Investment plan – Page 8 – What I'm Watching This Week

What I’m Watching This Week – 16 December 2024

Published on December 15, 2024 by dredheadz

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

Stocks pulled back last week as tech shares pared gains from the prior week. The NASDAQ posted a minimal gain, while the S&P 500 retreated from recent record highs. Nine of the 11 market sectors declined last week, with only consumer discretionary and communication services advancing. Investors will be paying close attention to the Federal Open Market Committee, which meets December 17-18, at which time the Committee will have to decide if the recent uptick in price inflation is sufficient to defer another interest rate cut. While the November Consumer Price Index and Producer Price Index came in as expected (see below), data from both sources showed inflationary pressures moved further away from the Fed’s 2.0% target. This trend, coupled with a solid labor market, opens the possibility that the Committee may decide to wait until the January 2025 meeting before considering a further interest rate reduction. Nevertheless, the consensus remains that the Fed will reduce the federal funds rate by 25.0 basis points when it meets this week. Crude oil prices rose to their highest levels in three weeks, buoyed by expectations of an increase in demand following China’s economic stimulus and potential supply disruptions resulting from U.S. sanctions on Iran and Russia.

Wall Street saw stocks trend lower to kick off last week. Each of the benchmark indexes listed here lost value. The NASDAQ, the Russell 2000, and the S&P 500 each fell 0.6%. The Dow lost 0.5%, and the Global Dow dipped 0.2%. A Chinese government antitrust probe into a major AI company saw its shares tumble, which led a retreat in tech stocks. Investors also may have been reticent about risk pending the upcoming inflation data and next week’s Federal Reserve meeting. The yield on 10-year Treasuries rose 4.8 basis points to 4.20%. Crude oil prices advanced to $68.11 per barrel. The dollar gained 0.1%, and gold prices climbed 0.8%.

Stocks continued to slide last Tuesday as investors awaited the upcoming Consumer Price Index report. The Global Dow fell 0.5%, while the Russell 2000 lost 0.4%. The NASDAQ, the S&P 500, and the Dow each declined 0.3%. Ten-year Treasury yields climbed to 4.22%. Crude oil prices, at $68.38 per barrel, changed marginally. The dollar gained 0.3%, while gold prices rose 1.2%.

Following two days of losses, stocks climbed higher last Wednesday, led by a jump in tech shares, while stocks in communication services and consumer discretionary also trended higher. The NASDAQ gained 1.8% to reach a record high. The S&P 500 climbed 0.8%, the Russell 2000 advanced 0.6%, and the Global Dow rose 0.2%. The Dow slipped 0.2%. Bond prices fell, pushing yields higher, with 10-year Treasuries advancing to 4.27%. Crude oil prices surged 2.5% to $70.31 per barrel as supply concerns increased following the European Union’s approval of sanctions against Russian oil exports. The dollar rose 0.3%, and gold prices moved up 1.3%.

Last Thursday, a jump in producer prices (see below) and unemployment claims (see below) cooled investors’ appetite for risk. The Russell 2000 fell 1.4%. The NASDAQ slid 0.7%, the Dow and the S&P 500 dropped 0.5%, and the Global Dow dipped 0.3%. Ten-year Treasury yields gained 5.3 basis points to close at 4.32%. Crude oil prices declined 0.3% to settle at $70.08 per barrel. The dollar gained 0.3%, while gold prices fell 1.9%.

Stocks closed mostly lower last Friday, with only the NASDAQ ticking up 0.1%. The S&P 500 was unchanged, while the Russell 2000 dropped 0.6%, and both the Dow and the Global Dow fell 0.2%. Yields on 10-year Treasuries gained 7.5 basis points. Crude oil prices ended an up-and-down week by climbing 1.7%. The dollar was flat, while gold prices fell 1.6%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 12/13	Weekly Change	YTD Change
DJIA	37,689.54	44,642.52	43,828.06	-1.82%	16.29%
Nasdaq	15,011.35	19,859.77	19,926.72	0.34%	32.74%
S&P 500	4,769.83	6,090.27	6,051.09	-0.64%	26.86%
Russell 2000	2,027.07	2,408.99	2,346.90	-2.58%	15.78%
Global Dow	4,355.28	5,041.08	4,991.65	-0.98%	14.61%
fed. funds target rate	5.25%-5.50%	4.50%-4.75%	4.50%-4.75%	0 bps	-75 bps
10-year Treasuries	3.86%	4.15%	4.39%	24 bps	53 bps
US Dollar-DXY	101.39	105.98	106.98	0.94%	5.51%
Crude Oil-CL=F	$71.30	$67.15	$71.11	5.90%	-0.27%
Gold-GC=F	$2,072.50	$2,653.80	$2,666.90	0.49%	28.68%

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

Last Week’s Economic News

The Consumer Price Index posted the largest gain in seven months after climbing 0.3% in November. For the 12 months ended in November, the CPI advanced 2.7%, up 0.1 percentage point from the comparable period ended in October. Core prices, excluding the more volatile food and energy prices, also advanced 0.3% last month and 3.3% over the last 12 months. Food prices increased 0.4% last month, driven by a 0.5% jump in prices for food at home. For the year, prices for food advanced 2.4%. Energy prices rose 0.2% in November but declined 3.2% over the last 12 months. Other categories that saw price increases in November include shelter, used cars and trucks, household furnishings and operations, medical care, new vehicles, and recreation. Prices for communication were among the few major categories that decreased over the month. Shelter costs rose 0.3% for the month and 4.7% for the year. While the latest increases in shelter costs showed some moderation, at nearly 40% of the total basket of goods and services, shelter costs continue to keep the CPI above the Federal Reserve’s 2.0% target.
Prices at the wholesale level rose 0.4% in November, according to the latest Producer Price Index. Prices increased 0.3% (revised) the prior month. For the 12 months ended in November, producer prices advanced 3.0%, up 0.8 percentage point from the 12-month period ended in October. This was the largest 12-month increase since prices rose 4.7% for the year ended in February 2023. According to the Bureau of Labor Statistics, nearly 60.0% of the increase in the November PPI was attributable to a 0.7% increase in prices for goods. Prices for services moved up 0.2%. Food prices jumped 3.1% last month after being flat in October and have risen 5.1% since November 2023. Prices less food and energy increased 0.2% last month and 3.4% for the year. Prices less food, energy, and trade services inched up 0.1% in November and 3.5% for the last 12 months.
The Treasury budget deficit for November was $367 billion, well above the October estimate and $53 billion more than the deficit from last November. Contributing to the November deficit were outlays for military active duty and retirement, veterans benefits, Supplemental Security Income, and Medicare payments to health maintenance organizations and prescription drug plans, which accelerated into November, because December 1, 2024, the normal payment date, fell on a non-business day. According to the Department of the Treasury report, November has been a deficit month 70 out of 71 fiscal years. Through the first two months of fiscal year 2025, the cumulative deficit is $624 billion.
Prices for imports increased 0.1% for the second consecutive month in November and 1.3% over the last 12 months, the largest one-year advance since the period ended July 2024. After declining 0.8% in October, import fuel prices rose 1.0% in November, greatly contributing to the overall increase in import prices. Import prices excluding fuel were unchanged in November. Export prices were unchanged in November after increasing 1.0% the previous month. Higher nonagricultural prices in November offset lower agricultural prices. Export prices rose 0.8% over the past year, the largest 12-month advance since a 1.2% increase from July 2023 to July 2024.
The national average retail price for regular gasoline was $3.008 per gallon on December 9, $0.026 per gallon below the prior week’s price and $0.128 per gallon less than a year ago. Also, as of December 9, the East Coast price ticked up $0.010 to $2.999 per gallon; the Midwest price decreased $0.094 to $2.808 per gallon; the Gulf Coast price rose $0.022 to $2.603 per gallon; the Rocky Mountain price declined $0.001 to $2.786 per gallon; and the West Coast price decreased $0.036 to $3.827 per gallon.
For the week ended December 7, there were 242,000 new claims for unemployment insurance, an increase of 17,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 30 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 30 was 1,886,000, an increase of 15,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended November 23 were New Jersey (2.2%), Alaska (2.0%), Washington (2.0%), California (1.8%), Puerto Rico (1.8%), Rhode Island (1.8%), Minnesota (1.7%), Nevada (1.7%), Massachusetts (1.6%), and New York (1.6%). The largest increases in initial claims for unemployment insurance for the week ended November 30 were in Wisconsin (+1,785), North Dakota (+1,004), Kentucky (+731), Pennsylvania (+642), and Iowa (+252), while the largest decreases were in California (-10,113), Texas (-5,996), Florida (-2,373), Georgia (-2,239), and New York (-1,946).

Eye on the Week Ahead

The Federal Reserve meets for the last time this year. Many expect the Fed to drop interest rates by 25.0 basis points. The third and final estimate of gross domestic product for the third quarter is also out this week. The last reading had the economy expanding at an annualized rate of 2.8%.

What I’m Watching This Week – 9 December 2024

Published on December 9, 2024 by dredheadz

The Markets (as of market close December 6, 2024)

A stronger-than-expected jobs report (see below) helped drive stocks mostly higher last week and raise optimism of an interest rate cut when the Federal Reserve meets later in December. Consumer discretionary, communication services, and information technology helped drive the market, which was otherwise tempered by downturns in energy, utilities, real estate, and materials. Long-term bond prices were relatively stable, with yields on 10-year Treasuries slipping 2.0 basis points from the prior week’s closing mark. Crude oil prices declined on demand fears despite OPEC+’s decision to extend production cuts until the end of 2026. The dollar inched higher, while gold prices dipped lower.

A surge in tech shares and large-cap stocks drove the NASDAQ (1.0%) and the S&P 500 (0.24%) to record highs last Monday. Along with information technology, other sectors outperforming were communication services and consumer discretionary. The Global Dow gained 0.1%, while the Dow (-0.3%) declined. The small caps of the Russell 2000 ended the day essentially unchanged. Yields on 10-year Treasuries inched up to 4.19%. Crude oil prices settled at $68.09 per barrel. The dollar climbed 0.6%, partially rebounding from a 1.7% decline the previous week. Gold prices fell 0.7% to $2,661.60 per ounce.

Last Tuesday saw both the NASDAQ (0.4%) and the S&P 500 (0.1%) notch new record highs, while the Russell 2000 (-0.8%) and the Dow (-0.2%) declined. The Global Dow inched up 0.3%. Ten-year Treasury yields ticked up to 4.22%. Crude oil prices closed the session at about $69.99 per barrel, an increase of 2.8% from the previous day’s estimate. The dollar dipped 0.1%, while gold prices increased 0.3%.

All three major market indexes reached new record highs last Wednesday. The NASDAQ (1.3%), the Dow (0.7%), and the S&P 500 (0.6%) each posted notable gains, with the Dow closing above 45,000 for the first time in its history. Tech stocks continued to thrive, while some encouraging earnings reports from major companies bolstered investor confidence. The small caps of the Russell 2000 gained 0.4%, while the Global Dow dipped 0.1%. Crude oil prices gave back some of the prior day’s gains, falling 1.7% to $68.72 per barrel. Ten-year Treasury yields slipped to 4.18%. The dollar was unchanged, while gold prices rose 0.2%.

The markets trended lower last Thursday ahead of Friday’s employment data, which could be the determining factor in whether the Federal Reserve lowers interest rates later this month. Of the benchmark indexes listed here, only the Global Dow (0.3%) ended higher. The Russell 2000 fell 1.3%, while the Dow lost 0.6%. Both the S&P 500 and the NASDAQ dipped 0.2%. Ten-year Treasury yields were flat, crude oil prices slipped to $68.41 per barrel, the dollar fell 0.6%, and gold prices declined 0.8%.

