What I’m Watching This Week – 9 December 2019

The Markets (as of market close December 6, 2019)

Market performance was uneven last week, culminating in some of the benchmark indexes closing in the black while a few lost value by week’s end. A strong jobs report and guarded optimism that progress will continue toward a resolution to the U.S./China trade war helped push stocks higher. The S&P 500 closed up less than 0.25%, while the small caps of the Russell 2000 gained over 0.50%. The Dow fell slightly, as did the tech-heavy Nasdaq. Year-to-date, the Nasdaq continues to lead the way, followed by the S&P 500, the Russell 2000, the Dow, and the Global Dow. Long-term government bond prices dipped pushing yields higher as investors were likely influenced by last week’s robust labor numbers.

Oil prices rose last week, closing at $59.12 per barrel by late Friday afternoon, up from the prior week’s price of $55.17. The price of gold (COMEX) inched lower last week, closing at $1,464.50 by late Friday afternoon, down from the prior week’s price of $1,465.60. The national average retail regular gasoline price was $2.575 per gallon on December 2, 2019, $0.004 less than the prior week’s price but $0.124 more than a year ago.

Market/Index 2018 Close Prior Week As of 12/6 Weekly Change YTD Change
DJIA 23327.46 28051.41 28015.06 -0.13% 20.09%
Nasdaq 6635.28 8665.47 8656.53 -0.10% 30.46%
S&P 500 2506.85 3140.98 3145.91 0.16% 25.49%
Russell 2000 1348.56 1624.50 1633.84 0.57% 21.15%
Global Dow 2736.74 3151.08 3162.32 0.36% 15.55%
Fed. Funds target rate 2.25%-2.50% 1.50%-1.75% 1.50%-1.75% 0 bps -75 bps
10-year Treasuries 2.68% 1.77% 1.84% 7 bps -84 bps

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

  • November saw a whopping 266,000 new jobs added and the unemployment rate dip 0.01 percentage point to 3.5%. Job growth has averaged 180,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018. There were 5.811 million unemployed persons in November (5.855 in October), the labor force participation rate decreased from October’s 63.3% to 63.2%, and the employment-population ratio remained at 61.0%. In November, notable job gains occurred in health care and in professional and technical services. Employment also increased in manufacturing, reflecting the return of workers from a strike. Employment continued to trend up in leisure and hospitality, transportation and warehousing, and financial activities, while mining lost jobs. The average workweek was unchanged at 34.4 hours in November. Average hourly earnings rose by $0.07 to $28.29. Over the last 12 months, average hourly earnings have increased by 3.1%.
  • According to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™, manufacturing improved in November. The purchasing managers’ index climbed from 51.3 in October to 52.6 last month, marking the strongest improvement in the manufacturing sector since April. Also increasing were new orders, output growth, and workforce numbers.
  • The other major report on the health of the manufacturing sector, the Manufacturing ISM® Report On Business®, saw its purchasing managers’ index decrease 0.2 percentage point in November, coming in at 48.1%. Anything below 50.0% indicates a slowdown. New orders fell 1.9 percentage points, employment fell 1.1 percentage points, inventories dropped 3.4 percentage points, and new export orders plummeted 2.5 percentage points. While the ISM® and Markit® indexes are based on surveys of purchasing managers, the ISM® index is based on a larger survey field and the questions are qualitative and ask about general direction rather than specific level of activity. The Markit® index is based on a smaller survey field and is based on more quantitative information.
  • The services sector also slowed in November, according to the Non-Manufacturing ISM® Report On Business®. The Non-Manufacturing Index fell to 53.9%, down from November’s 54.7%. While business activity regressed last month, new orders, employment, and prices each improved in November over October’s readings. Some industries reporting growth in business activity include real estate, rental, and leasing; health care and social assistance; arts, entertainment, and recreation; finance and insurance; retail trade; and accommodation and food services. Service industries reporting a slowdown in business activity include agriculture, forestry, fishing and hunting; construction; mining; public administration; wholesale trade; and professional, scientific and technical services.
  • The goods and services deficit was $47.2 billion in October, down $3.9 billion from $51.1 billion in September, revised. October exports were $207.1 billion, $0.4 billion less than September exports. October imports were $254.3 billion, $4.3 billion less than September imports. Year-to-date, the goods, and services deficit increased $6.9 billion, or 1.3%, from the same period in 2018. Exports decreased $0.8 billion, or less than 0.1%. Imports increased $6.1 billion, or 0.2%.
  • For the week ended November 30, there were 203,000 claims for unemployment insurance, a decrease of 10,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims increased 0.1 percentage point to 1.2% for the week ended November 23. The advance number of those receiving unemployment insurance benefits during the week ended November 23 was 1,693,000, an increase of 51,000 from the prior week’s level, which was revised up by 2,000.

