higher. Apparel increased 0.8% in June and transportation services increased 2.1%. For the 12 months ended in June, the CPI increased 9.1% (8.6% for the 12-month period ended in May), the largest 12-month increase since the period ending November 1981.
  • Prices that producers receive for goods and services jumped 1.1% in June following a 0.8% increase in May. Producer prices have increased 11.3% since June 2021. Prices less foods, energy, and trade services increased 0.4% in June and 8.2% since June 2021, the largest 12-month increase since March 2022. In June, nearly three-fourths of the rise in the PPI was due to a 2.4% advance in prices for final demand goods. Prices for final demand services increased 0.4%. A major factor in the June increase in the prices for goods was a 10.0% increase in energy prices, within which gasoline prices spiked 18.5%.
  • Housing: Sales of existing homes retreated for the fifth consecutive month in June, falling 5.4% from the May estimate. Year over year, existing home sales were 14.2% under the June 2021 total. According to the latest survey from the National Association of Realtors®, mortgage rates and home prices have risen sharply over a short span of time, taking a toll on potential home buyers. The median existing-home price was $416,000 in June, up from $408,400 in May and 13.4% higher than June 2021 ($366,900). Unsold inventory of existing homes represents a 3.0-month supply at the current sales pace, up from a 2.6-month supply in May. Sales of existing single-family homes also fell, down 4.8% in June. Sales of existing single-family homes have fallen 12.8% since June 2021. The median existing single-family home price was $423,300 414,200 in June, up from $415,400 in May and 13.3% over the June 2021 price.
  • Sales of new single-family homes also declined in June, falling 8.1% from May’s total and 17.4% from June 2021. The median sales price of new single-family houses sold in June was $402,400 ($444,500 in May). The June average sales price was $456,800 ($514,000 in May). The inventory of new single-family homes for sale in June represented a supply of 9.3 months at the current sales pace, up from May’s 8.4-month supply. Sales of new single-family homes in June were 17.4% below the June 2021 estimate.
  • Manufacturing: Industrial production decreased 0.2% in June. Industrial production was flat in May. In June, manufacturing output declined for a second consecutive month, falling 0.5%. Manufacturing of durable goods is down 0.3% in June including a 1.5% decline in motor vehicles and parts. Manufacturing of nondurable goods is off 0.8%, with broad-based declines across most categories except apparel and leather which increased 2.5%. In June, the index for mining rose 1.7%, while the index for utilities fell 1.4%. Despite the June decline, total industrial production was 4.2% higher than it was a year earlier. Since June 2021, manufacturing has risen 3.6%, mining has jumped 8.2%, while utilities have increased 1.4%.
  • June saw new orders for durable goods increase $5.0 billion, or 1.9%, marking the eighth monthly increase out of the last nine months. Excluding transportation, new orders rose 0.3% in June. Excluding defense, new orders increased 0.4%. Transportation equipment, up for three consecutive months, led the increase, up $4.5 billion, or 5.1%.
  • Imports and exports: Import prices rose 0.2% in June after advancing 0.5% in May, according to the U.S. Bureau of Labor Statistics. Higher fuel prices offset lower nonfuel prices to account for the overall June increase. Fuel import prices rose 5.7% in June, with higher petroleum and natural gas prices both contributing to the increase. The price index for import fuel rose 73.9% over the past year, the largest 12-month advance since increasing 87.0% in November 2021. Prices for nonfuel imports declined for the second consecutive month, dipping 0.5% in June, the largest one-month decrease since April 2020. Prices for U.S. exports advanced 0.7% in June following a 2.9% rise the previous month. Higher prices for nonagricultural exports more than offset lower agricultural export prices. Export prices have risen 18.2% since June 2021.
  • The international trade in goods deficit was $98.2 billion in June, down $5.9 billion, or 5.6%, from May. Exports of goods were $181.5 billion in June, $4.4 billion more than in May. Imports of goods were $279.7 billion, $1.5 billion less than May imports.
  • The latest information on international trade in goods and services, released July 7, is for May and shows that the goods and services trade deficit declined by $1.1 billion to $86.7 billion from the April deficit. May exports were $255.9 billion, $3.0 billion more than April exports. May imports were $341.4 billion, $1.9 billion higher than April imports. Year over year, the goods and services deficit increased $125.6 billion, or 38.4%, from the same period in 2021. Exports increased $197.1 billion, or 19.4%. Imports increased $323.6 billion, or 24.0%.
  • International markets: China’s gross domestic product contracted 2.6% in the second quarter after advancing 1.4% in the first quarter. The second-quarter decrease largely reflects the impact of public health restrictions implemented by the government in response to growing COVID cases. As health restrictions eased, economic indicators have shown some improvement recently. Nevertheless, the Chinese government does not appear to be overly concerned about the economic slowdown. On the other hand, economic growth in the eurozone accelerated, despite the ongoing Russia/Ukraine war. The combined GDP of eurozone members was 0.7% higher in the second quarter compared to the first quarter, largely attributable to lifting of pandemic restrictions put in place in the early part of the year. Overall, for the markets in July, the STOXX Europe 600 Index advanced 7.3%. The United Kingdom’s FTSE rose 3.2%. Japan’s Nikkei 225 Index jumped 7.2%, while China’s Shanghai Composite Index fell nearly 4.0%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® decreased for a third consecutive month in July following a larger decline in June. The July index dipped 2.7 points to 95.7. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined to 141.3 in July, down from 147.2 in June. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 65.3 in July (65.8 in June).

Eye on the Month Ahead

In August, investors will be looking for some clues as to the state of the economy, particularly in the aftermath of the Federal Reserve’s interest-rate hikes (the FOMC does not meet in August). The employment sector has shown some evidence of slowing, with a downturn in new hires and an increase in unemployment claims. The housing sector has also retreated from its torrid pace set earlier in the year. Nevertheless, economic indicators haven’t shown an obvious curtailment in the pace of inflation.

What I’m Watching This Week – 1 August 2022

The Markets (as of market close July 29, 2022)

Positive economic news and corporate earnings data helped drive stocks higher last week. Although the Federal Reserve hiked interest rates another 75 basis points, investors may expect subsequent rate increases to be no more than 75 basis points, with the possibility of a slowdown in rate hikes in the not-too-distant future. Each of the benchmark indexes listed here gained at least 2.9%, with the Nasdaq, the S&P 500, and the Russell 2000 climbing more than 4.0%. Ten-year Treasury yields fell for the third consecutive week. Crude oil prices increased for the first time in four weeks. Gold prices jumped nearly $57.00 per ounce, while the dollar dipped lower.

Stock opened last week generally higher, with only the Nasdaq closing last Monday in the red. The benchmark indexes listed here swayed between gains and losses throughout the day as investors tried to gauge the effect of another expected 75-basis point interest-rate hike by the Federal Reserve later in the week. The Russell 2000 led the indexes listed here, rising 0.6%, followed by the Global Dow (0.5%), the Dow (0.3%), and the S&P 500 (0.1%). The Nasdaq slid 0.4% as traders were leery of tech shares in anticipation of earnings reports from several major technology firms. Yields on 10-year Treasuries rose 3.7 basis points to close at 2.82%. The dollar and gold prices declined. Crude oil prices rose nearly $2.00 to $96.78 per barrel.

Investors shunned equities last Tuesday as fears of an economic recession grew ahead of the Federal Reserve’s anticipated rate hike on Wednesday. Underwhelming earnings reports from some major corporations, including one of the world’s largest retailers, highlighted the impact of inflation on consumer spending. The Nasdaq fell 1.9%, while the S&P 500 slid 1.2% by the close of trading. The Dow and the Russell 2000 declined 0.7%. The Global Dow dipped 0.8%. Ten-year Treasury yields dropped to 2.78%. Crude oil prices decreased to $95.00 per barrel. Gold prices lost $3.40, falling to $1,715.70 per ounce. The U.S. Dollar Index (USDX) rose 0.7% to 107.23.

Last Wednesday saw stocks surge and bond yields slump despite another 75-basis point interest-rate hike by the Federal Reserve. Chair Jerome Powell said the Fed will slow the pace of rate increases at some point but would not offer more concrete information on how many rate hikes will follow or the size of those increases. Nearly all the market sectors in the S&P 500 rose, driving the index up 2.6% on the day. The Nasdaq jumped 4.1%, the most since November 2020. The Russell 2000 advanced 2.4%, the Dow climbed 1.4%, and the Global Dow added 1.2%. Ten-year Treasury yields fell 5.3 basis points to 2.73%. Crude oil prices rose $3.16 to hit $98.14 per barrel. The dollar dipped, while gold prices jumped nearly $16.00 per ounce.

The stock rally continued into Thursday, with each of the benchmark indexes listed here gaining at least 1.0%. The Russell 2000 led the surge, climbing 1.3%, followed by the S&P 500 (1.2%) and the Nasdaq (1.1%), with the Dow and the Global Dow advancing 1.0%. Bond prices rose higher, dragging yields lower. Ten-year Treasury yields slid 5.3 basis points to 2.68%. Crude oil prices dipped to $97.15 per barrel. The dollar fell marginally, while gold prices increased for the second consecutive day. Data released last Thursday showed gross domestic product decreased in the second quarter, but not by as much as the first quarter. In a bit of an ironic twist, evidence that the economy may be slowing is likely to check rising inflation, which could lead to moderation in the Federal Reserve’s pace of tightening, which would be favorable for stocks.