Stocks closed last week with mixed results. The Dow (-0.3%) and the Global Dow (-0.1%) declined, while the NASDAQ (0.8%), the Russell 2000 (0.5%), and the S&P 500 (0.3%) advanced. Last Friday’s gains sent both the NASDAQ and the S&P 500 to new record highs. Yields on 10-year Treasuries dipped to 4.15%. Crude oil prices dropped 1.7%. The dollar and gold prices each increased by 0.3%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 12/6	Weekly Change	YTD Change
DJIA	37,689.54	44,910.65	44,642.52	-0.60%	6.89%
Nasdaq	15,011.35	19,218.17	19,859.77	3.34%	18.09%
S&P 500	4,769.83	6,032.38	6,090.27	0.96%	15.41%
Russell 2000	2,027.07	2,434.73	2,408.99	-1.06%	7.76%
Global Dow	4,355.28	5,016.35	5,041.08	0.49%	9.30%
fed. funds target rate	5.25%-5.50%	4.50%-4.75%	4.50%-4.75%	0 bps	-75 bps
10-year Treasuries	3.86%	4.17%	4.15%	-2 bps	29 bps
US Dollar-DXY	101.39	105.74	105.98	0.23%	4.53%
Crude Oil-CL=F	$71.30	$68.00	$67.15	-1.25%	-5.82%
Gold-GC=F	$2,072.50	$2,657.00	$2,653.80	-0.12%	28.05%

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 anticipated, the labor sector recovered from severe weather and strike activity in the previous month. Employment rose by 227,000 in November following upward revisions to both September (+32,000) and October (+24,000). Employment increased by an average of 186,000 per month over the 12 months prior to November. The unemployment rate, at 4.2%, rose by 0.1 percentage point, while the number of unemployed increased by 161,000 to 7.1 million. These measures are higher than a year earlier, when the jobless rate was 3.7%, and the number of unemployed people was 6.3 million. The labor force participation rate was 62.5%, 0.1 percentage point lower than the October estimate. The employment-population ratio declined 0.2 percentage point to 59.8%. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.7 million in November but was up from 1.2 million a year earlier. In November, the long-term unemployed accounted for 23.2% of all unemployed people. In November, average hourly earnings rose by $0.13, or 0.4%, to $35.61. Over the past 12 months, average hourly earnings have increased by 4.0%. The average workweek edged up by 0.1 hour to 34.3 hours in November.
The manufacturing sector picked up steam in November, according to the latest survey from S&P Global. Purchasing managers noted that the reduction in new orders was at the slowest pace in the last five months. Some manufacturers indicated that domestic demand conditions had started to improve, however new export orders decreased at a sharper pace as international demand worsened. Although the pace of reduction in total new orders eased, a further decline in new business contributed to another drop in manufacturing production for the fourth straight month. The S&P Global US Manufacturing Purchasing Managers’ Index™ remained below the 50.0 break-even mark in November, but at 49.7, pointed to only a marginal worsening in the health of the manufacturing sector.
Business activity increased in the services sector in November at the fastest pace since March 2022. The expansion in services was largely driven by the largest rise in new business in just over two-and-a-half years. The S&P Global US Services PMI® Business Activity Index rose to 56.1 in November, up from 55.0 in October and above the 50.0 neutral mark for the 22nd consecutive month.
The number of job openings, at 7.7 million, increased by 372,000 in October from the prior month, according to the latest Job Openings and Labor Turnover Summary. Despite the increase, job openings were 941,000 under the pace a year earlier. In October, the number of hires fell 269,000 to 5.3 million and was down by 501,000 over the year. Total separations, which includes quits, layoffs and discharges, and other separations, were little changed at 5.3 million but were down 369,000 from October 2023.
The latest report on the international trade deficit was released December 5 and was for October. The goods and services deficit was $73.8 billion, down $10.0 billion, or 11.9%, from September. October exports were $265.7 billion, $4.3 billion, or 1.6%, less than September exports. October imports were $339.6 billion, $14.3 billion, or 4.0%, less than September imports. Year to date, the goods and services deficit increased $80.7 billion, or 12.3%, from the same period in 2023. Exports increased $94.0 billion, or 3.7%. Imports increased $174.7 billion, or 5.4%.
The national average retail price for regular gasoline was $3.034 per gallon on December 2, $0.010 per gallon below the prior week’s price and $0.197 per gallon less than a year ago. Also, as of December 2, the East Coast price ticked down $0.022 to $2.989 per gallon; the Midwest price increased $0.036 to $2.902 per gallon; the Gulf Coast price fell $0.054 to $2.581 per gallon; the Rocky Mountain price declined $0.041 to $2.787 per gallon; and the West Coast price decreased $0.021 to $3.863 per gallon.
For the week ended November 30, there were 224,000 new claims for unemployment insurance, an increase of 9,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 23 was 1.2%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 23 was 1,871,000, a decrease of 25,000 from the previous week’s level, which was revised down by 11,000. States and territories with the highest insured unemployment rates for the week ended November 16 were New Jersey (2.3%), California (2.0%), Washington (2.0%), Alaska (1.9%), Puerto Rico (1.9%), Nevada (1.7%), Rhode Island (1.7%), Massachusetts (1.6%), Minnesota (1.6%), and New York (1.6%). The largest increases in initial claims for unemployment insurance for the week ended November 23 were in California (+4,573), Illinois (+2,814), Pennsylvania (+2,785), Georgia (+2,152), and Michigan (+1,976), while the largest decreases were in New Jersey (-853), Delaware (-94), Hawaii (-57), Virginia (-21), and West Virginia (-4).

Eye on the Week Ahead

November inflation data is available this week with the releases of both the Consumer Price Index (CPI) and the Producer Price Index (PPI). October saw the CPI rise 0.2% for the month and 2.6% for the year, while the PPI ticked up 0.2% for October and 2.2% for the year.

Monthly Market Review – November 2024

Published on December 2, 2024 by dredheadz

The Markets (as of market close November 29, 2024)

Stocks posted strong gains for November, which saw the S&P and the Dow have their best months of the year. The gains likely reflected investor optimism that a second Trump administration will favor businesses, with the hope that the President-elect will take a more moderate stance on trade tariffs. All 11 market sectors ended November higher, led by consumer discretionary and financials. Year to date, financials and information technology increased by more than 36.0%.

The latest data showed inflation has stubbornly resisted falling lower. For the 12 months ended in October, the Consumer Price Index (CPI) ticked up 0.2 percentage point to 2.6%, while the annual rate for the personal consumption expenditures (PCE) price index came in at 2.3%, 0.2 percentage point above the rate for the same period ended in September. Over the last three months, inflation has moved away from the Federal Reserve’s target of 2.0%, making it less likely that December will see another cut in the fed funds rate.

Growth of the U.S. economy continued at a modest pace. The gross domestic product (GDP) met expectations after increasing 2.8% in the third quarter following a 3.0% increase in the second quarter (see below). Personal consumption expenditures, the largest contributor in the calculation of GDP, rose 3.5%, with spending rising in durable goods and nondurable goods. Government expenditures rose 5.0%, imports grew more than exports, while gross domestic investment increased 1.1%.

Job growth rose by a mere 12,000 in October following a downward revision of 112,000 in the prior two months. The unemployment rate was unchanged at 4.1%, while the number of unemployed increased marginally. Wage growth rose 0.4% in October and 4.0% over the past 12 months. The employment data may have been skewed due to Hurricanes Milton and Helene. As a result, the Fed will likely wait until more information is available before assessing whether the labor sector has suddenly decelerated. The latest unemployment data may encourage tempering the pace of further rate cuts. While new weekly unemployment claims were unchanged from a year ago, total claims paid increased by over 90,000 (see below).

The S&P reported earnings growth of 5.8% in the third quarter. Roughly 75% of companies reported earnings per share above estimates, which is below the five-year average of 77% but equal to the 10-year average. Seven of the 11 sectors reported year-over-year growth, led by the communication services and health care sectors.

The real estate sector reversed course in October from September. Sales of existing homes increased in October after falling in September. New-home sales, which increased in September, plunged in October (see below). Mortgage rates have shown little downward movement, which has impacted sales. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.78% as of November 14. That’s down from 6.79% one week ago and 7.44% one year ago.

Industrial production retracted for the second consecutive month in October (see below). Manufacturing output and mining decreased, while utilities increased. Purchasing managers reported manufacturing continued to slow in October as new orders decreased for the fourth month running. On the other hand, the services sector grew modestly higher in October.

Ten-year Treasury yields closed the month down by nearly 10.0 basis points as the probability of an interest rate cut in December waned. The two-year note closed November at 4.25%, down 3.0 basis points from a month earlier. The dollar strengthened, closing up nearly 2.0%. Gold prices declined in November after hitting a record high in October. Crude oil prices decreased by the end of the month as investors awaited further insights into production plans from OPEC+. The retail price of regular gasoline was $3.044 per gallon on November 25, $0.053 below the price a month earlier and $0.194 less than the price a year ago.

Stock Market Indexes

Market/Index	2023 Close	Prior Month	As of November 29	Monthly Change	YTD Change
DJIA	37,689.54	41,763.46	44,910.65	7.54%	19.16%
NASDAQ	15,011.35	18,095.15	19,218.17	6.21%	28.02%
S&P 500	4,769.83	5,705.45	6,032.38	5.73%	26.47%
Russell 2000	2,027.07	2,196.65	2,434.73	10.84%	20.11%
Global Dow	4,355.28	4,892.56	5,016.35	2.53%	15.18%
fed. funds target rate	5.25%-5.50%	4.75%-5.00%	4.50%-4.75%	-25 bps	-75 bps
10-year Treasuries	3.86%	4.28%	4.17%	-11 bps	31 bps
US Dollar-DXY	101.39	103.89	105.74	1.78%	4.29%
Crude Oil-CL=F	$71.30	$70.40	$68.00	-3.41%	4.63%
Gold-GC=F	$2,072.50	$2,756.30	$2,657.00	-3.60%	28.20%

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

Latest Economic Reports

Employment: Total employment increased by 12,000 in October, well below the consensus of 125,500 and lower than the 12-month average gain of 194,000. The October estimate followed downward revisions in August and September, which, combined, were 112,000 lower than previously reported. According to the Bureau of Labor Statistics, Hurricanes Helene and Milton affected labor data collection. In October, job gains occurred in health care and government. Temporary help services lost jobs, as did manufacturing, due to strike activity. The unemployment rate for October was unchanged at 4.1% but was 0.3 percentage point above the rate from a year earlier. The number of unemployed persons, at 7.0 million, was 150,000 above the September figure and 541,000 above the October 2023 estimate. The number of long-term unemployed (those jobless for 27 weeks or more) at 1.6 million, was relatively unchanged from the prior month’s total and accounted for 22.9% of all unemployed people. The labor force participation rate, at 62.6%, was 0.1 percentage point lower than September’s rate, while the employment-population ratio declined 0.2 percentage point to 60.0%. In October, average hourly earnings increased by $0.13, or 0.4%, to $35.46. Since October 2023, average hourly earnings rose 4.0%. The average workweek remained at 34.3 hours.
There were 213,000 initial claims for unemployment insurance for the week ended November 23, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,907,000. A year ago, there were 213,000 initial claims, while the total number of workers receiving unemployment insurance was 1,813,000.
FOMC/interest rates: The Federal Open Market Committee met in November, which resulted in a 25.0-basis-point reduction in the fed funds target rate range to 4.50%-4.75%. The Committee noted that the economy had experienced a solid pace of expansion and inflation progressed toward the Committee’s 2.0% objective but remained somewhat elevated. The Committee will remain responsive to economic data in making future policy decisions.
GDP/budget: According to the second estimate from the Bureau of Economic Analysis, the economy, as measured by gross domestic product, accelerated at an annualized rate of 2.8% in the third quarter of 2024. GDP increased 3.0% in the second quarter. Compared to the second quarter, the deceleration in GDP in the third quarter primarily reflected a downturn in private inventory investment (8.3% to 1.1%) and a larger decrease in residential fixed investment (-2.8% to -5.0%). These movements were partly offset by accelerations in exports (1.0% to 7.5%), personal consumption expenditures (2.8% to 3.5%), and federal government spending (4.3% to 8.9%). Imports, which are a negative in the calculation of GDP, accelerated 10.2%. Personal consumption expenditures (2.37%) contributed the most to overall economic growth. Consumer prices, as measured by the PCE index, increased 1.5%, compared with an increase of 2.5% in the second quarter. Excluding food and energy prices, the PCE price index increased 2.1%, compared with an increase of 2.8% in the prior quarter.
October was the first month of fiscal year 2025 for the federal government. In October, the federal budget statement showed a deficit of $257 billion versus a deficit of $67 billion a year ago. In October, government receipts totaled $327 billion, with the majority coming from collection of individual income taxes ($168 billion) and social insurance and retirement receipts ($122 billion). Government outlays were $584 billion, the largest of which came from payments for Social Security ($125 billion) and national defense ($103 billion).
Inflation/consumer spending: The PCE price index ticked up 0.2% in October, the same increase as in September. Prices for goods decreased 0.1%, while prices for services rose 0.4%. Food prices were unchanged in October from September, while energy prices decreased 0.1%. Excluding food and energy, the PCE price index increased 0.3% in October. The 12-month PCE price index for October increased 2.3%. Prices excluding food and energy rose 2.8% from one year ago. Also in October, personal income rose 0.6% and disposable (after-tax) personal income increased 0.7%. Personal consumption expenditures, a measure of consumer spending, increased 0.4% in October, down from a 0.6% advance in the previous month.
The Consumer Price Index rose 0.2% in October, the same increase as in each of the previous three months. Over the 12 months ended in October, the CPI rose 2.6%, up 0.2 percentage point from the 12-month period ended in September. Prices for shelter rose 0.4% in October, accounting for over one-third of the overall monthly increase. In addition to shelter prices, the October CPI also saw prices increase in used cars and trucks, airline fares, medical care, and recreation. Prices for apparel, communication, and household furnishings and operations were among those that decreased over the month. Excluding food and energy (core prices), the CPI rose 0.3% in October, unchanged from September and August. Core prices advanced 3.3% from October 2023.
The Producer Price Index rose 0.2% in October after ticking up 0.1% (revised) in September. In October, prices for services increased 0.3%, while prices for goods inched up 0.1%. For the 12 months ended in October, producer prices advanced 2.4%. Producer prices less foods, energy, and trade services increased 0.3% in October after moving up 0.1% in September. For the 12 months ended in October, prices for final demand less foods, energy, and trade services rose 3.5%.
Housing: Sales of existing homes rose 3.4% in October after falling 1.0% in September. Existing-home prices increased 2.9% over the past 12 months. According to the National Association of Realtors® (NAR), increasing inventory, additional job gains, and continued economic growth helped drive existing-home sales. Unsold inventory of existing homes in October represented a 4.2-month supply at the current sales pace, down from 4.3 months in September but up from 3.6 months in October 2023. The median existing-home price in October was $407,200 ($406,700 in September) and 4.0% above the October 2023 price of $391,600. Sales of existing single-family homes increased 3.5% in October and 4.1% from a year ago. The median existing single-family home price was $412,200 in October, up from $411,400 in September and above the October 2023 estimate of $396,000.
New single-family home sales decreased 17.3% in October and were 9.4% lower than the October 2023 rate. The median sales price of new single-family houses sold in October was $437,300 ($426,800 in September). The October average sales price was $545,800 ($509,900 in September). The inventory of new single-family homes for sale in October represented a supply of 9.5 months at the current sales pace, up from 7.7 months in September.
Manufacturing: Industrial production decreased 0.3% in October after declining 0.5% in the prior month. A strike at a major producer of civilian aircraft held down total growth by an estimated 0.2% in October, and the effects of two hurricanes subtracted an estimated 0.1%. Manufacturing output declined 0.5% in October. Mining output increased 0.3% and utilities rose 0.7%. For the 12 months ended in October, total industrial production moved down 0.3% from its year-earlier level. Over the same period, manufacturing decreased 0.3%, mining declined 1.5%, while utilities advanced 1.5%.
New orders for durable goods increased 0.2% in October, following two consecutive monthly decreases. Excluding transportation, new orders increased 0.1%. Excluding defense, new orders increased 0.4%. Transportation equipment, down three consecutive months, advanced 0.5%. New orders for nondefense capital goods in October increased 1.4%. New orders for defense capital goods in October declined 4.0%.
Imports and exports: U.S. import prices rose 0.3% in October following a 0.4% decrease in September. The October advance in import prices was the largest monthly increase since April 2024. Prices for import fuel increased 1.5% in October after declining 7.5% in September. Excluding fuel, import prices ticked up 0.2% in October for the second straight month. Import prices edged up 0.8% over the past year. Prices for U.S. exports increased 0.8% in October after declining 0.6% the previous month. The October advance was the largest monthly rise since August 2023. Higher prices for nonagricultural and agricultural exports in October contributed to the monthly increase. Export prices declined 0.1% over the past year.
The international trade in goods deficit was $99.1 billion in October, down 8.8%, or $9.6 billion, from the September estimate. Exports of goods for October were $168.7 billion, $5.6 billion, or 3.2%, less than September exports. Imports of goods for October were $267.8 billion, $15.2 billion, or 5.4%, less than September imports.
The latest information on international trade in goods and services, released November 5, was for September and revealed that the goods and services trade deficit was $84.4 billion, up 19.2% from the August deficit. September exports were $267.9 billion, 1.2% lower than August exports. September imports were $352.3 billion, 3.0% more than August imports. Year to date, the goods and services deficit increased $69.6 billion, or 11.8%, from the same period in 2023. Exports increased $784.7 billion, or 3.7%. Imports increased $154.4 billion, or 5.3%.
International markets: Eurozone inflation in November rose 2.3%, in line with expectations. Lackluster economic growth in Canada dampened hopes for continued monetary policy easing by the Bank of Canada. Third-quarter Canadian GDP grew at an annualized rate of 1.0%, falling short of the central bank’s 1.5% projection. As a result, the yield on Canada’s 10-year Treasury bond fell to 3.17%, its lowest level in over a month, while the Canadian dollar neared its mid-2020 low. Elsewhere, China’s economy grew by 0.9% in the third quarter of 2024. In September, The People’s Bank of China introduced the biggest stimulus package for the economy since the pandemic, including significant cuts to interest and mortgage rates. The plans also included help for the struggling stock market and measures to encourage banks to lend more to individuals and businesses. For November, the STOXX Europe 600 Index dipped 0.1%; the United Kingdom’s FTSE rose 1.4%; Japan’s Nikkei 225 Index gained 0.4%; while China’s Shanghai Composite Index increased 1.7%.
Consumer confidence: Consumer confidence rose in November to 111.7, up from 109.6 in October, according to the Conference Board Consumer Confidence Index®. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased by 4.8 points to 140.9 in November. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, ticked up to 92.3 in November, up from 91.9 in October.

Eye on the Month Ahead

The Federal Reserve meets in December for the final time this year. Comments from Fed Chair Jerome Powell and other voting members seem to indicate that there is a slim chance that interest rates will be lowered in December. Recent data has shown relative strength in the economy, and the job market appears to be nearing full employment. However, inflationary pressures, while somewhat muted, continued to inch higher in October and November, which will heighten interest in the inflation indicators released in December.

What I’m Watching This Week – 2 December 2024

Published on December 1, 2024 by dredheadz

The Markets (as of market close November 29, 2024)

Thanksgiving week proved to be a positive one for stocks. Each of the benchmark indexes listed here closed higher, led by the Dow and the Russell 2000. Financials, consumer staples, and industrials led the market sectors, with only energy and communication services declining. Yields on 10-year Treasuries fell for the second consecutive week. Crude oil prices declined despite an apparent ceasefire between Israel and Hezbollah. The dollar lost about 1.7% for the week, while gold prices declined 2.0%.

The Dow reached a new high last Monday as stocks closed generally higher. The Russell 2000 gained 1.5% to lead the benchmark indexes listed here, followed by the Dow (1.0%) and the Global Dow (0.5%). The NASDAQ and the S&P 500 each climbed 0.3%. Ten-year Treasury yields closed at 4.27% after falling 14.5 basis points. The dollar, which had been rallying, declined 0.6%, while gold prices snapped a five-day winning streak after losing 3.1%. Crude oil prices slid 3.1%, settling at $69.07 per barrel.

Both the S&P 500 (0.6%) and the Dow (0.3%) reached record highs last Tuesday. The NASDAQ gained 0.6%, while the Russell 2000 (-0.7%) and the Global Dow (-0.1%) declined. Investors wrestled with the potential economic effects of President-elect Trump’s trade tariffs. Yields on 10-year Treasuries closed at 4.30%. Crude oil prices slid to $68.63 per barrel. Gold prices rose 0.6% and the dollar inched up 0.1%.

Stocks fell the day before Thanksgiving as each of the benchmark indexes listed here closed the session in the red, with the exception of the Russell 2000, which ticked up 0.1%. The NASDAQ fell 0.6%, the S&P 500 lost 0.4%, and the Dow declined 0.3%. The Global Dow was flat. Crude oil prices closed at $68.76 per barrel. Ten-year Treasury yields settled at 4.24%. The dollar declined 0.9%, while gold prices rose 0.6%. Investors saw the likelihood of another interest rate reduction in December diminish after the latest data showed inflation ticked up in October and over the last 12 months (see below), indicating that movement toward the Fed’s 2.0% target has stalled.