Wall Street closed higher last Friday, ending a choppy week of trading. Strong earnings reports from some major megacap tech companies helped push stocks higher. The Nasdaq and the S&P 500 led the gainers, advancing 1.9% and 1.4%, respectively. The Global Dow rose 1.3%, followed by the Dow (1.0%) and the Russell 2000 (0.7%). Crude oil prices climbed $1.81 to hit $98.23 per barrel. The dollar dipped lower, while gold continued to rally, adding $9.60 to reach $1,778.80 per ounce. The yield on 10-year Treasuries fell 3.9 basis points to 2.64%.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 7/29Weekly ChangeYTD Change
DJIA36,338.3031,899.2932,845.132.97%-9.61%
Nasdaq15,644.9711,834.1112,390.694.70%-20.80%
S&P 5004,766.183,961.634,130.294.26%-13.34%
Russell 20002,245.311,806.881,885.734.36%-16.01%
Global Dow4,137.633,536.523,639.482.91%-12.04%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%2.25%-2.50%75 bps225 bps
10-year Treasuries1.51%2.78%2.64%-14 bps113 bps
US Dollar-DXY95.64106.59105.83-0.71%10.65%
Crude Oil-CL=F$75.44$94.65$98.233.78%30.21%
Gold-GC=F$1,830.30$1,722.00$1,778.803.30%-2.81%

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

  • As expected last Wednesday, the Federal Open Market Committee raised the target range for the federal funds rate 75.0 basis points to 2.25%-2.50%. The Committee anticipates ongoing increases in the target range, while continuing to reduce its holdings, until reaching the Committee’s objective of 2.0% inflation. In support of its decision, the FOMC noted that “indicators of spending and production have softened” but the employment sector remains strong. Nevertheless, inflation remains elevated due to supply and demand imbalances related to the pandemic, higher food and energy prices, and the ongoing Russia/Ukraine war.
  • Gross domestic product decreased at an annual rate of 0.9% in the second quarter, according to the initial, or “advance,” estimate from the Bureau of Economic Analysis. GDP decelerated at a rate of 1.6% in the first quarter. The second-quarter decline reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential (business) fixed investment that were partly offset by increases in exports and personal consumption expenditures. Imports, which are a subtraction in the calculation of GDP, increased. The decrease in private inventory investment was led by a downturn in retail trade, most notably merchandise stores and motor vehicle dealers. Residential fixed investment dropped 14.0% in the second quarter. The personal consumption expenditures price index, an indicator of inflation, increased 7.1% in the second quarter, matching the increase in the first quarter. Consumer spending, as measured by personal consumption expenditures, increased 1.0% in the second quarter following a 1.8% increase in the first quarter.
  • Consumer prices rose 1.0% in June, according to the latest Personal Income and Outlays report from the Bureau of Economic Analysis. Excluding food and energy, prices advanced 0.6%. On an annual basis, prices rose 6.8% for the 12 months ended in June, up from 6.3% for the 12 months ended in May. Consumer spending also increased in June, rising 1.1%. Spending on goods rose 1.6%, while consumer spending on services advanced 0.8%. Personal income advanced 0.6% in June, while disposable (after-tax) personal income increased 0.7%. Wages and salaries rose 0.4% in June, and rental income increased 2.5%.
  • The housing market continues to retreat. Sales of new single-family homes dipped 8.1% in June and are 17.4% below the June 2021 pace. The median sales price of new houses sold in June was $402,400. The average sales price was $456,800. Inventory of new single-family homes for sale in June represented a supply of 9.3 months, higher than the 8.4-month supply in May. The June supply is the highest since May 2010.
  • The international trade in goods deficit shrunk in June, falling $5.9 billion from the May figure. Exports of goods for June were $4.4 billion more than May exports. Imports of goods were $1.5 billion less than May imports. The June 2022 deficit was $7.6 billion above the June 2021 trade deficit.
  • New orders for durable goods rose 1.9% in June over the previous month. Excluding transportation, new orders increased 0.3%. Excluding defense, new orders increased 0.4%. Transportation equipment, up for three consecutive months, led the increase, advancing 5.1%. New orders for nondefense capital goods in June increased 0.1%. New orders for defense capital goods slid 2.7%. Several categories saw a decrease in new orders, including nondefense aircraft and parts (-2.1%), communications equipment (-2.3%), and primary metals (-1.1%). Areas of growth included computers and related products (+5.9%), electrical equipment, appliances, and components (+2.5%), transportation equipment (+5.1%), and motor vehicles and parts (+1.5%). New orders for defense aircraft and parts vaulted 80.6% higher in June.
  • The national average retail price for regular gasoline was $4.330 per gallon on July 25, $0.160 per gallon below the prior week’s price but $1.194 higher than a year ago. Also as of July 25, the East Coast price decreased $0.139 to $4.206 per gallon; the Gulf Coast price fell $0.169 to $3.831 per gallon; the Midwest price dropped $0.201 to $4.227 per gallon; the West Coast price slid $0.128 to $5.266 per gallon; and the Rocky Mountain price fell $0.194 to $4.656 per gallon. Residential heating oil prices averaged $3.456 per gallon on July 22, about $0.243 per gallon less than the prior week’s price. According to the U.S. Energy Information Administration report of July 27, prices for propane have steadily declined since reaching a peak in March. Propane prices, which are correlated to crude oil prices, have fallen 32.0% to $1.11 per gallon, down from $1.64 per gallon on March 11.
  • For the week ended July 23, there were 256,000 new claims for unemployment insurance, a decrease of 5,000 from the previous week’s level, which was revised up by 10,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 16 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 16 was 1,359,000, a decrease of 25,000 from the previous week’s unrevised level. States and territories with the highest insured unemployment rates for the week ended July 9 were Puerto Rico (2.1%), New Jersey (2.1%), California (1.9%), Rhode Island (1.9%), New York (1.6%), Pennsylvania (1.6%), Connecticut (1.5%), Massachusetts (1.4%), Alaska (1.3%), and the Virgin Islands (1.3%). The largest increases in initial claims for the week ended July 16 were in Massachusetts (+14,142), Connecticut (+6,000), Georgia (+3,166), South Carolina (+3,149), and California (+2,681), while the largest decreases were in New York (-3,633), Ohio (-3.633), Kentucky (-1,907), New Jersey (-1,872), and Indiana (-1,865).

Eye on the Week Ahead

The employment figures for July are out this week. There were 372,000 new jobs added in June and hourly earnings increased 0.3%. Earnings have risen 5.1% since June 2021. The unemployment rate, currently 3.6%, has remained relatively steady. Overall, the employment numbers have been solid, lending credence to the Federal Reserve’s assessment that the labor market is strong and able to withstand rate hikes.

What I’m Watching This Week – 25 July 2022

The Markets (as of market close July 22, 2022)

Stocks ended last week in the black, with the market posting its best week in a month. Despite a late-week decline, each of the benchmark indexes listed here posted solid weekly gains, led by the Russell 2000 and the Nasdaq. Bond prices rose, pulling yields lower. Crude oil prices ended a volatile week down by about $3.00 per barrel. The dollar edged lower, while gold prices advanced.

Wall Street began last week on a sour note as each of the benchmark indexes listed (except for the Global Dow) lost value. The S&P 500 and the Nasdaq led the declines, dropping 0.8%. The Dow fell 0.7% and the Russell 2000 dipped 0.3%. The Global Dow rose 0.6%. Tech and healthcare shares waned after a large tech company announced plans to slow hiring and spending next year in anticipation of a possible economic downturn. Ten-year Treasury yields climbed 3.0 basis points to close at 2.96%. Crude oil prices gained $4.58 to push the price per barrel to $102.17. The dollar fell, but gold prices rose higher.

Stocks surged higher last Tuesday, pushing each of the benchmark indexes up by at least 2.0%. Strong corporate quarterly earnings reports may have given traders confidence that the economy is still strong, despite rising inflation and corresponding interest rates. The Russell 2000 led the upswing, gaining 3.5%, while the Nasdaq jumped up 3.1%. The S&P 500 (2.8%) and the Dow (2.4%) advanced notably. The Global Dow rose 2.1%. Crude oil prices continued to climb above $100.00 per barrel, reaching $104.10 per barrel after rising $1.50. Ten-year Treasuries added nearly 6.0 basis points to settle at 3.01%. The dollar slid lower for the second day, while gold prices advanced.

The S&P 500 posted its first back-to-back gains in nearly two weeks after advancing 0.6% last Wednesday. The Nasdaq and the Russell 2000 led the indexes, advancing 1.6% as tech shares climbed higher for the second straight day. The Dow inched up 0.2%, while the Global Dow was unchanged. Ten-year Treasury yields inched up to 3.03%. Crude oil prices slipped down to $102.61 per barrel. The dollar advanced, while gold prices fell.

Stocks enjoyed their best three-day rally since May last Thursday. Tech shares led the charge once again, with the Nasdaq gaining 1.4% by the close of trading. The S&P 500 added 1.0%, while the Dow and the Russell 2000 rose 0.5%. The Global Dow was flat for the second day in a row. Ten-year Treasury yields dipped 12.6 basis points, slipping to 2.91%, likely influenced by the European Central Bank’s 50 basis-point interest rate hike — the first one since 2011. The dollar fell, while gold prices advanced. Crude oil prices slid $3.45, reaching $96.43 per barrel.