The week ended as it began with stocks closing higher. The S&P 500 (0.6%) and the Dow (0.4%) reached record highs. The NASDAQ gained 0.8%, the Global Dow rose 0.5%, and the Russell 2000 edged up 0.4%. Ten-year Treasury yields lost 6.4 basis points to close at 4.17%. Crude oil prices dropped 1.1%, while gold prices increased 0.7%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 11/29	Weekly Change	YTD Change
DJIA	37,689.54	44,296.51	44,910.65	1.39%	19.16%
NASDAQ	15,011.35	19,003.65	19,218.17	1.13%	28.02%
S&P 500	4,769.83	5,969.34	6,032.38	1.06%	26.47%
Russell 2000	2,027.07	2,406.67	2,434.73	1.17%	20.11%
Global Dow	4,355.28	4,971.05	5,016.35	0.91%	15.18%
fed. funds target rate	5.25%-5.50%	4.50%-4.75%	4.50%-4.75%	0 bps	-75 bps
10-year Treasuries	3.86%	4.41%	4.17%	-24 bps	31 bps
US Dollar-DXY	101.39	107.53	105.74	-1.66%	4.29%
Crude Oil-CL=F	$71.30	$71.25	$68.00	-4.56%	-4.63%
Gold-GC=F	$2,072.50	$2,711.70	$2,657.00	-2.02%	28.20%

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

Last Week’s Economic News

The second estimate for the third-quarter gross domestic product revealed the economy expanded at an annualized rate of 2.8%, unchanged from the initial estimate. In the second quarter, GDP increased 3.0%. Personal consumption expenditures, a measure of consumer spending, rose 3.5% in the third quarter. Nonresidential fixed investment advanced 3.8%, while residential fixed investment declined 5.0%. Exports rose 7.5% and imports, which are a negative in the calculation of GDP, advanced 10.2%. The personal consumption expenditures price (PCE) index increased 1.5% and 2.1% excluding food and energy.
Personal income increased 0.6% in October, while disposable personal income, personal income less personal current taxes, increased 0.7%. Personal consumption expenditures (PCE) increased 0.4%. The PCE price index increased 0.2% in October. Excluding food and energy, the PCE price index increased 0.3%. Since October 2023, the PCE price index rose 2.3%. The PCE price index less food and energy increased 2.8% for the year.
New orders for manufactured durable goods in October increased 0.2% following two consecutive monthly decreases. Excluding transportation, new orders increased 0.1%. Excluding defense, new orders increased 0.4%. Transportation equipment, also up following two consecutive monthly decreases, led the increase, advancing 0.5%. New orders for nondefense capital goods in October increased 1.4%, while new orders for defense capital goods in October decreased 4.0%.
The advance report on international trade in goods for October showed the deficit was $99.1 billion, down $9.6 billion, or 8.8%, from the September estimate. Exports of goods for October were $168.7 billion, $5.6 billion, or 3.2%, less than September exports. Imports of goods for October were $267.8 billion, $15.2 billion, or 5.4% less than September imports.
Sales of new single-family homes dropped 17.3% in October and fell 9.4% over the last 12 months. The median sales price of new houses sold in October 2024 was $437,300. The average sales price was $545,800. Inventory in October sat at a supply of 9.5 months.
The national average retail price for regular gasoline was $3.044 per gallon on November 25, $0.002 per gallon below the prior week’s price and $0.194 per gallon less than a year ago. Also, as of November 25, the East Coast price ticked up $0.008 to $3.011 per gallon; the Midwest price decreased $0.016 to $2.866 per gallon; the Gulf Coast price rose $0.006 to $2.635 per gallon; the Rocky Mountain price fell $0.089 to $2.828 per gallon; and the West Coast price increased $0.009 to $3.884 per gallon.
For the week ended November 23, there were 213,000 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 November 16 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 16 was 1,907,000, an increase of 9,000 from the previous week’s level, which was revised down by 10,000. This is the highest level for insured unemployment since November 13, 2021, when it was 1,974,000. States and territories with the highest insured unemployment rates for the week ended November 9 were New Jersey (2.3%), California (1.9%), Washington (1.9%), Alaska (1.8%), Puerto Rico (1.8%), Nevada (1.6%), Rhode Island (1.6%), Illinois (1.5%), Massachusetts (1.5%), and New York (1.5%). The largest increases in initial claims for unemployment insurance for the week ended November 16 were in Utah (+538), Minnesota (+381), Missouri (+252), Idaho (+200), and Louisiana (+199), while the largest decreases were in California (-5,088), Georgia (-1,952), New Jersey (-1,423), Texas (-1,160), and Ohio (-1,125).

Eye on the Week Ahead

One of the most closely watched of all economic indicators is the employment situation report, which is released this week for November. October saw the labor force increase by a scant 12,000. However, Hurricane Milton may have impacted the surveys that support the employment data. It would not be surprising to see October’s figures increase as more data is made available. However, the consensus for November, at about 125,000, is well below the monthly average for the year.

What I’m Watching This Week – 25 November 2024

Published on November 24, 2024 by dredheadz

The Markets (as of market close November 22, 2024)

Wall Street enjoyed a solid week of gains, rebounding from the prior week’s losses. Each of the benchmark indexes climbed higher, led by the small caps of the Russell 2000, as investors moved from mega caps to cyclical stocks, which are influenced largely by the economy. Communication services was the only market sector to close in the red, while the remaining sectors moved higher, led by utilities, consumer staples, real estate, and materials. Crude oil prices gained nearly 6.5% last week, driven by increasing conflict between Russia and Ukraine. The dollar and gold prices moved higher as investors sought safe-haven assets, in light of increasing geopolitical risks.

Last week began with stocks closing generally higher as the information technology sector rebounded from a tough prior week. The NASDAQ and the Global Dow each advanced 0.6%, while the S&P 500 gained 0.4% and the Russell 2000 ticked up 0.1%. The Dow fell 0.1%. Yields on 10-year Treasuries slid to 4.41%. Crude oil prices rose 3.3% to settle at $69.22 per barrel, driven higher by growing concerns over supply cuts. The dollar declined 0.5%, while gold prices advanced 1.8%.

Stocks closed mostly higher last Tuesday, led by the NASDAQ (1.0%), followed by the Russell 2000 (0.8%), and the S&P 500 (0.4%). The Dow dipped 0.3% and the Global Dow fell less than 0.1%. Ten-year Treasury yields closed at 4.37%, a decrease of 3.5 basis points. Gold prices rose for the second straight session after gaining 0.8%. The dollar dipped 0.1%. Crude oil prices increased 0.7% to $69.64 per barrel.

The Dow ended a streak of daily losses last Wednesday after closing up 0.3%. The Russell 2000 and the S&P 500 were flat, while the Global Dow (-0.3%), and the NASDAQ (-0.1%) declined. Ten-year Treasury yields closed up 1.7 basis points to 4.41%. Crude oil prices slipped 0.2%, falling to $69.12 per barrel. The dollar rose 0.4% and gold prices advanced 0.8%. Investors were pensive as they awaited the earnings report from a major AI company.

Wall Street saw a rally last Thursday, with each of the benchmark indexes listed here closing higher as investors shifted toward cyclical stocks. The economy showed evidence of strengthening as jobless claims fell to nearly a seven-month low (see below), and sales of existing homes rebounded in October. The Russell 2000 led the benchmarks, gaining 1.7%, the Dow rose 1.1%, the S&P 500 and the Global Dow each climbed 0.5%, while the NASDAQ ticked up less than 0.1%. Ten-year Treasury yields rose 2.6 basis points to reach 4.43%. Crude oil prices jumped 2.0%, settling at $70.13 per barrel, driven by escalating tensions between Ukraine and Russia. The dollar (0.3%) and gold prices (0.8%) advanced.

The markets closed on a positive note last Friday. The Russell 2000 gained 1.8% to lead the benchmark indexes listed here, followed by the Dow (1.0%), the Global Dow (0.4%), the S&P 500 (0.3%), and the NASDAQ (0.2%). Ten-year Treasury yields slipped to 4.41%. Crude oil continued to surge, climbing 1.6%. The dollar and gold prices also advanced.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 11/22	Weekly Change	YTD Change
DJIA	37,689.54	43,444.99	44,296.51	1.96%	17.53%
NASDAQ	15,011.35	18,680.12	19,003.65	1.73%	26.60%
S&P 500	4,769.83	5,870.62	5,969.34	1.68%	25.15%
Russell 2000	2,027.07	2,303.84	2,406.67	4.46%	18.73%
Global Dow	4,355.28	4,913.45	4,971.05	1.17%	14.14%
fed. funds target rate	5.25%-5.50%	4.50%-4.75%	4.50%-4.75%	0 bps	-75 bps
10-year Treasuries	3.86%	4.44%	4.41%	-3 bps	55 bps
US Dollar-DXY	101.39	106.73	107.53	0.75%	6.06%
Crude Oil-CL=F	$71.30	$66.96	$71.25	6.41%	-0.07%
Gold-GC=F	$2,072.50	$2,566.00	$2,711.70	5.68%	30.84%

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

October saw a downturn in new home construction and completions. According to the U.S. Census Bureau, the number of issued residential building permits fell 0.6% in October and 7.7% from a year earlier. Building permits for single-family homes rose 0.5% last month. Housing starts dropped 3.1% in October and were 4.0% under the October 2023 estimate. Single-family housing starts decreased 6.9% in October. Housing completions declined 4.4% last month but were 16.8% above the October 2023 rate. Completions of single-family homes in October were 1.4% below the September rate.
Sales of existing homes rose in October, according to the National Association of REALTORS®. Existing-home sales rose 3.4% last month and were up 2.9% since October 2023. The expanding economy, job growth, and increased inventory helped drive sales higher. Total housing inventory sat at a 4.2-month supply at the current sales pace, down from 4.3 months in September but up from 3.6 months in October 2023. The median existing-home price in October was $407,200 ($406,700 in September), up 4.0% from one year ago ($391,600). Single-family home sales accelerated 3.5% in October and were 4.1% above the prior year’s pace. The median existing single-family home price was $412,200 in October, ahead of the September price of $411,400, and 4.1% above the October 2023 price of $396,000. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.78% as of November 14. That’s down from 6.79% one week ago and 7.44% one year ago.
The national average retail price for regular gasoline was $3.046 per gallon on November 18, $0.006 per gallon below the prior week’s price and $0.243 per gallon less than a year ago. Also, as of November 18, the East Coast price ticked up $0.001 to $3.003 per gallon; the Midwest price increased $0.016 to $2.882 per gallon; the Gulf Coast price dipped $0.001 to $2.629 per gallon; the Rocky Mountain price fell $0.158 to $2.917 per gallon; and the West Coast price declined $0.049 to $3.875 per gallon.
For the week ended November 16, there were 213,000 new claims for unemployment insurance, a decrease of 6,000 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 November 9 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 9 was 1,908,000, an increase of 36,000 from the previous week’s level, which was revised down by 1,000. This is the highest level for insured unemployment since November 13, 2021, when it was 1,974,000. States and territories with the highest insured unemployment rates for the week ended November 2 were New Jersey (2.2%), California (2.0%), Puerto Rico (1.9%), Washington (1.7%), Alaska (1.6%), Nevada (1.6%), Rhode Island (1.6%), Massachusetts (1.5%), New York (1.5%), Illinois (1.4%), Oregon (1.4%), and Pennsylvania (1.4%). The largest increases in initial claims for unemployment insurance for the week ended November 9 were in California (+5,906), New Jersey (+2,439), New York (+2,327), Minnesota (+1,889), and Texas (+1,275), while the largest decreases were in Michigan (-4,072), Kansas (-599), Wisconsin (-436), Ohio (-305), and North Dakota (-284).

Eye on the Week Ahead

There’s plenty of potentially market-moving economic information released this week. Two reports will draw the most attention: the second estimate of third-quarter GDP and the report on personal income and outlays. The October release showed GDP advanced 2.8%, while consumer spending rose 3.7%. Also last month, personal income rose 0.3%, personal consumption expenditures increased 0.5%, and consumer prices rose 0.2%.

What I’m Watching This Week – 18 November 2024

Published on November 18, 2024 by dredheadz

The Markets (as of market close November 15, 2024)

Last week saw stocks close markedly lower as investors were discouraged by hawkish comments from Federal Reserve Chair Jerome Powell, who put a damper on the likelihood of another interest rate decrease this year. Among the market sectors, energy, financials, and utilities closed the week higher, while the remaining sectors ended the week in the red, led by health care, which saw stocks fall after President-elect Trump’s appointment of Robert Kennedy as secretary of the Department of Health and Human Services. Ten-year Treasury yields hovered near the highest level since June, reflecting the diminished probability of interest rate cuts. Crude oil and gold prices declined, while the dollar advanced.

Stocks closed higher last Monday as both the Dow (0.7%) and the S&P 500 (0.1%) reached record highs. The Russell 2000 led the benchmark indexes listed here, gaining 1.5%, while the NASDAQ and the Global Dow each ticked up 0.1%. Consumer discretionary and financials led the market sectors. Crypto-related companies saw sharp gains. Gold dropped 2.4%, extending losses and falling to its lowest level in a month. Crude oil prices declined 3.1% to $68.20 per barrel, pulled lower by a strong dollar (+0.5%) and concerns over China’s waning demand for crude. The bond market was closed in observance of Veterans Day.

The market saw its rally end last Tuesday. Investor preference for risk cooled amid concerns about the economy and inflation, which prompted profit-taking following recent market highs. The Russell 2000 (-1.8%) and the Global Dow (-1.3%) declined the furthest, followed by the Dow (-0.9%), the S&P 500 (-0.3%), and the NASDAQ (-0.1%). Ten-year Treasury yields gained 12.4 basis points to 4.43%. Crude oil prices closed at $68.10 per barrel. The dollar gained 0.4%. Gold prices fell 0.4%.

Of the benchmark indexes listed here, the Dow and the S&P 500 barely edged higher last Wednesday, while the Russell 2000 (-0.9%), the NASDAQ (-0.3%), and the Global Dow (-0.2%) declined. Ten-year Treasury yields increased to 4.45%. Crude oil prices dipped to $68.04 per barrel. The dollar continued to rise, gaining 0.4%, while gold prices fell 1.0%. Investors may be exercising caution following the latest Consumer Price Index (see below), which showed disinflation has stalled a bit.

Stocks declined on Thursday after Fed Chair Jerome Powell stated that there was no urgency to lower interest rates given the strength of the economy. The small caps of the Russell 2000 declined for the third straight day after dropping 1.4%. The NASDAQ and the S&P 500 each fell 0.6%. The Dow lost 0.5% and the Global Dow dipped 0.3%. The yield on 10-year Treasuries slipped 3.3 basis points to end the session at 4.41%. Crude oil prices increased for the first time last week, closing at $68.70 per barrel. The dollar advanced 0.4%, while gold prices declined 0.5%.

Last Friday saw stocks close sharply lower with each of the benchmark indexes listed here losing value. The NASDAQ dropped 2.2%, the Russell 2000 fell 1.4%, the S&P 500 declined 1.3%, the Dow decreased 0.7%, and the Global Dow slid 0.2%. Ten-year Treasury yields closed up at 4.44%. Crude oil prices fell 2.4%, the dollar ticked up 0.1%, while gold prices declined for the fifth straight session.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 11/15	Weekly Change	YTD Change
DJIA	37,689.54	43,988.99	43,444.99	-1.24%	15.27%
NASDAQ	15,011.35	19,286.78	18,680.12	-3.15%	24.44%
S&P 500	4,769.83	5,995.54	5,870.62	-2.08%	23.08%
Russell 2000	2,027.07	2,399.64	2,303.84	-3.99%	13.65%
Global Dow	4,355.28	4,990.57	4,913.45	-1.55%	12.82%
fed. funds target rate	5.25%-5.50%	4.50%-4.75%	4.50%-4.75%	0 bps	-75 bps
10-year Treasuries	3.86%	4.30%	4.44%	14 bps	58 bps
US Dollar-DXY	101.39	104.92	106.73	1.73%	5.27%
Crude Oil-CL=F	$71.30	$70.48	$66.96	-4.99%	-6.09%
Gold-GC=F	$2,072.50	$2,691.30	$2,566.00	-4.66%	23.81%

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

Last Week’s Economic News

The Consumer Price Index rose 0.2% in October, the same increase as in each of the previous three months. For the 12 months ended in October, the CPI increased 2.6%, up 0.2 percentage point from the same period ended in September. Prices, excluding food and energy, rose 0.3% in October and 3.3% over the last 12 months. Prices for shelter rose 0.4% in October, accounting for over half of the monthly increase. Food prices also increased over the month. Prices for energy were unchanged over the month after declining 1.9% in September.
The Producer Price Index rose 0.2% in October following a 0.1% bump in September. Producer prices moved up 2.4% for the 12 months ended in October. Most of the October increase can be traced to a 0.3% in crease in prices for services. Goods prices inched up 0.1%. Producer prices less foods, energy, and trade services increased 0.3% in October after moving up 0.1% in September. For the 12 months ended in October, prices less foods, energy, and trade services rose 3.5%.
Retail and food services sales rose 0.4% in October and increased 2.8% for the 12 months ended in October. Retail trade sales were up 0.4% last month and up 2.6% from last year. Nonstore (online) retailer sales were up 7.0% from October 2023, while food services and drinking places sales increased 4.3% over the same period.
Import prices rose 0.3% in October following a 0.4% decline in September. The October increase was the largest one-month advance since April 2024. Fuel prices rose 1.5% last month after declining 7.5% in September, marking the largest monthly increase since April 2024. Despite the October increase, import fuel prices declined 13.6% for the year ended in October. Nonfuel import prices increased 0.2% for the second consecutive month in October. Import prices increased 0.8% from October 2023 to October 2024. Prices for exports increased 0.8% in October, which was the largest monthly rise since August 2023. Higher prices for nonagricultural and agricultural exports in October contributed to the monthly increase. Despite the October rise, export prices declined 0.1% over the past year.
According to the Federal Reserve’s latest report, industrial production declined 0.3% in October after falling 0.5% the previous month. A strike at a major producer of civilian aircraft, coupled with the lingering effects of Hurricanes Milton and Helene contributed to the October decline. Manufacturing fell 0.5% last month, while mining and utilities rose 0.3% and 0.7%, respectively. Industrial production in October was 0.3% below its year-earlier level.
October 2024, the first month of fiscal year 2025, saw a monthly government deficit of $257.5 billion, well above the $66.6 billion deficit reported for October 2023. Government receipts were $326.8 billion, while expenditures totaled $584.2 billion.
The national average retail price for regular gasoline was $3.052 per gallon on November 11, $0.017 per gallon below the prior week’s price and $0.297 per gallon less than a year ago. Also, as of November 11, the East Coast price increased $0.010 to $3.002 per gallon; the Midwest price decreased $0.071 to $2.866 per gallon; the Gulf Coast price rose $0.011 to $2.630 per gallon; the Rocky Mountain price dipped $0.028 to $3.075 per gallon; and the West Coast price fell $0.021 to $3.924 per gallon.
For the week ended November 9, there were 217,000 new claims for unemployment insurance, a decrease 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 November 2 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 2 was 1,873,000, a decrease of 11,000 from the previous week’s level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended October 26 were New Jersey (2.2%), California (2.0%), Puerto Rico (1.9%), Washington (1.7%), Nevada (1.6%), Rhode Island (1.6%), Alaska (1.5%), Massachusetts (1.5%), New York (1.5%), Illinois (1.4%), and Pennsylvania (1.4%). The largest increases in initial claims for unemployment insurance for the week ended November 2 were in California (+3,825), Michigan (+3,439), Ohio (+1,911), New Jersey (+1,317), and Kansas (+870), while the largest decreases were in Florida (-1,530), Georgia (-1,303), Missouri (-797), New York (-469), and Washington (-364).

Eye on the Week Ahead

The focus is on the housing sector this week. The report on housing starts for October is out on Tuesday. September saw the number of housing starts and issued building permits decline. Also out this week is the report on existing home sales for October. Sales fell in September from the previous month as did the median sales price.

What I’m Watching This Week – 11 November 2024

Published on November 11, 2024 by dredheadz

The Markets (as of market close November 8, 2024)

Investors had plenty to think about last week as they focused on the results of the presidential election and the Federal Reserve’s move to further reduce interest rates (see below). Each of the benchmark indexes listed here closed up by the end of the week, with consumer discretionary, information technology, and financials outperforming. Bond prices ended the week higher, pulling yields lower. Crude oil prices rose to over $72.00 per barrel only to slip back a bit at the end of the week. The dollar inched higher, while gold prices declined. According to Freddie Mac, mortgage rates rose to 6.79% on November 7, the highest they’ve been in nearly four months.

Last Monday saw stocks tumble as election uncertainty weighed on the markets. Of the benchmark indexes listed here, only the Russell 2000 (0.4%) posted a gain. The Dow lost 0.6%, the NASDAQ and the S&P 500 each fell 0.3%, and the Global Dow dipped 0.1%. Ten-year Treasury yields fell 5.2 basis points to close at 4.30%. Crude oil prices rose 3.2% to reach $71.69 per barrel. The dollar lost 0.4%, while gold prices slipped 0.1%.

Stocks rallied last Tuesday as investors awaited the results of the presidential election. The Russell 2000 led the benchmark indexes listed here, gaining 1.9%. The NASDAQ rose 1.4%, the S&P 500 gained 1.2%, the Dow advanced 1.0%, and the Global Dow climbed 0.9%. Ten-Year Treasury yields closed at 4.28%. Crude oil prices rose 1.0%, closing at $72.16 per barrel. The dollar slipped 0.4%, while gold prices advanced 0.2%.

Wall Street enjoyed a robust day following the presidential election. Investors showed optimism that a second Trump administration may favor businesses and boost economic growth. Each of the benchmark indexes jumped higher, led by the Russell 2000 (5.8%), followed by the Dow (3.6%), the NASDAQ (3.0%), the S&P 500 (2.5%), and the Global Dow (0.7%). Yields on 10-year Treasuries rose more than 13.0 basis points to 4.42%. The dollar index, at 105.14, reached its highest level in four months. Crude oil prices dipped 0.2%, settling at $71.84 per barrel. Gold prices fell nearly 3.0%.

Stocks closed mostly higher last Thursday, with the NASDAQ (1.5%), the S&P 500 (0.7%), and the Global Dow (0.7%) advancing, while the Russell 2000 fell 0.4%. The Dow was flat. The ten-year Treasury yield slid to 4.34%. Crude oil prices rose to $72.16 per barrel. The dollar fell 0.7%, while gold prices rose 1.4%.