Stocks fell last Friday, ending a three-day rally. Investors retreated from risk following disappointing earnings reports from some social media companies. Tech shares gave back much of the gains from earlier in the week, pulling the Nasdaq down 1.9%, while the Russell 2000 fell 1.6%. The large caps of the S&P 500 (-0.9%) and the Dow (-0.4%) ended the day down, while the Global Dow ended flat for the third consecutive day. Yields on 10-year Treasury yields slid nearly 13.0 basis points to close at 2.78%. Crude oil prices declined to $94.65 per barrel. The dollar dipped, while gold prices rose.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 7/22Weekly ChangeYTD Change
DJIA36,338.3031,288.2631,899.291.95%-12.22%
Nasdaq15,644.9711,452.4211,834.113.33%-24.36%
S&P 5004,766.183,863.163,961.632.55%-16.88%
Russell 20002,245.311,744.371,806.883.58%-19.53%
Global Dow4,137.633,439.843,536.522.81%-14.53%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%1.50%-1.75%0 bps150 bps
10-year Treasuries1.51%2.93%2.78%-15 bps127 bps
US Dollar-DXY95.64108.03106.59-1.33%11.45%
Crude Oil-CL=F$75.44$97.66$94.65-3.08%25.46%
Gold-GC=F$1,830.30$1,704.00$1,722.001.06%-5.92%

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

Last Week’s Economic News

  • Rising mortgage rates and overall inflationary pressure appear to be impacting new home construction. Building permits, housing starts, and housing completions fell in June following a downturn in May. Issued building permits dipped 0.6% last month but are 1.4% above the June 2021 estimate. Single-family authorizations slid 8.0% in June and are 11.4% under the June 2021 pace. Housing starts in June were 2.0% less than the May estimate and 6.3% below the June 2021 rate. Single-family housing starts were 8.1% below the May figure and 15.7% less than the June 2021 figure. Housing completions dipped 4.6% last month but are 4.6% higher than a year ago. Single-family housing completions in June were 4.1% below the previous month’s total but 8.5% higher than in June 2021.
  • Sales of existing homes declined for the fifth straight month in June, according to the National Association of Realtors®. Total existing home sales dipped 5.4% last month from May and are down 14.2% year over year. Rising home prices and mortgage rates have impacted the market. The median existing home price for all housing types was $416,000 in June, up from May’s price of $408,400 and 13.4% higher than the price in June 2021. Total housing inventory for sale sits at a 3.0 month supply at the current sales pace. Sales of single-family existing homes dropped 4.8% in June and 12.8% from a year ago. The median existing single-family home price was $423,300 in June, up from $415,400 in May and 13.3% greater than the price in June 2021.
  • The national average retail price for regular gasoline was $4.490 per gallon on July 18, $0.156 per gallon below the prior week’s price but $1.337 higher than a year ago. Also as of July 18, the East Coast price decreased $0.127 to $4.345 per gallon; the Gulf Coast price fell $0.190 to $4.000 per gallon; the Midwest price dropped $0.171 to $4.428 per gallon; the West Coast price slid $0.177 to $5.394 per gallon; and the Rocky Mountain price fell $0.097 to $4.850 per gallon. Residential heating oil prices averaged $3.699 per gallon on July 15, about $0.026 per gallon more than the prior week’s price. According to the U.S. Energy Information Administration report of July 20, gasoline production increased the previous week, averaging 9.4 million barrels per day. Crude oil refinery inputs averaged 16.3 million barrels per day during the week ended July 15, 321,000 barrels per day less than the previous week’s average.
  • For the week ended July 16, there were 251,000 new claims for unemployment insurance, an increase of 7,000 from the previous week’s level, marking the third consecutive weekly increase for initial claims. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 9 was 1.0%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 9 was 1,384,000, an increase of 51,000 from the previous week’s level, which was revised up by 2,000. States and territories with the highest insured unemployment rates for the week ended July 2 were Puerto Rico (2.1%), New Jersey (1.9%), California (1.7%), Rhode Island (1.7%), New York (1.5%), Pennsylvania (1.5%), Massachusetts (1.4%), Connecticut (1.3%), Alaska (1.2%), and Illinois (1.2%). The largest increases in initial claims for the week ended July 9 were in New York (+10,051), Kentucky (+3,061), Arizona (+2,447), Ohio (+2,274), and Indiana (+2,234), while the largest decreases were in California (-3,801), New Jersey (-3,332), Georgia (-1,859), Mississippi (-678), and Rhode Island (-484).

Eye on the Week Ahead

This week is replete with market-moving economic data, headlined by the Federal Open Market Committee meeting. Also out this week is the initial estimate of the second-quarter gross domestic product. The economy retracted 1.6% in the first quarter.

What I’m Watching This Week – 18 July 2022

The Markets (as of market close July 15, 2022)

Despite a late-week rally, stocks ended last week lower. A strong retail sales report for June showed continued economic strength, even in the face of rising inflation and concerns over an economic recession. Investors still aren’t totally sold on risk, however. Each of the benchmark indexes listed here ended last week lower, led by the Global Dow, which fell more than 2.0%. Year to date, the Nasdaq is nearing a 30.0% downturn from its value at the end of 2021. Crude oil prices fell by nearly $7.00 to end the week below $100 per barrel. The dollar continued to rise, while gold prices faltered. Fed rate hikes and fears of a recession have sent the dollar to the highest level since March 2020.

Monday saw stocks slump, as trading volume was at its lowest pace in 2022. Tech shares led the sell-off, pulling the Nasdaq down 2.3%. The Russell 2000 also dipped a little more than 2.00%, followed by the Global Dow and the S&P 500, which slid 1.2%. The Dow lost 0.5%. Ten-year Treasury yields tumbled 11.0 basis points to close at 2.99%. Crude oil prices dropped $1.20 to sit at $103.50 per barrel. The dollar advanced, while gold prices declined. Traders may have pulled back from stocks as they awaited inflation data with the release of the June Consumer Price Index on Wednesday.

Stocks tumbled lower for the second consecutive day last Tuesday. Once again, the Nasdaq led the downturn, giving back 1.0%, followed by the S&P 500 (-0.9%), the Dow (-0.6%), the Global Dow (-0.4%), and the Russell 2000 (-0.2%). The yield on 10-year Treasuries dipped lower last Tuesday and is about 12.0 basis points below the two-year rate. This so-called “inversion curve” is often a sign of a contracting economy. Crude oil prices fell $8.40 to hit $95.68 per barrel. The dollar rose against a basket of currencies, while gold prices lagged.

Wall Street saw equities slide last Wednesday as investors retreated from risk following a greater-than-expected jump in the latest Consumer Price Index. Both the Dow and the Global Dow fell 0.7%, while the S&P 500 dropped 0.5%. The Nasdaq dipped 0.2%, while the Russell 2000 broke even on the day. Ten-year Treasury yields fell 5.4 basis points, settling at 2.90%, while the two-year rate rose to 3.14%, deepening the “inversion” of the yield curve. Crude oil prices and the dollar were relatively unchanged, while gold prices reversed course, gaining $6.30 to reach $1,731.10 per ounce.

Last Thursday, traders spent most of the day retreating from stocks, worried that recent inflation data would prompt a 100-basis point rate hike at the end of the month. However, Wall Street recovered somewhat after Federal Reserve officials seemed to quel those concerns. Nevertheless, the Global Dow (-1.6%), the Russell 2000 (-1.1%), the Dow (-0.5%), and the S&P 500 (-0.3%) still ended the day in the red. The Nasdaq ended the day flat. Crude oil prices and the dollar advanced marginally, while gold prices slid lower. The yield on 10-year Treasuries climbed to 2.96%, up 5.6 basis points. Two-year Treasury yields dipped lower, but not enough to make a dent in the inverted yield curve. Disappointing quarterly results from some major financial firms pulled the financial sector lower and added to the concern that an economic downturn is coming.

Stocks rallied last Friday to end a topsy-turvy week of trading. It’s possible that some investors were buoyed by a solid retail sales report, while other traders may have been taking advantage of some possible low-hanging bargains. In any case, each of the benchmark indexes listed here posted solid gains, led by the Russell 2000 and the Dow, which advanced 2.2%. The S&P 500 climbed 1.9%, the Nasdaq added 1.8%, and the Global Dow gained 1.7%. Long-term bond prices advanced, dragging the yield on 10-year Treasuries down marginally to 2.93%. Crude oil prices rose to $97.66 per barrel. The dollar and gold prices dipped lower.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 7/15Weekly ChangeYTD Change
DJIA36,338.3031,338.1531,288.26-0.16%-13.90%
Nasdaq15,644.9711,635.3111,452.42-1.57%-26.80%
S&P 5004,766.183,899.383,863.16-0.93%-18.95%
Russell 20002,245.311,769.361,744.37-1.41%-22.31%
Global Dow4,137.633,514.363,439.84-2.12%-16.86%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%1.50%-1.75%0 bps150 bps
10-year Treasuries1.51%3.10%2.93%-17 bps142 bps
US Dollar-DXY95.64106.95108.031.01%12.95%
Crude Oil-CL=F$75.44$104.86$97.66-6.87%29.45%
Gold-GC=F$1,830.30$1,740.40$1,704.00-2.09%-6.90%