The S&P 500 (0.4%) and the Dow (0.6%) closed at record highs last Friday, buoyed by the Fed’s latest interest rate cut. The Russell 2000 gained 0.7%, the NASDAQ rose 0.1%, while the Global Dow fell 0.5%. Ten-year Treasury yields continued to tumble, closing the session at 4.30%. Crude oil prices dipped 2.7%, gold prices lost 0.5%, while the dollar climbed 0.4%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 11/8	Weekly Change	YTD Change
DJIA	37,689.54	42,052.19	43,988.99	4.61%	16.71%
NASDAQ	15,011.35	18,239.92	19,286.78	5.74%	28.48%
S&P 500	4,769.83	5,728.80	5,995.54	4.66%	25.70%
Russell 2000	2,027.07	2,210.13	2,399.64	8.57%	18.38%
Global Dow	4,355.28	4,902.55	4,990.57	1.80%	14.59%
fed. funds target rate	5.25%-5.50%	4.75%-5.00%	4.50%-4.75%	-25 bps	-75 bps
10-year Treasuries	3.86%	4.36%	4.30%	-6 bps	44 bps
US Dollar-DXY	101.39	104.34	104.92	0.56%	3.48%
Crude Oil-CL=F	$71.30	$69.47	$70.48	1.45%	-1.15%
Gold-GC=F	$2,072.50	$2,743.70	$2,691.30	-1.91%	29.86%

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

Last Week’s Economic News

By a unanimous vote, the Federal Open Market Committee (FOMC) decided to cut interest rates an additional 25.0 basis points. The federal funds target rate range is now 4.50%-4.75%. The Committee noted that economic activity has continued to expand at a solid pace, labor market conditions have generally eased, and the unemployment rate moved up but remained low. Inflation has progressed toward the Committee’s 2.0% objective but remained somewhat elevated. In sum, the Committee would be prepared to adjust its monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals of 2.0% inflation and maximum employment.
The international trade in goods and services deficit was $84.4 billion in September, up $13.6 billion, or 19.2%, from $70.8 billion in August, revised. September exports were $267.9 billion, $3.2 billion, or 1.2%, less than August exports. September imports were $352.3 billion, $10.3 billion, or 3.0%, more than August imports. Year to date, the goods and services deficit increased $69.6 billion, or 11.8%, from the same period in 2023. Exports increased $84.7 billion, or 3.7%. Imports increased $154.4 billion, or 5.3%.
The S&P Global US Services PMI® Business Activity Index registered 55.0 in October, down slightly from 55.2 in September. A reading of 50.0 or higher indicates growth, thus services activity expanded solidly last month but at a slightly slower pace than in September. The services sector has expanded in each of the past 21 months. New orders grew at a solid pace in October. However, firms continued to scale back staffing levels amid uncertainty over future demand.
The national average retail price for regular gasoline was $3.069 per gallon on November 4, $0.028 per gallon below the prior week’s price and $0.327 per gallon less than a year ago. Also, as of November 4, the East Coast price declined $0.053 to $2.992 per gallon; the Midwest price increased $0.014 to $2.937 per gallon; the Gulf Coast price fell $0.027 to $2.619 per gallon; the Rocky Mountain price dipped $0.095 to $3.103 per gallon; and the West Coast price fell $0.028 to $3.945 per gallon.
For the week ended November 2, there were 221,000 new claims for unemployment insurance, an increase of 3,000 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 October 26 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 26 was 1,892,000, an increase of 39,000 from the previous week’s level, which was revised down by 9,000. This is the highest level for insured unemployment since November 13, 2021, when it was 1,974,000. States and territories with the highest insured unemployment rates for the week ended October 19 were New Jersey (2.2%), California (1.9%), Puerto Rico (1.8%), Washington (1.7%), Nevada (1.6%), Rhode Island (1.6%), Massachusetts (1.5%), New York (1.5%), Alaska (1.4%), Illinois (1.4%), and Pennsylvania (1.4%). The largest increases in initial claims for unemployment insurance for the week ended October 26 were in New York (+1,983), Michigan (+1,722), Illinois (+1,066), Texas (+757), and Ohio (+706), while the largest decreases were in North Carolina (-2,859), Florida (-2,429), California (-1,876), Virginia (-824), and Washington (-698).

Eye on the Week Ahead

The latest inflation data for October is available this week with the release of the Consumer Price Index, the Producer Price Index, and the report on import and export prices. The CPI rose 0.2% in September but ticked down 0.1 percentage point to 2.4% year over year. Producer prices, on the other hand, were flat in September and up only 1.8% since September 2023.

What I’m Watching This Week – 4 November 2024

Published on November 3, 2024 by dredheadz

The Markets (as of market close November 1, 2024)

Wall Street saw stocks end October with a whimper, although equities began November on a high note. Each of the benchmark indexes listed here closed last week lower, except the Russell 2000. A surprisingly weak jobs report (see below) at the end of the week was offset by solid earnings reports from a couple of tech giants. Analysts speculated that the October labor data was impacted by hurricane disruptions and a strike at a major airplane manufacturer. Consumer discretionary and communication services were the only market sectors to end the week higher. Utilities, real estate, and information technology fell the furthest. Ten-year Treasury yields reached the highest rate in nearly four months as the latest economic data favored a slightly more hawkish Federal Reserve. Crude oil prices closed the week with three consecutive days of gains, but not enough to recover from a downturn earlier in the week.

Stocks ended higher last Monday as investors awaited a batch of major corporate earnings reports. The Russell 2000 added 1.6% to lead the benchmark indexes listed here. The Dow advanced 0.7%, followed by the Global Dow, which rose 0.5%. The NASDAQ and the S&P 500 each gained 0.3%. Ten-year Treasury yields closed at 4.27%, an increase of 4.6 basis points. Crude oil prices plunged 5.2% to $68.02 per barrel after Iranian crude oil facilities escaped Israeli bombardment, easing fears of disruptions to energy supplies. Both the dollar and gold prices were relatively unchanged by the close of trading.

Last Tuesday saw the NASDAQ (0.8%) and the S&P 500 (0.2%) close higher, while the remaining indexes ended the session in the red. The Dow fell 0.4%, while the Russell 2000 and the Global Dow each ended the day down 0.3%. Yields on 10-year Treasuries remained at 4.27%. Crude oil prices slid to $67.30 per barrel. The dollar was flat, while gold prices rose 1.1%.

Investors were cautious last Wednesday ahead of earnings results from some big tech companies. Each of the benchmark indexes listed here lost ground, led by the NASDAQ (-0.6%), and followed by the Global Dow (-0.5%), the S&P 500 (-0.3%), the Dow (-0.2%), and the Russell 2000 (-0.2%). Ten-year Treasury yields ticked lower, settling at 4.26%. Crude oil prices rebounded, gaining 2.5% to close at about $68.91 per barrel. The dollar fell 0.2%, while gold prices rose 0.6%.

Stocks continued to trend lower last Thursday as weak earnings data from some tech giants dampened investors’ zeal for risk. The NASDAQ fell 2.8%, followed by the S&P 500 (-1.9%), the Russell 2000 (-1.6%), the Dow (-0.9%), and the Global Dow (-0.8%). Crude oil prices climbed higher for the second straight day, gaining 2.8% to close at $70.62 per barrel. Ten-year Treasury yields inched up 1.8 basis points to 4.28%. The dollar and gold prices declined.

Wall Street kicked off November with a bang as stocks closed sharply higher last Friday. Strong earnings from two giant tech companies bolstered market sentiment despite a weak jobs report. The NASDAQ (0.8%) led the benchmark indexes listed here, followed by the Dow (0.7%), the Russell 2000 (0.6%), the S&P 500 (0.4%), and the Global Dow (0.3%). As stocks moved higher, bond values declined, pushing yields higher. Ten-year Treasury yields ended the session up 1.8% to close at 4.36%. Crude oil prices rose 0.4%. Gold prices dipped 0.2%, while the dollar gained 0.4%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 11/1	Weekly Change	YTD Change
DJIA	37,689.54	42,114.40	42,052.19	-0.15%	11.58%
NASDAQ	15,011.35	18,518.61	18,239.92	-1.50%	21.51%
S&P 500	4,769.83	5,808.12	5,728.80	-1.37%	20.10%
Russell 2000	2,027.07	2,207.99	2,210.13	0.10%	9.03%
Global Dow	4,355.28	4,939.32	4,902.55	-0.74%	12.57%
fed. funds target rate	5.25%-5.50%	4.75%-5.00%	4.75%-5.00%	0 bps	-50 bps
10-year Treasuries	3.86%	4.23%	4.36%	13 bps	50 bps
US Dollar-DXY	101.39	104.32	104.34	0.02%	2.91%
Crude Oil-CL=F	$71.30	$71.59	$69.47	-2.96%	-2.57%
Gold-GC=F	$2,072.50	$2,757.40	$2,743.70	-0.50%	32.39%

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 was essentially unchanged (+12,000) in October after adding 223,000 (revised) new jobs in September. The average monthly gain over the prior 12 months was 194,000. According to the latest report from the Bureau of Labor Statistics, Hurricanes Helene and Milton may have impacted the collection and accuracy of data in October. Nevertheless, the unemployment rate remained at 4.1%, while the number of unemployed persons increased by 150,000. These measures are higher than a year earlier, when the jobless rate was 3.8%, and the number of unemployed people was 6.4 million. The labor force participation rate fell 0.1 percentage point to 62.6%. The employment-population ratio declined 0.2 percentage point to 60.0%. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.6 million in October. This measure is up from 1.3 million a year earlier. In October, the long-term unemployed accounted for 22.9% of all unemployed people. The change in total employment for August was revised down by 81,000, and the change for September was revised down by 31,000. With these revisions, employment in August and September combined was 112,000 lower than previously reported. In October, average hourly earnings rose by $0.13, or 0.4%, to $35.46. Over the past 12 months, average hourly earnings have increased by 4.0%. The average workweek was unchanged at 34.3 hours in October.
According to the initial estimate, third-quarter gross domestic product increased at an annual rate of 2.8%. In the second quarter, GDP advanced 3.0%. The increase in GDP primarily reflected increases in consumer spending (3.7%), exports (8.9%), and federal government spending (9.7%). Imports, which are a subtraction in the calculation of GDP, increased 11.2%. The personal consumption expenditures (PCE) price index increased 1.5%, compared to an increase of 2.5% in the second quarter. Excluding food and energy prices, the PCE price index increased 2.2% (2.8% in the second quarter).
In September, personal income and disposable personal income each increased 0.3%. Personal consumption expenditures (PCE) advanced 0.5%. The PCE price index moved up 0.2%. Excluding food and energy (core prices), the PCE price index rose 0.3%. Over the last 12 months, the PCE price index climbed 2.1%, while the core PCE price index increased 2.7%.
The international trade in goods deficit increased $14.0 billion, or 14.9%, in September over the prior month. A $10.4 billion increase in imports more than offset a $3.6 billion decrease in exports.
According to the latest Job Openings and Labor Turnover Summary, the number of job openings in September, at 7.4 million, declined about 400,000 from the August estimate and decreased 1.9 million since September 2023. The number of hires changed little at 5.6 million in September. The number of total separations in September was unchanged at 5.2 million but was down 326,000 over the last 12 months. In September, the number of quits changed little at 3.1 million but declined 525,000 over the year. The number of job openings for August was revised down by 179,000 to 7.9 million, the number of hires was revised up by 118,000 to 5.4 million, and the number of total separations was revised up by 171,000 to 5.2 million.
New orders continued to decline in the manufacturing sector, according to the latest survey results from the S&P Global US Manufacturing Purchasing Managers’ Index™ (PMI®). On the plus side, the pace of the decline was the slowest in three months. Nevertheless, manufacturers continued to reduce employment and purchasing activity. The October PMI was 48.5, up from 47.3 in September, but below the 50.0 no-change mark for the fourth consecutive month.
The national average retail price for regular gasoline was $3.097 per gallon on October 28, $0.047 per gallon below the prior week’s price and $0.376 per gallon less than a year ago. Also, as of October 28, the East Coast price declined $0.009 to $3.045 per gallon; the Midwest price decreased $0.083 to $2.923 per gallon; the Gulf Coast price inched down $0.074 to $2.646 per gallon; the Rocky Mountain price dipped $0.023 to $3.198 per gallon; and the West Coast price fell $0.061 to $3.973 per gallon.
For the week ended October 26, there were 216,000 new claims for unemployment insurance, a decrease of 12,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 19 was 1.2%, unchanged from the previous week’s rate, which was revised down by 0.1 percentage point to 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended October 19 was 1,862,000, a decrease of 26,000 from the previous week’s level, which was revised down by 9,000. States and territories with the highest insured unemployment rates for the week ended October 12 were New Jersey (2.1%), California (1.9%), Puerto Rico (1.8%), Washington (1.8%), Nevada (1.6%), Rhode Island (1.6%), Illinois (1.4%), Massachusetts (1.4%), Michigan (1.4%), and New York (1.4%). The largest increases in initial claims for unemployment insurance for the week ended October 19 were in Florida (+4,501), Kansas (+304), Wisconsin (+222), Hawaii (+103), and Idaho (+101), while the largest decreases were in New York (-2,785), North Carolina (-2,767), California (-2,012), Texas (-1,865), and Georgia (-1,852).

Eye on the Week Ahead

The first full week of November is somewhat lacking in the release of important economic data. However, the focus will be on the Federal Reserve’s statement following its latest meeting on November 7. After reducing the federal funds target range by 50.0 basis points in September, it is possible that the Fed will make no changes in November and may wait until its final meeting of the year in December to adjust rates further.

Monthly Market Review – October 2024

Published on November 1, 2024 by dredheadz

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

Stocks closed lower in October as Wall Street couldn’t maintain the momentum from September’s strong showing after the Fed lowered interest rates. Equities began October on an upswing on the heels of a better-than-expected jobs report. In fact, during the first half of the month, the Dow and the S&P 500 reached record highs. However, investors began moving away from risk as the unrest in the Middle East intensified and sentiment grew that the Fed may not cut rates in November. Toward the end of the month, disappointing earnings data from big tech companies raised concerns about rising AI costs and the potential for profit pressures. Among the market sectors, only communication services, financials, and energy managed to outperform. Health care, materials, real estate, and consumer staples lagged.

Inflationary data showed price pressures edged higher but came within expectations. For the 12 months ended in September, the Consumer Price Index (CPI) dipped lower, while the annual rate for the personal consumption expenditures (PCE) price index came in at 2.1%, the lowest rate since early 2021 as each indicator moved closer to the Federal Reserve’s 2.0% target rate range.

Growth of the U.S. economy continued at a modest pace. The gross domestic product (GDP) met expectations after increasing 2.8% in the third quarter following a 3.0% increase in the second quarter (see below). Personal consumption expenditures, the largest contributor in the calculation of GDP, rose 3.7%, with spending rising in durable goods and nondurable goods. Government expenditures, up 5.0%, were the second largest contributor to GDP.

Job growth in September far exceeded expectations after adding 254,000 jobs, which followed upward revisions in both July and August. The unemployment rate slid 0.1 percentage point to 4.1%, while the number of unemployed declined. Wage growth rose 0.4% in September and 4.0% over the past 12 months. The Fed’s 50-basis-point decrease in interest rates probably played a large part in the spurt in job growth in September. However, the latest jobs data also will likely encourage tempering the pace of further rate cuts. New weekly unemployment claims decreased from a year ago, while total claims paid increased (see below).

With about 37% of the S&P 500 companies reporting, third-quarter earnings results have been mixed. While the S&P 500 reported earnings growth for the fifth straight quarter, it was the lowest growth rate since the second quarter of 2023. Of the companies reporting thus far, roughly 75% have indicated actual earnings per share (EPS) above estimates, which is below the 5-year average of 77% but equal to the 10-year average of 75%. Companies in the financials and consumer discretionary sectors were the largest contributors to the increase in overall earnings growth thus far. On the other hand, earnings lagged from companies in the industrials, health care, and energy sectors.

Rising mortgage rates cooled real estate sales over the past few months. However, with rates gradually falling and inventory increasing, the home sector is expected to bounce back. In September sales of existing homes declined, while new home sales increased. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.44% as of October 17, up from 6.32% one week earlier, but down from 7.63% from one year ago.

Industrial production retracted in September from August, which saw a 0.3% decline. Manufacturing output decreased 0.4% in September and was 0.5% below its year-earlier level. This trend was further endorsed by purchasing managers, who reported manufacturing continued to slow in September. On the other hand, the services sector rose modestly higher.

November proved to be a rocky month for bonds. Ten-year Treasury yields closed the month up, reaching the highest level in over three months. as favorable economic data supported the notion that the U.S. economy could withstand higher interest rates. The two-year note closed November at 4.18%, a monthly gain of 5.7 basis points. The dollar strengthened, marking its strongest monthly gain in more than two years. Gold prices hit a record high of $2,790.00 during the month, only to slip lower, but well into the black for November. Crude oil prices rose higher by the end of the month, but remained somewhat subdued, as investors anticipated a supply increase by OPEC+ in October and decreased demand in China. The retail price of regular gasoline was $3.097 per gallon on October 28, $0.082 below the price a month earlier and $0.376 less than the price a year ago.

Stock Market Indexes

Market/Index	2023 Close	Prior Month	As of October 31	Monthly Change	YTD Change
DJIA	37,689.54	42,330.15	41,763.46	-1.34%	10.81%
NASDAQ	15,011.35	18,189.17	18,095.15	-0.52%	20.54%
S&P 500	4,769.83	5,762.48	5,705.45	-0.99%	19.62%
Russell 2000	2,027.07	2,229.97	2,196.65	-1.49%	8.37%
Global Dow	4,355.28	5,029.62	4,892.56	-2.73%	12.34%
fed. funds target rate	5.25%-5.50%	4.75%-5.00%	4.75%-5.00%	0 bps	-50 bps
10-year Treasuries	3.86%	3.80%	4.28%	48 bps	42 bps
US Dollar-DXY	101.39	100.75	103.89	3.12%	2.47%
Crude Oil-CL=F	$71.30	$68.35	$70.40	3.00%	-1.26%
Gold-GC=F	$2,072.50	$2,654.60	$2,756.30	3.83%	32.99%

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

Latest Economic Reports

Employment: Total employment increased by 254,000 in September, well above the consensus of 132,500 and higher than the 12-month average gain of 203,000. The September estimate followed upward revisions in both July and August, which, combined, were 72,000 higher than previously reported. In September, job gains occurred in food services and drinking places, health care, government, social assistance, and construction. The unemployment rate for September ticked down 0.1 percentage point to 4.1% but was 0.3 percentage point above the rate from a year earlier (3.8%). The number of unemployed persons, at 6.8 million, was 281,000 below the August figure, but 487,000 above the September 2023 estimate. The number of long-term unemployed (those jobless for 27 weeks or more) at 1.6 million, was 97,000 above the August total and accounted for 23.7% of all unemployed people. The labor force participation rate, at 62.7%, was unchanged from August, while the employment-population ratio rose 0.2 percentage point to 60.2%. In September, average hourly earnings increased by $0.13, or 0.4%, to $35.36. Since September 2023, average hourly earnings rose by 4.0%. The average workweek edged down 0.1 hour to 34.2 hours.
There were 216,000 initial claims for unemployment insurance for the week ended October 26, 2024. During the same period, the total number of workers receiving unemployment insurance was 1,862,000. A year ago, there were 216,000 initial claims, while the total number of workers receiving unemployment insurance was 1,816,000.
FOMC/interest rates: The Federal Open Market Committee did not meet in October. It next meets during the week of November 8. While the PCE price index continued to move closer to the Fed’s 2.0% target, the core annual rate (2.7%) remained relatively elevated. The Fed is not likely to reverse course and raise interest rates based on this information (in addition to moderate economic and job growth). By the same token, Fed governors may be hesitant to lower rates in November.
GDP/budget: According to the initial estimate from the Bureau of Economic Analysis, the economy, as measured by gross domestic product, accelerated at an annualized rate of 2.8% in the third quarter of 2024. GDP increased 3.0% in the second quarter. Personal consumption expenditures rose 3.7% in the third quarter compared to a 2.8% increase in the previous quarter. Consumer spending on goods rose 6.0%, while spending on services advanced 2.6%. Personal consumption expenditures (2.46%) contributed the most to overall economic growth. Gross domestic investment advanced 0.3% in the third quarter, well below the 8.3% increase in the second quarter. Nonresidential (business) fixed investment advanced 3.3% in the third quarter (3.9% in the second quarter), while residential fixed investment declined 5.1%, compared to a 2.8% decrease in the second quarter. Exports climbed 8.9%, while imports, which are a negative in the calculation of GDP, increased 11.2%. Consumer prices, as measured by the personal consumption expenditures price index, increased 1.5%, compared with an increase of 2.5% in the second quarter. Excluding food and energy prices, the PCE price index increased 2.2%, compared with an increase of 2.8% in the prior quarter.
September was the last month of the fiscal year for the federal government. In September, the federal budget statement showed a surplus $64.3 billion versus a deficit of $170.7 billion a year ago. In September, government receipts totaled $527.6 billion, while government outlays were $463.4 billion. For fiscal year 2024, the total deficit $1,832.8 trillion, which was roughly $137.6 billion more than the deficit from the previous fiscal year. For FY24, total receipts were $4,918.7 trillion and total expenditures were $6,751.6 trillion. Individual income tax receipts for FY 24 totaled $2,426.1 trillion, while corporate income tax receipts were $529.9 billion. Social Security payments were estimated at $1,461.0 trillion, accounted for the largest outlays for the fiscal year.
Inflation/consumer spending: The PCE price index ticked up 0.2% in September after increasing 0.1% in August and was in line with expectations. Prices for goods decreased 0.1%, while prices for services increased 0.3%. Food prices increased 0.4%, while energy prices decreased 2.0%. Excluding food and energy, the PCE price index increased 0.3%. The 12-month PCE price index for September increased 2.1%, the lowest annual rate since February 2021. Prices for goods decreased 1.2% although prices for services increased 3.7%. Food prices increased 1.2%, while energy prices decreased 8.1%. Excluding food and energy, the PCE price index increased 2.7% from one year ago. Also in September, both personal income and disposable (after-tax) personal income rose 0.3%. Personal consumption expenditures, a measure of consumer spending, increased 0.5%.
The Consumer Price Index rose 0.2% in September, the same increase as in August and July. Over the 12 months ended in September, the CPI rose 2.4%, down 0.1 percentage point from the 12-month period ended in August. This was the smallest 12-month increase since February 2021. Excluding food and energy, the CPI rose 0.3% in September, unchanged from the previous month’s total, and 3.3% from September 2023. Shelter prices rose 0.2% in September and prices for food increased 0.4%. Together, these two components contributed over 75% of the monthly all items increase. Since September 2023, shelter prices have risen 4.9%, while food prices increased 2.3%. Energy prices were down 1.9% in September and 6.8% lower than a year ago. Much of the decrease in energy prices was from a 4.1% decline in gasoline prices.
The Producer Price Index was flat in September after ticking up 0.2% in August. In September, a 0.2% increase in prices for services offset a 0.2% decline in prices for goods. For the 12 months ended in September, producer prices advanced 1.8%.
Housing: Sales of existing homes declined 1.0% in September and 3.5% over the last 12 months. According to the National Association of Realtors® (NAR), the market for existing homes remained sluggish but lower mortgage rates and increased inventory should help spur sales moving forward. Unsold inventory of existing homes in September represented a 4.3-month supply at the current sales pace, up 1.5% from the August estimate. The median existing-home price fell 2.4% in September to $404,500, but was 3.0% above the September 2023 price of $392,700. Sales of existing single-family homes decreased 0.6% in September and were down 2.3% from a year ago. The median existing single-family home price was $409,000 in September, down from $419,000 in August but above the September 2023 estimate of $397,400.
New single-family home sales increased 4.1% in September and were 6.3% higher than the September 2023 rate. The median sales price of new single-family houses sold in July was $426,300 ($410,900 in August). The September average sales price was $501,000 ($486,500 in August). The inventory of new single-family homes for sale in September represented a supply of 7.6 months at the current sales pace, down from 7.9 months in August.
Manufacturing: Industrial production decreased 0.3% in September after advancing 0.3% in the prior month. A strike at a major producer of civilian aircraft held down total growth by an estimated 0.3% in September, and the effects of two hurricanes subtracted an estimated 0.3%. Manufacturing output declined 0.4% in September and was 0.5% below its year-earlier level. Mining output fell 0.6%, while utilities rose 0.7%. For the 12 months ended in September, total industrial production moved down 0.6% from its year-earlier level. Over the same period, manufacturing decreased 0.7%, mining declined 2.2%, while utilities advanced 0.6%.
New orders for durable goods declined 0.8% in September, following a 0.8% decrease in August. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders decreased 1.1%. Transportation equipment, down three of the last four months, drove the overall decrease, falling 3.1%. New orders for nondefense capital goods in September decreased 4.5%. New orders for defense capital goods in September rose 6.4%.
Imports and exports: U.S. import prices receded 0.4% in September following a 0.2% decrease in August. The September decline in imports was the largest monthly drop since the index decreased 0.7% in December 2023. Prices for import fuel fell 7.0% in September, after declining 2.9% in August. Excluding fuel, import prices ticked up 0.1% in September. The August drop was the largest one-month decline since the index fell 8.0% in December 2023. Prices for nonfuel imports edged down 0.1% in August. Import prices edged down 0.1% over the past year, the first 12-month drop since February 2024. Prices for U.S. exports fell 0.7% in September, after advancing 0.9% the previous month. Lower prices for nonagricultural exports in September more than offset higher agricultural export prices. Export prices declined 2.1% over the past year, the largest 12-month decrease since January 2024.
The international trade in goods deficit was $108.2 billion in September, up 14.9%, or $14.0 billion, from the August estimate. Exports of goods for September were $174.2 billion, $3.6 billion, or 2.9% more than August exports. Imports of goods for September were $258.4 billion, $10.4 billion, or 1.4% less than August imports.
The latest information on international trade in goods and services, released October 8, was for August and revealed that the goods and services trade deficit was $70.4 billion, up $8.5 billion, or 10.8%, from the July deficit. August exports were $271.8 billion, $5.3 billion, or 2.0%, more than July exports. August imports were $342.2 billion, $3.2 billion, or 0.9% less than July imports. Year to date, the goods and services deficit increased $47.1 billion, or 8.9%, from the same period in 2023. Exports increased $79.0 billion, or 3.9%. Imports increased $126.1 billion, or 4.9%.
International markets: Annual inflation in the eurozone grew to 2.0% in October, up from 1.7% in September. The marginal increase was expected as last year’s declines in energy prices are no longer factored into annual rates. In the United Kingdom, the annual inflation rate in September fell to 1.7%, the lowest since April 2021. China’s annual inflation rate was estimated at 0.4% in September, below expectations and under August’s figure of 0.6%. Canada’s GDP grew by 0.3% in September, ending the third quarter with a 0.2% increase. For October, the STOXX Europe 600 Index dipped 2.3%; the United Kingdom’s FTSE fell 2.3%; Japan’s Nikkei 225 Index gained 1.4%; while China’s Shanghai Composite Index declined 1.7%.
Consumer confidence: Consumer confidence rose in October to 108.7, up from 99.2 in September, according to the Conference Board Consumer Confidence Index®. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased by 14.2 points to 138.0 in October. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, increased to 89.1 in October, up from 82.8 in September.