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

Last Week’s Economic News

  • The Consumer Price Index rose 1.3% in June and is up 9.1% over the past 12 months. This is the largest 12-month increase in the CPI since 1981. Both the monthly and 12-month rates were greater than expected and will almost certainly prompt the Federal Reserve to raise interest rates by at least 75.0 basis points following its next meeting at the end of July. The June increase was broad-based, with gasoline, shelter, and food being the largest contributors. The energy index rose 7.5% and contributed nearly half of the overall increase, with the gasoline index rising 11.2%. The food index rose 1.0% in June, while the shelter index increased 0.6%. Since June 2021, the food index has risen 10.4%, the energy index has advanced 41.6% (gasoline is up 59.9% and fuel oil has risen 98.5%), and prices for shelter have increased 5.6%.
  • Producer prices climbed higher in June. The Producer Price Index advanced 1.1% last month after increasing 0.9% in May. Over the past 12 months, the PPI has risen 11.3%, the largest increase since a record 11.6% increase in March 2022. In June, prices for goods rose 2.4%, while prices for services increased 0.4%. A 10.0% increase in energy prices accounted for 90% of the increase in prices for goods. Prices for goods less foods and energy advanced 0.5%. Gasoline prices jumped 18.5% in June, while prices for foods ticked up 0.1%.
  • Sales of food services and retail items rose 1.0% in June over the previous month. Retail and food services sales are up 8.4% since June 2021. In many cases, the increase in June retail sales is attributable to higher prices and not necessarily greater demand. Excluding gasoline sales, retail sales rose 0.7% in June. Sales from gasoline stations increased 3.6% in June and were up 49.1% from June 2021, while food services and drinking places sales advanced 1.0% last month and 13.4% from last year. On the other hand, department store sales dropped 2.6% in June, while clothing and clothing accessories sales dipped 0.4%. Retail trade sales were up 1.0% from May and have increased 7.7% over the last 12 months.
  • Prices for imports rose 0.2% in June over May. Export prices rose 0.7% last month. Import prices have risen 10.7% over the last 12 months, while export prices increased 18.2%. Import fuel prices rose 5.7% last month and 73.9% for the year ended in June, which is the largest 12-month increase since November 2021. Excluding fuel, import prices declined for the second consecutive month, decreasing 0.5% in June. The June decline in nonfuel imports was the largest one-month decrease since April 2020. In June, lower prices for nonfuel industrial supplies and materials; consumer goods; and foods, feeds, and beverages more than offset higher capital goods prices. On the other side of the ledger, agricultural export prices dipped 0.3% in June, falling for the first time since September 2021. Nonagricultural export prices increased 0.9% last month and have not decreased since December 2021.
  • The monthly Treasury statement for June showed a budget deficit of $88.8 billion, up from May’s $66.2 billion but well below the June 2021 deficit of $174.2 billion. Through the first nine months of the fiscal year, the government budget deficit sits at $515.1 billion, nearly $1.8 billion less than the deficit over the same period in the previous fiscal year. Individual income taxes are up $544.8 billion in the current fiscal year, while corporate income taxes are up $40.9 billion.
  • In June, total industrial production fell 0.2% and has not increased since April 2022. Manufacturing output declined 0.5% for the second consecutive month in June. Mining rose 1.7%, although utilities fell 1.4%. Despite the downturn, total industrial production was 4.2% above its level in June 2021. The June decrease in production was widespread, with durable and nondurable consumer good falling 1.0% and 0.7%, respectively. Last month, the appliance, furniture, and carpeting category posted the largest loss among the components of consumer goods (-3.3%), while only home electronics, miscellaneous goods, and clothing recorded gains.
  • The national average retail price for regular gasoline was $4.646 per gallon on July 11, $0.125 per gallon below the prior week’s price but $1.513 higher than a year ago. Also as of July 11, the East Coast price decreased $0.119 to $4.472 per gallon; the Gulf Coast price fell $0.161 to $4.190 per gallon; the Midwest price dropped $0.130 to $4.599 per gallon; the West Coast price slid $0.123 to $5.571 per gallon; and the Rocky Mountain price fell $0.054 to $4.947 per gallon. Residential heating oil prices averaged $3.673 per gallon on July 8, about $0.266 per gallon less than the prior week’s price. According to the U.S. Energy Information Administration report of July 13, gasoline production decreased, averaging 5.1 million barrels per day. Refineries operated at 94.9% of their capacity. 53 U.S. exploration and production (E&P) companies reported higher revenue in the first quarter of 2022, passing some of those profits on to shareholders in the form of dividends. In addition, as crude oil prices and returns on investment rise, the valuation of these companies has increased to just below the previous five-year high.
  • For the week ended July 9, there were 244,000 new claims for unemployment insurance, an increase of 9,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 2 was 0.9%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 2 was 1,331,000, a decrease of 41,000 from the previous week’s level, which was revised down by 3,000. States and territories with the highest insured unemployment rates for the week ended June 25 were New Jersey (2.0%), Puerto Rico (1.9%), California (1.9%), Rhode Island (1.6%), Pennsylvania (1.5%), Massachusetts (1.4%), New York (1.4%), Alaska (1.3%), and Georgia (1.3%). The largest increases in initial claims for the week ended July 2 were in New York (+5,165), Michigan (+5,104), Georgia (+2,935), California (+2,823), and Mississippi (+1,364), while the largest decreases were in Illinois (-1,508), Kentucky (-1,232), Missouri (-1,061), Ohio (-998), and Pennsylvania (-971).

Eye on the Week Ahead

The latest data on the housing market for June is out this week with reports on housing starts and existing home sales. The housing market has definitely slowed in 2022 after setting a torrid pace the previous year. In May, residential building permits and housing starts fell, while sales of existing homes dipped for the fourth consecutive month.

What I’m Watching This Week – 11 July 2022

The Markets (as of market close July 8, 2022)

Last Friday’s strong jobs report may have alleviated fears of a recession for the time being, but it also likely supported a more aggressive response from the Federal Reserve as it tries to dampen rising inflation. Stocks started July on a strong note, with each of the benchmark indexes listed here posting solid gains. The tech-heavy Nasdaq, which has been hit hard during the first half of the year, gained over 4.5%, although it remains more than 25.0% below its 2021 year-end value. The small caps of the Russell 2000, down more than 21.0% from the beginning of the year, jumped nearly 2.5% higher last week. Wall Street is likely to see volatility continue until investors see signs that the Fed is backing off its current path of rate increases. With corporate earnings season right around the corner, traders will focus on company forecasts as well as inflation data to assess the health of the economy.

Stocks began the holiday-shortened week generally higher last Tuesday, with the Nasdaq gaining 1.8%. Treasury prices rallied, sending yields lower, despite talks of easing trade sanctions against China, as worries of an economic recession persisted among investors. The Russell 2000 gained 0.8%, while the S&P 500 eked out a 0.2% advance. The Global Dow (-1.8%) and the Dow (-0.4%) dipped lower. Ten-year Treasury yields slid 8 basis points, falling to 2.80%. Crude oil prices posted their largest decline since March, dropping to just below $100 per barrel. On the other hand, the dollar jumped higher against a basket of currencies.

Last Wednesday saw equities close generally higher for the third consecutive session. The Nasdaq and the S&P 500 each added 0.4%, while the Dow gained 0.2%. The small caps of the Russell 2000 (-0.8%) and the Global Dow (-0.4%) closed lower. Bond prices dipped lower, sending the yield on 10-year Treasuries up 10.4 basis points to reach 2.91% by the close of trading. Crude oil prices fell for a second straight day, falling $1.40 to end the day at $98.10 per barrel. The dollar advanced, while gold prices sank to $1.73 per ounce. Investors apparently weren’t influenced by last Wednesday’s economic data, which evidenced some softening. Job openings dipped in May, and growth in the services sector eased in June to a more than two-year low. Minutes from the Federal Reserve’s last meeting in June reflected a Fed that is very much concerned with inflation, to the point of talking about the potential for an even more restrictive policy over time.

Stocks gained for the fourth session in a row last Thursday. Investors may be banking on the Federal Reserve being able to curb inflation without sending the economy into a recession. The dollar dropped for the first time in five days as each of the benchmark indexes posted solid gains, led by the Russell 2000 (2.4%), closely followed by the Nasdaq (2.3%). The Global Dow (1.8%), the S&P 500 (1.5%), and the Dow (1.1%) also advanced. Ten-year Treasury yields ended the day at 3.00%, an increase of 9.5 basis points. Crude oil prices jumped $3.67 to $102.20 per barrel. Gold prices ended a downward trend after climbing $2.90 to reach $1,739.40 per ounce.

Friday closed the week for stocks with mixed results. The Nasdaq inched up 0.1% and the Global Dow rose 0.2%. The remaining benchmark indexes listed here slipped marginally lower. Ten-year Treasury yields gained 9.3 basis points to reach 3.10%. Crude oil prices continued to advance, climbing nearly $2.00 to sit at $104.69 per barrel. The dollar fell, while gold prices rose for the second consecutive day.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 7/8Weekly ChangeYTD Change
DJIA36,338.3031,097.2631,338.150.77%-13.76%
Nasdaq15,644.9711,127.8411,635.314.56%-25.63%
S&P 5004,766.183,825.333,899.381.94%-18.19%
Russell 20002,245.311,727.761,769.362.41%-21.20%
Global Dow4,137.633,513.943,514.360.01%-15.06%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%1.50%-1.75%0 bps150 bps
10-year Treasuries1.51%2.88%3.10%22 bps159 bps
US Dollar-DXY95.64105.09106.951.77%11.83%
Crude Oil-CL=F$75.44$108.39$104.86-3.26%39.00%
Gold-GC=F$1,830.30$1,809.00$1,740.40-3.79%-4.91%

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

Last Week’s Economic News

  • Employment rose by a higher-than-expected 372,000 in June, with notable job growth occurring in professional and business services, leisure and hospitality, and health care. The unemployment rate was 3.6% for the fourth month in a row, and the number of unemployed persons was essentially unchanged at 5.9 million in June. These measures are little different from their values in February 2020 (3.5% and 5.7 million, respectively), prior to the coronavirus (COVID-19) pandemic. The labor force participation rate, at 62.2%, and the employment-population ratio, at 59.9%, were little changed over the month. Both measures remain below their February 2020 values (63.4% and 61.2%, respectively). In June, 2.1 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, up from 1.8 million in May. In June, average hourly earnings rose by $0.10, or 0.3%, to $32.08. Over the past 12 months, average hourly earnings have increased by 5.1%. The average work week was unchanged from the previous month at 34.5 hours in June.
  • The services sector saw new orders decrease in June, with price pressures and economic uncertainty hitting demand. According to the latest report, the S&P Global US Services PMI Business Activity Index registered 52.7 in June, remaining above 50.0, thereby signaling an increase in business activity, albeit at a slower pace than in May when the PMI registered 53.4. Business confidence outlook for the year ahead dropped to a 21-month low. On a more positive note, employment continued to increase sharply.
  • According to the latest Job Openings and Labor Turnover report, the number of job openings decreased in May to 11.3 million, a drop of about 427,000 from the April total. The largest decreases in job openings were in professional and business services (-325,000), durable goods manufacturing (-138,000), and nondurable goods manufacturing (-70,000). In May, the number of hires, at 6.5 million, and the number of total separations, at 6.0 million, were little changed from the prior month’s respective totals. Over the 12 months ended in May, hires totaled 78.4 million and separations totaled 72.0 million, yielding a net employment gain of 6.4 million.
  • The international goods and services trade deficit for May was $85.5 billion, down $1.1 billion, or 1.3%, from the April deficit. According to the latest information from the Bureau of Economic Analysis, in May exports increased 1.2% and imports advanced 0.6%. Year to date, the goods and services deficit increased $126.5 billion, or 38.4%, from the same period in 2021. Exports increased $197.1 billion, or 19.4%. Imports increased $323.6 billion, or 24.0%.
  • The national average retail price for regular gasoline was $4.77 per gallon on July 4, $0.101 per gallon below the prior week’s price but $1.649 higher than a year ago. Also as of July 4, the East Coast price decreased $0.10 to $4.59 per gallon; the Gulf Coast price fell $0.15 to $4.35 per gallon; the Midwest price dropped $0.09 to $4.73 per gallon; the West Coast price slid $0.09 to $5.69 per gallon; and the Rocky Mountain price rose $0.02 to $5.00 per gallon. Residential heating oil prices averaged $3.94 per gallon on July 1, about $0.42 per gallon less than the prior week’s price. According to the U.S. Energy Information Administration, gasoline consumption during the second quarter of 2022 and into the beginning of July remained lower than 2021 levels. Excluding the pandemic year of 2020, this would be the lowest second quarter of gasoline consumption since 2001. Although U.S. gasoline consumption has not completely returned to pre-pandemic levels, it generally increased from mid-2020 through the first quarter of 2022. April was the first month this trend reversed.
  • For the week ended July 2, there were 235,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended June 25 was 1.0%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 25 was 1,375,000, an increase of 51,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended June 18 were New Jersey (1.9%), Puerto Rico (1.9%), California (1.8%), Pennsylvania (1.5%), New York (1.4%), Alaska (1.3%), Rhode Island (1.3%), Connecticut (1.2%), Hawaii (1.2%), Illinois (1.2%), and Massachusetts (1.2%). The largest increases in initial claims for the week ended June 25 were in New Jersey (+5,569), Massachusetts (+3,217), Ohio (+2,588), Kentucky (+1,478), and Missouri (+1,375), while the largest decreases were in California (-2,504), Texas (-2,074), Michigan (-1,683), Pennsylvania (-1,628), and Georgia (-1,606).