Eye on the Month Ahead

All attention will be focused on the results of the presidential and congressional elections in early November. In addition, the Federal Reserve meets this month. After lowering the federal funds target rate range by 50.0 basis points in September, it is questionable whether an additional decrease is in the offing in November. However, the Fed meets again in December and may consider an interest rate adjustment at that time.

What I’m Watching This Week – 28 October 2024

Published on October 28, 2024 by dredheadz

The Markets (as of market close October 25, 2024)

Tech shares helped the NASDAQ close up last week. The remaining indexes listed here didn’t fare as well. Renewed concerns about the Federal Reserve’s interest rate policy dampened investor appetite for risk. Bond prices also faded during the week, driving yields higher. Crude oil prices climbed higher as investors monitored ongoing tensions in the Middle East. Gold prices continued to advance and have risen over 33.0% from the beginning of the year.

Stocks mostly retreated last Monday following their longest weekly rally of the year. Of the benchmark indexes listed here, only the NASDAQ (0.3%) posted a gain. The remaining indexes closed in the red, led by the Russell 2000 (-1.6%), followed by the Dow and the Global Dow (-0.8%). The S&P 500 dipped 0.2%. Ten-year Treasury yields rose 10.9 basis points to close at 4.18%, the highest level since late July. Among the market sectors, utilities, materials, financials, real estate, and information technology closed higher, while health care and energy declined. Crude oil prices closed up 1.8% to $70.45 per barrel. The dollar (0.5%) and gold prices (0.2%) posted gains.

In what was akin to the previous day’s performance, stocks closed mostly lower last Tuesday. Once again, the NASDAQ was the only benchmark index to post a gain after ticking up 0.2%, while the Dow and the S&P 500 were essentially unchanged. The Global Dow fell 0.4%, and the Russell 2000 declined 0.3%. The yield on 10-year Treasuries inched up to 4.20%. Crude oil prices jumped 2.4% to settle at $72.24 per barrel. The dollar inched up 0.1%, while gold prices rose 0.9%.

Each of the benchmark indexes listed here retreated last Wednesday as bond yields rose amid investor concerns over further interest rate cuts. Several major tech companies saw their stock values decline, which also placed a drag on Wall Street. The Nasdaq dropped 1.6%, the Dow fell 1.0%, the S&P 500 declined 0.9%, the Russell 2000 lost 0.8%, and the Global Dow dipped 0.6%. Bond values also tumbled, pushing yields higher, with 10-year Treasury yields climbing 3.8 basis points to close the session at 4.24%. Crude oil prices fell 1.0%, falling to $71.03 per barrel. The dollar ticked up 0,3%, while gold prices declined 1.1%.

Stocks closed mostly higher last Thursday with only the Dow (-0.3%) sliding lower. Investors reacted to the latest earnings reports, particularly one involving a major electric automotive manufacturer. The NASDAQ rose 0.8%, the S&P 500 ended a three-session slide after gaining 0.2%. The Russell 2000 also edged up 0.2%, while the Global Dow inched up 0.1%. Ten-year Treasury yields fell to 4.20%. Crude oil prices retreated for the second straight day, settling at $70.47 per barrel. The dollar edged lower, while gold prices (0.7%) recouped some of the losses from the previous session.

Gains in tech shares helped drive the NASDAQ (0.6%) higher last Friday. A decline in financial shares was enough to overshadow tech gains, resulting in losses for the Dow (-0.6%), the Russell 2000 (-0.5%), and the Global Dow (-0.4%). The S&P 500 ended the session flat. Ten-year Treasury yields climbed to 4.23%. Crude oil prices reversed losses from the previous two days, advancing 2.1%. The dollar and gold prices each gained 0.2%.

Stock Market Indexes

Market/Index	2023 Close	Prior Week	As of 10/25	Weekly Change	YTD Change
DJIA	37,689.54	43,275.91	42,114.40	-2.68%	11.74%
NASDAQ	15,011.35	18,489.55	18,518.61	0.16%	23.36%
S&P 500	4,769.83	5,864.67	5,808.12	-0.96%	21.77%
Russell 2000	2,027.07	2,276.09	2,207.99	-2.99%	8.93%
Global Dow	4,355.28	5,043.43	4,939.32	-2.06%	13.41%
fed. funds target rate	5.25%-5.50%	4.75%-5.00%	4.75%-5.00%	0 bps	-50 bps
10-year Treasuries	3.86%	4.07%	4.23%	16 bps	37 bps
US Dollar-DXY	101.39	103.46	104.32	0.83%	2.89%
Crude Oil-CL=F	$71.30	$69.35	$71.59	3.23%	0.41%
Gold-GC=F	$2,072.50	$2,736.90	$2,757.40	0.75%	33.05%

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

September, the last month of the fiscal year, saw the government budget enjoy a surplus of $64.3 billion, well off from August’s deficit of $380.1 billion. For fiscal year 2024, the deficit was $1,832.8 trillion, $137.6 billion above the FY23 deficit of $1,695.2 trillion. Compared to the prior fiscal year, FY24 saw government receipts increase by roughly $479.5 billion, while government outlays increased by $617.0 billion.
New orders for manufactured durable goods in September, down three of the last four months, decreased 0.8%, according to the U.S. Census Bureau. This followed a 0.8% August decrease. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders decreased 1.1%. Transportation equipment, also down three of the last four months, drove the decrease after declining 3.1%. New orders for nondefense capital goods in September decreased 4.5%. New orders for defense capital goods rose 6.4% last month. Since September 2023, new orders for durable goods have decreased 1.5%.
Existing-home sales decreased 1.0% in September and 3.5% from one year ago. The median existing-home sales price fell 2.4% in September to $404,500 but was 3.0% above the September 2023 price. The inventory of unsold existing homes, at a supply of 4.3 months, rose by 1.5% from the prior month. Sales of single-family homes edged lower by 0.6% in September and fell 2.3% from a year earlier. The median existing single-family home price was $409,000 in September, down from $419,000 in August but up from $397,400 in September 2023. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.44% as of October 17. That’s up from 6.32% from one week ago but down from 7.63% one year ago.
Sales of new single-family homes in September reached the highest level since May 2023 after rising 4.1% over the prior month’s total. Last month’s sales were 6.3% above the September 2023 estimate. The median sales price of new homes sold in September 2024 was $426,300. The average sales price was $501,000. The estimate of new homes for sale at the end of September represented a supply of 7.6 months at the current sales rate.
The national average retail price for regular gasoline was $3.144 per gallon on October 21, $0.027 per gallon below the prior week’s price and $0.389 per gallon less than a year ago. Also, as of October 21, the East Coast price rose $0.012 to $3.054 per gallon; the Midwest price decreased $0.094 to $3.006 per gallon; the Gulf Coast price inched down $0.015 to $2.720 per gallon; the Rocky Mountain price dipped $0.037 to $3.221 per gallon; and the West Coast price fell $0.013 to $4.034 per gallon.
For the week ended October 19, there were 227,000 new claims for unemployment insurance, a decrease of 15,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 12 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 5 was 1,897,000, an increase of 28,000 from the previous week’s level, which was revised up by 2,000. This is the highest level for insured unemployment since November 13, 2021 when it was 1,974,000. States and territories with the highest insured unemployment rates for the week ended October 5 were New Jersey (2.2%), California (1.9%), Puerto Rico (1.9%), Washington (1.8%), Nevada (1.6%), Rhode Island (1.6%), Massachusetts (1.5%), New York (1.5%), Illinois (1.4%), Alaska (1.3%), Oregon (1.3%), and Pennsylvania (1.3%). The largest increases in initial claims for unemployment insurance for the week ended October 12 were in Georgia (+3,293), New York (+2,340), Pennsylvania (+1,379), Texas (+886), and South Carolina (+779), while the largest decreases were in Michigan (-7,917), Florida (-3,257), Ohio (-2,556), North Carolina (-2,365), and Indiana (-2,173).

Eye on the Week Ahead

There are several market-moving economic reports released this week. Among those reports is the initial estimate of gross domestic product for the third quarter. The second quarter GDP estimated that the economy grew at an annualized rate of 3.0%. The personal consumption expenditures price index, the preferred inflation indicator of the Federal Reserve, is released within the personal income and outlays report. August saw prices tick up 0.1%, while the annual rate of growth rose 2.2%. Lastly, the latest employment data for October is released on Friday. September’s report revealed an unexpected 254,000 new jobs, a figure well above consensus estimates. It is likely that the September figure is adjusted downward.