Eye on the Week Ahead

This is a busy week for the release of important economic data. Most of the attention, however, will focus on the Consumer Price Index for June. May saw consumer prices jump unexpectedly higher at 1.0%. Consumer prices have risen 8.6% since June 2021. Several analysts suggest that the June CPI will come in lower than the May figure.

What I’m Watching This Week – 5 July 2022

The Markets (as of market close July 1, 2022)

Despite an end-of-week surge, stocks closed last week lower. Recession fears resulted in traders moving to bonds, driving prices higher and yields lower. As another round of corporate earnings reports nears, investors are bracing for weaker results, which could dampen trader sentiment and send stocks tumbling lower. With last Friday marking the start of the second half of the year, stocks are likely to continue to ride the volatility train. By the end of last week, each of the indexes listed here slid lower, led by the tech-heavy Nasdaq. Ten-year Treasury yields fell 25 basis points. The dollar rose marginally. Gold prices dipped lower. Crude oil prices climbed higher.

Stocks kicked off last week on a down note as Wall Street was unable to maintain the prior week’s rally. The Nasdaq (-0.7%), the S&P 500 (-0.3%), and the Dow (-0.2%) underperformed, while the Russell 2000 (0.3%) and the Global Dow (0.5%) edged higher. Among the market sectors of the S&P 500, only energy, utilities, and health care advanced. Ten-year Treasury yields advanced nearly 7 basis points to close at 3.19%. Crude oil prices rose by more than $2.00 to reach $109.82 per barrel. The dollar and gold prices fell.

Equities continued to tumble last Tuesday, with each of the benchmark indexes listed here closing the day in the red. Megacaps and growth stocks lagged, giving back gains from the previous week. The Nasdaq fell 3.0%, followed by the S&P 500 (-2.0%), the Russell 2000 (-1.8%), the Dow (-1.6%), and the Global Dow (-0.5%). Traders may have reacted to the latest report on waning consumer confidence, with economic expectations hitting a nearly 10-year low. Crude oil prices advanced for the third day as prices jumped another $2.00 to reach $111.68 per barrel. Ten-year Treasury yields climbed marginally higher, while the dollar rose against a bucket of currencies.

Only the Dow was able to eke out a gain last Wednesday after another choppy day of trading. The Russell 2000 fell the furthest, dropping 1.1%, followed by the Global Dow, which lost 1.0%. The S&P 500 and the Nasdaq slid less than 0.1%. Bond prices jumped higher, sending yields lower. Ten-year Treasury yields declined 11.3 basis points to close at 3.09%. Crude oil prices fell for the first time in four days, dropping $2.44 to $109.32 per barrel. The dollar advanced for a second consecutive day. Although Federal Reserve Chair Jerome Powell said the U.S. is in “strong shape” and “well positioned to withstand tighter monetary policy,” first-quarter consumer spending expanded at its softest pace since the beginning of the pandemic, possibly indicating the economy isn’t on such strong footing.

June ended last Thursday with equities continuing to tumble lower. Fears of a recession on the heels of rising inflation swayed investors from risk. Megacaps, banks, retailers, metals and mining, and airlines lagged on the day. Once again, the Nasdaq led the losing benchmark indexes, dropping 1.3%, followed by the Global Dow (-1.2%), the S&P 500 (-0.9%), the Dow (-0.8%), and the Russell 2000 (-0.7%). Treasury yields shed 12 basis points, finishing the day at 2.97%. Crude oil prices inched higher, along with the dollar. Gold prices lagged marginally.

July started last Friday with Treasury prices surging driving yields lower. The yield on 10-year Treasuries lost 8.3 basis points to end the day at 2.88%. Each of the benchmark indexes listed here added value, led by the Russell 2000 (1.2%), followed by the S&P 500 and the Dow, which each gained 1.1%. The Nasdaq rose 0.9%, while the Global Dow advanced 0.3%. Crude oil prices jumped $2.63 to close at $108.39 per barrel amid supply outages in Libya and expected shutdowns in Norway. The dollar and gold prices also advanced on the day.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 7/1Weekly ChangeYTD Change
DJIA36,338.3031,500.6831,097.26-1.28%-14.42%
Nasdaq15,644.9711607.6211,127.84-4.13%-28.87%
S&P 5004,766.183911.743,825.33-2.21%-19.74%
Russell 20002,245.311765.741,727.76-2.15%-23.05%
Global Dow4,137.633576.143,513.94-1.74%-15.07%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%1.50%-1.75%0 bps150 bps
10-year Treasuries1.51%3.13%2.88%-25 bps137 bps
US Dollar-DXY95.64104.14105.090.91%9.88%
Crude Oil-CL=F$75.44$104.03$108.394.19%43.68%
Gold-GC=F$1,830.30$1,824.00$1,809.00-0.82%-1.16%

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

Last Week’s Economic News

  • First-quarter gross domestic product decelerated at an annual rate of 1.6%, according to the final estimate from the Bureau of Economic Analysis. In the fourth quarter of 2021, GDP increased 6.9%. The decrease in GDP reflected declines in exports, federal, state, and local government spending, and private inventory investment, while imports, which are a subtraction in the calculation of GDP, increased. Nonresidential fixed investment, personal consumption expenditures, and residential fixed investment increased. The increase in personal consumption expenditures, a main driver of overall GDP, increased 1.8% following a 2.5% increase in the previous quarter. Driving PCE higher was an increase in spending on services (led by housing and utilities) that was partly offset by a decrease in spending on goods. Within goods, widespread decreases in nondurable goods (led by groceries as well as gasoline and other energy goods) were largely offset by an increase in durable goods (led by motor vehicles and parts). The personal consumption expenditures price index, a measure of inflation, increased 7.1%. Excluding food and energy, consumer prices increased 5.2%.
  • Consumer prices rose 0.6% in May and are up 6.3% over the past 12 months, according to the latest report from the Bureau of Economic Analysis. Personal income and disposable (after-tax) personal income increased 0.5% in May. Personal consumption expenditures rose 0.2% in May, a much smaller increase than in April (0.6%) and March (1.2%), likely indicative of a shift in household spending away from discretionary items as prices for necessities, such as food and energy, increased.
  • New orders for long-lasting durable goods increased 0.7% in May, the seventh monthly increase out of the last eight months. The May increase was widespread. Materials that notably increased include primary metals (3.1%), machinery (1.1%), communications equipment (2.0%), defense aircraft and parts (8.1%), and transportation equipment (0.8%). New orders for nondefense capital goods in May increased 0.5%, while new orders for defense capital goods jumped 2.6%.
  • According to the S&P Global US Manufacturing PMI™ report, the purchasing managers’ index dropped to its lowest level since July 2020 amid a near-stagnation of factory output and a fall in new orders. The PMI posted 52.7 in June, down from 57.0 in May. The June reading was the lowest in nearly two years. The decrease in sales was the first since May 2020, with domestic and foreign client demand falling. A reduction in new orders, combined with a sustained rise in employment, led to greater success clearing backlogs of work. While inflationary pressures remained historically elevated, increases in input costs and output charges eased to three-month lows.
  • The international trade in goods deficit for May was $104.3 billion, down $2.4 billion, or 2.2%, from the April deficit. Exports of goods for May were $2.0 billion, or 1.2%, more than April exports. However, imports of goods for May were $0.4 billion, or -0.1%, less than April imports. Since May 2021, exports are up 22.0% and imports have risen 21.3%.
  • The national average retail price for regular gasoline was $4.87 per gallon on June 27, $0.090 per gallon below the prior week’s price but $1.781 higher than a year ago. Also as of June 27, the East Coast price decreased $0.10 to $4.69 per gallon; the Gulf Coast price fell $0.11 to $4.50 per gallon; the Midwest price dropped $0.09 to $4.82 per gallon; the West Coast price slid $0.07 to $5.79 per gallon; and the Rocky Mountain price dipped $0.01 to $4.98 per gallon. Residential heating oil prices averaged $4.36 per gallon on June 24, about $0.02 per gallon more than the prior week’s price. According to the U.S. Energy Information Administration, gas demand currently sits at 8.93 million barrels per day, which is lower than last year’s rate of 9.11 million barrels per day at the end of June. On the other hand, total domestic gasoline stocks increased by 2.6 million barrels. These supply/demand dynamics and decreasing oil prices have pushed pump prices lower.
  • For the week ended June 25, there were 231,000 new claims for unemployment insurance, a decrease of 2,000 from the previous week’s level, which was revised up by 4,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended June 18 was 0.9%, a decrease of 0.1 percentage point from the previous week’s rate, which was revised up by 0.1 percentage point to 1.0%. The advance number of those receiving unemployment insurance benefits during the week ended June 18 was 1,328,000, a decrease of 3,000 from the previous week’s level, which was revised up by 16,000. States and territories with the highest insured unemployment rates for the week ended June 11 were California (1.8%), New Jersey (1.8%), Puerto Rico (1.6%), Alaska (1.4%), New York (1.4%), Pennsylvania (1.4%), Rhode Island (1.3%), Hawaii (1.2%), Illinois (1.2%), and Massachusetts (1.2%). The largest increases in initial claims for the week ended June 18 were in Michigan (+1,849), Texas (+1,350), New Jersey (+897), Connecticut (+863), and Puerto Rico (+860), while the largest decreases were in Illinois (-2,595), California (-1,189), South Carolina (-731), Georgia (-621), and Florida (-535).

Eye on the Week Ahead The employment data for June is available this week. May saw 390,000 new jobs added, and hourly wages increased by 0.3%. For the 12 months ended in May, wages have risen 5.2%, driven higher by greater employer demand for workers.

Quarterly Market Review: April-June 2022

The Markets (second quarter through June 30, 2022)

For the first time since 2015, each of the benchmark indexes lost value for two consecutive quarters. They also posted losses for June, marking three consecutive down months for the tech-heavy Nasdaq, its longest losing streak since 2015. Investors watched for signs of an economic deceleration in the U.S., with inflation continuing to run at multi-decade highs, and monetary policymakers maintaining a firm stance that their priority remains bringing down prices even if it means slowing economic growth. Nevertheless, Wall Street has suffered one of its worst six-month stretches in decades. The S&P 500 is poised for its worst first half since 1962. Ten-year Treasury yields climbed from 2.37% at the beginning of the quarter to over 3.00%. The dollar is on pace for its best quarter since 2016. Consumer spending slowed for the first time this year, possibly indicating that the economy is indeed weakening. Consumer sentiment fell to its lowest level since 2021. Crude oil prices rose marginally in the quarter, spiking at $123.18 per barrel in early June, ultimately settling at around $105.00 by the end of the quarter. Gold prices declined each month of the quarter as investors weighed rising interest rates against fears of a recession. According to AAA, as of June 30, the average price for regular gasoline was $4.857 per gallon, $0.90 less than the previous week but $1.80 per gallon more than than a year ago. As prices for crude oil and gasoline increased, demand waned, helping to pull prices lower. In addition, OPEC+ agreed to increase output in July and August to compensate for the drop in production due to the sanctions placed on Russia.

Equities fell sharply in April as some disappointing earnings data from several mega-cap companies added to investor worries about rising inflation, the war in Ukraine, and the possibility of an economic pullback. The Nasdaq dropped the most since October 2008, falling nearly 24.0% from its peak as it entered bear territory. The S&P 500 notched its worst month since the beginning of the pandemic, dragged lower by heavy losses in communication services, consumer discretionary, and information technology. Bond prices also lagged as yields increased in anticipation of rising interest rates as part of the Federal Reserve’s plan to quell inflation. While consumers worried about cost containment and its impact on the economy, one factor helping to drive inflation higher was strong wage growth propelled by a tight labor market. Weekly jobless claims fell to their lowest level since 1970, while the unemployment rate dropped to a pre-pandemic 3.6%. Entering May, Americans remained focused on rising inflation, the ongoing war in Ukraine, lockdowns in China due to rising COVID numbers, and the impact of the Fed’s program of fiscal tightening.

May proved to be a month of market swings. Equities lost value for the first three weeks of the month. However, a late rally helped the benchmark indexes close the month relatively flat, with the exception being the tech-heavy Nasdaq, which followed April’s sharp declines by falling another 2.0%. Early in the month the Federal Reserve raised interest rates 50 basis points and announced plans to start reducing its balance sheet in June. The Fed’s hawkish pronouncements in its effort to curb rising inflation spurred worries of a recession, despite solid economic data from the prior month.

Stocks soured in June as a slowdown in consumer spending (personal consumption expenditures), which accounts for nearly 70% of economic activity, prompted concerns about a recession. The Federal Reserve increased the target range for the federal funds rate 75 basis points, more than expected, as forecasters estimated a 50-basis point rate increase. Despite a surge mid-month, each of the benchmark indexes ended June in the red. Crude oil prices fell in June, the first monthly decrease since November. The dollar advanced, while gold prices slid lower.

Stock Market Indexes

Market/Index2021 CloseAs of June 30Monthly ChangeQuarterly ChangeYTD Change
DJIA36,338.3030,775.43-6.71%-11.25%-15.31%
Nasdaq15,644.9711,028.74-8.71%-22.44%-29.51%
S&P 5004,766.183,785.38-8.39%-16.45%-20.58%
Russell 20002,245.311,707.99-8.79-17.49%-23.93%
Global Dow4,137.633,507.37-10.11%-14.43%-15.23%
Fed. Funds0.00%-0.25%1.50%-1.75%75 bps125 bps150 bps
10-year Treasuries1.51%2.97%13 bps65 bps146 bps
US Dollar-DXY95.64104.702.85%6.46%9.47%
Crude Oil-CL=F$75.44$105.82-7.90%4.83%40.27%
Gold-GC=F$1,830.30$1,808.00-1.71%-6.88%-1.22%

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

Latest Economic Reports

  • Employment: Employment rose by 390,000 in May. Notable job gains occurred in leisure and hospitality, in professional and business services, and in transportation and warehousing. Despite the increase, employment is down by 822,000, or 0.5%, from its pre-pandemic level in February 2020. The unemployment rate remained at 3.6% for the third month in a row. The number of unemployed persons was essentially the same at 6.0 million. By comparison, in February 2020 prior to the coronavirus (COVID-19) pandemic, the unemployment rate was 3.5%, and the number of unemployed persons was 5.7 million. Among the unemployed, the number of workers who permanently lost their jobs was unchanged at 1.4 million in May. The number of persons who were unable to work because their employer closed or lost business due to the pandemic fell to 1.8 million. The labor force participation rate increased 0.3 percentage point to 62.3% in May. The employment-population ratio increased by 0.3 percentage point to 60.2%. In May, average hourly earnings rose by $0.10 to $31.95. Over the last 12 months ended in May, average hourly earnings increased by 5.2%. The average work week was 34.6 hours in May, unchanged for the third consecutive month.
  • There were 231,000 initial claims for unemployment insurance for the week ended June 25, while the total number of insured unemployment claims was 1,328,000 as of June 18. During the second quarter of the year, claims for unemployment fell to their lowest levels since 1970. A year ago, there were 3,266,000 insured unemployment claims.
  • FOMC/interest rates: Following its meeting in June, the Federal Open Market Committee increased the federal funds target rate range by 75 basis points to 1.50%-1.75%. In support of its decision, the Committee noted that it is “highly attentive to inflation risks” and that it “is strongly committed to returning inflation to its 2.0% objective.”
  • GDP/budget: Gross domestic product decreased 1.6% in the first quarter of 2022. GDP advanced 6.9% in the fourth quarter of 2021. A record surge in the trade deficit was largely responsible for the decline in first-quarter GDP. Also, consumer spending, as measured by personal consumption expenditures, rose 1.8%, down from 2.5% in the fourth quarter of 2021. Consumers cut spending on goods such as clothes, home furnishings, and food. Fixed investment advanced 7.4%, driven higher by a 10.0% increase in nonresidential (business) fixed investment. Exports dropped 4.8%, while imports, a negative in the calculation of GDP, increased 18.9%. Also dragging GDP lower was a 6.8% decrease in federal government spending, while state and local government spending dipped 0.5%. The personal consumption expenditures (PCE) price index, a measure of inflation, increased 7.1%. Excluding food and energy prices, the PCE price index increased 5.2%.
  • The Treasury budget deficit came in at $66.2 billion in May, 50.0% smaller than the $132.0 billion shortfall in May 2021. Through the first eight months of fiscal year 2022, the deficit sits at $426.2 billion, 79.0% lower than the deficit over the same period in fiscal year 2021 as outlays dropped 19.0%, while receipts increased 29.0%. So far in this fiscal year, individual income tax receipts have risen 46.0% and corporate income tax receipts have increased 17.0%.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report for May, both personal income and disposable personal income rose 0.5%, the same increase as in the previous month. Consumer spending increased 0.2% following a 0.6% jump in April. Consumer prices climbed 0.6% in May after advancing 0.2% in April. Consumer prices have risen 6.3% since May 2021.
  • The Consumer Price Index climbed 1.0% in May after climbing 0.3% in the previous month. The May increase was broad-based, with advances in prices for shelter, gasoline, and food being the largest contributors. The gasoline index rose 4.1% in May, prices for food rose 1.0%, and the index for shelter increased 0.6%. The CPI increased 8.6% for the 12 months ended in May, the largest 12-month increase since the period ending December 1981.
  • Prices that producers receive for goods and services jumped 0.8% in May following a 0.4% increase in April. Producer prices have increased 10.8% since May 2021. Prices less foods, energy, and trade services increased 0.5% in May and 6.8% since May 2021. In May, nearly two-thirds of the rise in the PPI was due to a 1.4% advance in prices for final demand goods. Prices for final demand services increased 0.4%. A major factor in the May increase in the prices for goods was a 5.0% increase in energy prices, within which gasoline prices spiked 8.4%.
  • Housing: Sales of existing homes retreated for the fourth consecutive month in May, falling 3.4% from the April estimate. Year over year, existing home sales were 8.6% under the May 2021 total. According to the latest survey from the National Association of Realtors®, home sales have essentially returned to the levels seen in 2019, prior to the pandemic, after two years of exceptional performance. The median existing-home price was $407,600 in May, up from $395,500 in April and 14.8% more than May 2021 ($355,000). Unsold inventory of existing homes represents a 2.6-month supply at the current sales pace. Sales of existing single-family homes also fell, down 3.6% in May. Sales of existing single-family homes have fallen 7.7% since May 2021. The median existing single-family home price was $414,200 in May, up from $401,700 in April and up 14.6% from May 2021 ($361,300).
  • Sales of new single-family homes rose 10.7% in May, the first advance in the last five months. The median sales price of new single-family houses sold in May was $449,000 ($454,700 in April). The May average sales price was $511,400 ($569,500 in April). The inventory of new single-family homes for sale in May represented a supply of 7.0 months at the current sales pace, down from April’s 7.6-month supply. Sales of new single-family homes in May were 5.9% below the May 2021 estimate.
  • Manufacturing: Industrial production increased 0.2% in May following a 1.4% increase in April. In May, manufacturing output declined 0.1% after three months when growth averaged nearly 1.0%. The indexes for utilities and mining rose 1.0% and 1.3%, respectively, in May. Total industrial production was 5.8% higher than it was a year earlier. Since May 2021, manufacturing has risen 4.8%, mining has jumped 9.0%, while utilities increased 8.4%.
  • May saw new orders for durable goods increase $1.9 billion, or 0.7%, marking the seventh monthly increase out of the last eight months. Excluding transportation, new orders rose 0.7% in May. Excluding defense, new orders increased 0.6%. Transportation equipment, up two consecutive months, led the increase, up $0.7 billion, or 0.8%.
  • Imports and exports: Import prices rose 0.6% in May after advancing 0.4% in April, according to the U.S. Bureau of Labor Statistics. Higher fuel prices offset lower nonfuel prices to account for the overall May increase. Fuel import prices rose 7.5% in May, with higher petroleum and natural gas prices both contributing to the increase. The price index for import fuel rose 73.5% over the past year, the largest 12-month advance since increasing 87.0% in November 2021. Prices for nonfuel imports declined 0.3% in May, the first monthly decrease since November 2020. Prices for U.S. exports advanced 2.8% in May following a 0.8% rise the previous month. Higher prices for both nonagricultural and agricultural exports contributed to the export price rise in May. Export prices have risen 18.9% since May 2021, the largest year-over-year rise since September 1984.
  • The international trade in goods deficit was $104.3 billion in May, down $2.4 billion, or 2.2%, from April. Exports of goods were $176.6 billion in May, $2.0 billion more than in April. Imports of goods were $280.9 billion, $0.4 billion less than April imports.
  • The latest information on international trade in goods and services, released June 7, is for April and shows that the goods and services trade deficit declined by $20.6 billion to $87.1 billion from the March deficit. April exports were $252.6 billion, $8.5 billion more than March exports. April imports were $339.7 billion, $12.1 billion less than March imports. Year over year, the goods and services deficit increased $107.9 billion, or 41.1%, from the same period in 2021. Exports increased $151.3 billion, or 18.8%. Imports increased $259.2 billion, or 24.3%.
  • International markets: The United States is not the only country seeing rising costs. Several European nations, plus Israel and South Korea, have seen surges in inflation since the start of the pandemic. Germany, France, Spain, and Italy have seen inflation spike recently. South Korea’s inflation reached a 13-year high in April, while Israel, which had maintained low inflation rates through 2021, saw inflation jump 25.0% from the first quarter of 2020 to the beginning of 2022. Inflation rates in the United Kingdom hit a 40-year high in May, up 9.1%. Several countries have taken various measures to try to curb inflationary pressures, from freezing the price of gas and electricity (“tariff shield”), to transfers to the most vulnerable (e.g., energy vouchers), temporary tax reductions or discounts on fuel prices, and price regulation. Of course, several countries have also tightened monetary policy by raising interest rates. Overall, for the markets in June, the STOXX Europe 600 Index declined 5.7%. The United Kingdom’s FTSE slid 2.7%. Japan’s Nikkei 225 Index fell 2.4%, while China’s Shanghai Composite Index rose 5.6%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® decreased in June following a decline in May. The index stands at 98.7, down from 103.2 in May. The overall index is at its lowest level since February 2021. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined to 147.1 in June, down marginally from 147.4 in May. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 66.4 in June (73.7 in May), its lowest level since March 2013.

Eye on the Month Ahead

Inflation continued to run hot in June, prompting a plan of fiscal tightening from the Federal Reserve, which included a 75-basis point interest rate increase. The Fed meets again in July and is certain to increase interest rates by at least 50 basis points, with the growing likelihood of another 75-basis point jump, particularly since the Fed does not meet again until September. The first estimate of second-quarter gross domestic product is also out in July. The economy retracted 1.5% in the first quarter.

What I’m Watching This Week – 27 June 2022

The Markets (as of market close June 24, 2022)

The stock and bond markets were closed last Monday to observe the Juneteenth federal holiday. Then, after three weeks of bruising losses, stocks rebounded over the next four days to deliver solid gains. Investors hung on every word during Fed Chair Jerome Powell’s two days of testimony before Congress, but ironically it was signs of economic weakness that seemed to lift their spirits. The tech-heavy Nasdaq surged 7.5% and the S&P 500, which increased 6.5%, had its second-best showing of the year. The Russell 2000 rose 6.0%, followed by the Dow (5.4%) and the Global Dow (2.5%). Crude oil prices dropped (5.4%) for the second week in a row.

Investors were ready to rally last Tuesday, the first trading day after a nerve-wracking week in which U.S. stocks suffered their worst one-week decline since March 2020. The Nasdaq jumped 2.5%, followed by the S&P 500 (2.4%), the Dow (2.1%), the Russell 2000 (1.7%), and the Global Dow (1.4%). Gains were widespread across all 11 market sectors. A sell-off in U.S. government bonds pushed the yield on 10-year Treasuries above 3.3%. Crude oil prices climbed, while gold and the dollar dipped.

On Wednesday, Powell told Congress that attempting to control inflation (by hiking interest rates) is essential, and while the Committee’s intent is not to provoke a recession, “it’s certainly a possibility.” U.S. stocks swung between losses and gains before ending the day slightly in the red. The Global Dow fell 0.7%, while the Dow and the Russell 2000 slipped 0.2%. Both the S&P 500 and the Nasdaq barely dipped (-0.1%). With recession fears taking center stage, oil prices sunk 2.5% on expectations for reduced demand. The dollar weakened and gold prices advanced.

U.S. stocks ended higher last Thursday, even though the market remained jittery during the second day of Powell’s testimony. The Global Dow lost 0.9%, but the benchmark U.S. indexes listed here posted gains, led by the Nasdaq (1.6%) and followed by the Russell 2000 (1.2%), the S&P 500 (0.9%), and the Dow (0.6%). Information technology shares outperformed, as did defensive sectors including utilities, health care, real estate, and consumer staples. Economically sensitive sectors lagged, especially energy, which fell 3.75%. The yield on 10-year Treasuries declined 7 basis points to 3.08%. Crude oil and gold prices fell, and the dollar advanced.

Stocks soared on Friday after the May reading of a closely watched gauge of longer-term consumer inflation expectations was revised downward from an alarming 14-year high. Weakening economic data offered some hope that cooler inflation could potentially reduce the need for drastic rate hikes by the Fed. The Nasdaq jumped 3.3%, followed by the Russell 2000 (3.2%), the S&P 500 (3.1%), the Dow (2.7%), and the Global Dow (2.2%). All 11 market sectors ended the day higher. Treasury yields ticked up, while crude oil prices, gold, and the dollar fell.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 6/24Weekly ChangeYTD Change
DJIA36,338.3029,888.7831,500.685.39%-13.31%
Nasdaq15,644.9710,798.3511607.627.49%-25.81%
S&P 5004,766.183,674.843911.746.45%-17.93%
Russell 20002,245.311,665.691765.746.01%-21.36%
Global Dow4,137.633,487.213576.142.55%-13.57%
Fed. Funds target rate0.00%-0.25%1.50%-1.75%1.50%-1.75%0 bps150 bps
10-year Treasuries1.51%3.23%3.13%-10 bps162 bps
US Dollar-DXY95.64104.61104.14-0.45%%8.89%
Crude Oil-CL=F$75.44$109.95$104.03-5.38%37.90%
Gold-GC=F$1,830.30$1,842.00$1,824.00-0.98%-0.34%

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

  • After four straight months of declines, sales of new single-family homes jumped 10.7% in May above the prior month’s total, according to the Census Bureau. However, new home sales were 5.9% below the level in May 2021. The median sales price of new houses sold in May 2022 was $449,000. The average sales price was $511,400. Inventory of new homes for sale sat at a supply of 7.7 months in May at the current sales pace.
  • Sales of existing homes fell for the fourth straight month in May after declining 3.4% from April and 8.6% year-over-year. According to the National Association of Realtors®, home sales have essentially returned to levels last seen in 2019, before the pandemic supercharged the market. Further sales declines are expected due to affordability challenges worsened by the sharp rise in mortgage rates. Total housing inventory at the end of May increased 12.6% from April but fell 4.1% from one year ago. Unsold inventory sits at a 2.6-month supply at the present sales pace, up from 2.2 months in April and 2.5 months in May 2021. The median existing-home price for all housing types in May was $407,600, a rise of 14.8% from May 2021 ($355,000). Sales of existing single-family homes were also down in May after falling 3.6% from April and 7.7% year-over-year. The median existing single-family home price was $414,200 in May, up 14.6% from a year ago.
  • For the week ended June 18, there were 229,000 new claims for unemployment insurance, a decrease of 2,000 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 June 11 was 0.9%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 11 was 1,315,000, an increase of 5,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended June 4 were New Jersey (1.9%), California (1.8%), Puerto Rico (1.6%), Alaska (1.5%), New York (1.4%), Pennsylvania (1.4%), Rhode Island (1.3%), Hawaii (1.2%), and Massachusetts (1.2%). The largest increases in initial claims for the week ended June 11 were in California (+3,951), Pennsylvania (+2,615), Illinois (+1,903), Ohio (+1,772), and Michigan (+1,587), while the largest decreases were in Missouri (-1,297), Tennessee (-831), Kentucky (-202), Mississippi (-146), and New Mexico (-103).

Eye on the Week Ahead

The final estimate for first-quarter gross domestic product is available this week. So far, available data has shown that the economy retracted at an annual rate of -1.5%, compared to an increase of 6.9% in the fourth quarter of 2021. The latest report on personal income and spending is also out this week. Included in this report is the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve. The PCE price index was up 6.3% in April from 12 months earlier.

What I’m Watching This Week – 21 June 2022

The Markets (as of market close June 17, 2022)

Last week was marked by volatility. Stocks experienced brief rallies throughout the week, but not enough to overcome corresponding troughs that ultimately dragged the major benchmark indexes lower. The Federal Reserve’s intent to bring inflation down to 2.0% through tighter monetary policy has investors concerned about the impact on the economy in general and corporate valuations in particular. That is partially reflected in the stock market, as the S&P 500 is firmly in bear territory, down more than 20.0% from its all-time high. Despite a late Friday rally, stocks ended last week down. The Russell 2000 dropped nearly 7.5% for the week and is down 25.81% for the year. The Nasdaq gave back 5.80%, followed by the Global Dow, the Dow, and the S&P 500. Crude oil prices fell over $10.00 to end the week at roughly $109.95 per barrel. The dollar inched higher, while gold prices slid.

Last Monday saw a wave of sell-offs for stocks with each of the benchmark indexes listed here falling notably. The Russell 2000 and the Nasdaq lost 4.8% and 4.7%, respectively. The S&P 500 dropped 3.9%, the Global Dow slid 3.2%, and the Dow declined 2.8%. Ten-year Treasury yields jumped 21 basis points to reach 3.36%. Investors may have lost confidence that inflation had peaked following the somewhat unexpected jump in the latest Consumer Price Index. The move from stocks could be in anticipation of more aggressive interest-rate hikes from the Federal Reserve that could push the economy into a recession. Crude oil prices inched higher. The dollar advanced, while gold prices slid lower.

Stocks closed generally lower last Tuesday, with only the Nasdaq eking out a 0.2% gain, likely the result of dip buyers seeking some low-hanging fruit. The S&P 500 declined 0.4%, falling for the fifth consecutive session, its longest slide since January. The Dow dipped 0.5%, the Russell 2000 declined 0.4%, and the Global Dow dropped 0.8%. Yields on 10-year Treasuries rose over 11 basis points to close at 3.48%. Crude oil prices fell $2.50 to $118.41 per barrel. The dollar climbed for the second consecutive day. Gold prices lost nearly $23.00, falling to $1,809.20 per ounce.

Despite a larger-than-expected interest-rate hike from the Federal Reserve, stocks rallied last Wednesday, ending a five-day tailspin. The Nasdaq led the indexes, climbing 2.5%, followed by the S&P 500 (1.5%) and the Russell 2000 (1.4%). The Dow and the Global Dow advanced 1.0%. Ten-year Treasury yields fell 8.8 basis points to close at 3.39%. Crude oil prices rose to $116.02 per barrel. The dollar dipped lower, while gold prices jumped more than $17.00 to $1,836.80 per ounce.

Stocks finished last Thursday sharply lower, giving back gains from the previous session and dragging the Dow below 30,000 for the first time since early in 2021. Investors are likely eying a prolonged period of global monetary tightening as the Bank of England and the Swiss National Bank followed the Federal Reserve with rate hikes. The Nasdaq dropped over 4.0%, while the Russell 2000 fell 4.7%. The Dow (-2.4%), the S&P 500 (-3.3%), and the Global Dow (-1.7%) also slid lower. Each of the S&P 500 market sectors ended the day in the red, with energy declining 5.6%, consumer discretionary decreasing 4.8%, and information technology losing 4.1%. Yields on 10-year Treasuries ended the day at 3.30% after falling 8.8 basis points. Crude oil prices rose $1.70 to $117.03 per barrel. The dollar fell for the second consecutive session, while gold prices advanced for the second straight day.

Last Friday saw the Nasdaq, the S&P 500, and the Russell 2000 post gains, while the Dow and the Global Dow slid lower. Ten-year Treasury yields dipped to 3.23% after declining 6.8 basis points. Crude oil prices dropped to around $109.95 per barrel. The dollar rose, while gold prices fell.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 6/17Weekly ChangeYTD Change
DJIA36,338.3031,392.7929,888.78-4.79%-17.75%
Nasdaq15,644.9711,340.0210,798.35-4.78%-30.98%
S&P 5004,766.183,900.863,674.84-5.79%-22.90%
Russell 20002,245.311,800.281,665.69-7.48%-25.81%
Global Dow4,137.633,700.333,487.21-5.76%-15.72%
Fed. Funds target rate0.00%-0.25%0.75%-1.00%1.50%-1.75%75 bps150 bps
10-year Treasuries1.51%3.15%3.23%8 bps172 bps
US Dollar-DXY95.64104.18104.610.41%9.38%
Crude Oil-CL=F$75.44$120.49$109.95-8.75%45.74%
Gold-GC=F$1,830.30$1,875.60$1,842.00-1.79%0.64%

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 hiked the target range for the federal funds rate 75 basis points to 1.50%-1.75%. The increase is more than the anticipated 50-basis-point advance and is the biggest rate hike since November 1994. The Committee chose a more aggressive path after noting that inflation remained elevated due to supply-and-demand imbalances related to the pandemic, higher energy prices, and broader price pressures. The invasion of Ukraine by Russia created additional upward pressure on inflation and has weighed on global economic activity. Further, COVID-related lockdowns in China are likely to exacerbate supply-chain disruptions. In addition to ongoing increases in the target range, the Committee will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. Following last week’s meeting, Federal Reserve Chair Jerome Powell indicated that a 50-to-75 basis-point rate increase is likely in July when the Committee meets next.
  • Prices at the producer level increased 0.8% in May, following advances of 0.4% in April and 1.6% in March. Producer prices increased 10.8% for the 12 months ended in May. Last month, prices for goods advanced 1.4%, while prices for services rose 0.4%. Prices less foods, energy, and trade services moved up 0.5% in May after increasing 0.4% in April. For the 12 months ended in May, the index less foods, energy, and trade services rose 6.8%. Driving the May increase in prices for goods was a 5.0% increase in energy prices, of which prices for gasoline advanced 8.4%. Energy prices are up 45.3% since May 2021. Over half of the increase in prices for services was attributable to a 2.9% increase in prices for transportation and warehousing services.
  • In May, retail and food services sales fell 0.3% from the previous month, but are 8.1% above sales in May 2021. Retail trade sales also declined, dropping 0.4% for the month, but are up 6.9% over the 12 months ended in May. Gasoline station sales were up 4.0% in May and 43.2% from May 2021, while sales for food services and drinking places were up 0.7% last month and 17.5% from last year. Food and beverage store sales rose 1.2% in May and 7.9% over May 2021. The data for May seems to indicate that consumers are scaling back on discretionary spending, possibly evidenced by declining sales for motor vehicle and parts dealers (-3.5%), furniture and home furnishing stores (-0.9%), and electronics and appliance stores (-1.3%). Online retail sales also dipped 1.0% in May.
  • U.S. import prices rose 0.6% in May and 11.7% for the 12 months ended in May. Import fuel prices rose 7.5% last month and 73.5% since May 2021, the largest 12-month increase since advancing 87.0% in November 2021. Nonfuel imports actually declined 0.3% in May, the first monthly decrease since decreasing 0.2% in November 2020. Exports increased 2.8%. Higher prices for both nonagricultural and agricultural exports contributed to the U.S. export price rise in May. Exports have risen 18.9% since May 2021, the largest annual increase since the index was first published in September 1984.
  • New home construction slowed in May. The number of issued building permits fell 7.0% from the prior month and is only 0.2% above the total for May 2021. The number of housing starts in May was 14.4% lower than the April estimate and 3.5% below the May 2021 rate. Housing completions increased 9.1% in May and are up 9.3% from a year earlier. For single-family construction in May, issued building permits fell 5.5%, housing starts were down 9.2%, while completions rose 2.8%.
  • Total industrial production inched higher in May, advancing 0.2% from the previous month. Industrial production has increased every month of the year so far, with an average monthly gain of nearly 0.8%. Total industrial production in May was 5.8% above its year-earlier level. In May, manufacturing output declined 0.1%, following three months when growth averaged nearly 1%. The indexes for utilities and mining rose 1.0% and 1.3%, respectively.
  • The national average retail price for regular gasoline was $5.006 per gallon on June 13, $0.130 per gallon above the prior week’s price and $1.937 higher than a year ago. Also as of June 13, the East Coast price increased $0.13 to $4.85 per gallon; the Gulf Coast price rose $0.08 to $4.63 per gallon; the Midwest price climbed $0.16 to $4.97 per gallon; the West Coast price increased $0.12 to $5.87 per gallon, and the Rocky Mountain price increased $0.21 to $4.92 per gallon. Residential heating oil prices averaged $4.37 per gallon on June 10, about $0.09 per gallon more than the prior week’s price. According to the U.S. Energy Information Administration, U.S. exports of crude oil and petroleum products reached a record of 9.8 million barrels per day during the week of May 27. In addition to high exports, movements from the Gulf Coast to the East Coast via pipeline, tanker, and barge are near historic high annual levels for both motor gasoline and distillate. Despite this supply, low product inventories in the Northeast are likely to continue, driven by a confluence of factors, including transportation constraints, increasing demand, and low regional refinery production.
  • For the week ended June 11, there were 229,000 new claims for unemployment insurance, a decrease of 3,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended June 4 was 0.9%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 4 was 1,312,000, an increase of 3,000 from the previous week’s level, which was revised up by 3,000. States and territories with the highest insured unemployment rates for the week ended May 28 were California (1.8%), New Jersey (1.8%), Alaska (1.5%), New York (1.4%), Pennsylvania (1.3%), Puerto Rico (1.3%), Massachusetts (1.2%), Rhode Island (1.2%), Georgia (1.1%), Hawaii (1.1%), Illinois (1.1%), and Oregon (1.1%). The largest increases in initial claims for the week ended June 4 were in Florida (+2,098), Georgia (+2,060), Pennsylvania (+1,134), Missouri (+1,053), and Illinois (+827), while the largest decreases were in Michigan (-2,131), Mississippi (-1,723), New York (-631), Oklahoma (-598), and New Jersey (-440).

Eye on the Week Ahead

The real estate sector is front and center this week with the release of the latest data on sales of both new and existing homes. The housing market slowed notably in April and if the latest data on housing starts is any indication, May will not show much improvement.