Eye on the Week Ahead

The focus this week is on the Federal Open Market Committee, which meets for the first time since October. Having lowered interest rates three times already this year, it is unlikely that the Committee reduces rates again this month. While inflation has remained tepid, business investment picked up last month, as did manufacturing and exports, which should be enough to forestall another rate cut.

Monthly Market Review – November 2019

The Markets (as of market close November 29, 2019)

Stocks grew for the third straight month as each of the benchmark indexes listed here posted solid returns in November. Despite unrest in Washington as the impeachment process drones on, investors were encouraged by the possibility of favorable movement toward a resolution of the trade war between the United States and China. While inflation remained stymied, consumer spending remained solid and business fixed investment perked up.

By the close of trading on the last day of the month, each of the benchmark indexes listed here posted gains, led by the Nasdaq, which climbed close to 5.0%. The small caps of the Russell 2000 advanced nearly 4.0%. The large caps of the Dow and S&P 500 also posted solid monthly gains of well over 3.0%. Year-to-date, the Nasdaq is more than 30.0% ahead of its 2018 closing value. In fact, of the indexes listed here, only the Global Dow has not gained at least 20.0% for the year.

By the close of trading on November 29, the price of crude oil (WTI) was $55.17 per barrel, up from the October 31 price of $54.09 per barrel. However, as OPEC meets at the end of November, it is expected that major oil-producing nations will extend production cuts, which may impact prices moving forward. The national average retail regular gasoline price was $2.579 per gallon on November 25, down from the October 28 selling price of $2.596 but $0.040 more than a year ago. The price of gold fell by the end of November, dropping to $1,465.60 by close of business on the 29th, down from its $1,515.10 price at the end of October.

Market/Index 2018 Close Prior Month As of November 29 Month Change YTD Change
DJIA 23327.46 27046.23 28051.41 3.72% 20.25%
NASDAQ 6635.28 8292.36 8665.47 4.50% 30.60%
S&P 500 2506.85 3037.56 3140.98 3.40% 25.30%
Russell 2000 1348.56 1562.45 1624.50 3.97% 20.46%
Global Dow 2736.74 3081.07 3151.08 2.27% 15.14%
Fed. Funds 2.25%-2.50% 1.50%-1.75% 1.50%-1.75% 0 bps -75 bps
10-year Treasuries 2.68% 1.69% 1.77% 8 bps -91 bps

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.

  • Employment: The unemployment rate inched up 0.1 percentage point to 3.6% in October as the number of unemployed persons reached 5.86 million (5.77 million in September). Total employment increased by 128,000 in October after adding 180,000 (revised) new jobs in September. The average monthly job gain so far in 2019 is 167,000 (223,000 in 2018). Notable employment increases for October occurred in restaurants and bars (48,000), social assistance (20,000), financial activities (16,000), professional and business services (22,000), and health care (15,000). Sectors seeing a drop in employed persons include government (17,000) and manufacturing (36,000). The labor participation rate rose 0.1 percentage point to 63.3%, and the employment-population ratio remained at 61.0%. The average workweek remained at 34.4 hours for October. Average hourly earnings rose by $0.06 to $28.18. Over the last 12 months ended in October, average hourly earnings have risen 3.0%.
  • FOMC/interest rates: The Federal Open Market Committee did not meet in November. Following October’s interest rate decrease, the target range remains at 1.50%-1.75%. The Committee next meets December 10-11.
  • GDP/budget: According to the second estimate for the third-quarter gross domestic product, the economy accelerated at a rate of 2.1%, up from the second quarter’s 2.0% annual growth rate. The first quarter saw an annualized growth of 3.1%. Growth in consumer spending (personal consumption expenditures), which accounts for roughly two-thirds of the GDP, slowed to 2.9% from the second quarter’s 4.6%. Consumer prices for goods and services grew by 1.5% in the third quarter compared to an increase of 2.4% in the second quarter. A positive from the report comes from residential investment, which rose 5.1% — the first positive contribution to the GDP since 2017. October, the first month of the new fiscal year for the federal government, saw the budget open with a deficit of $134.5 billion ($100.5 billion in October 2018). The government spent roughly $380 billion in October and had receipts of $245.5 billion. Most of the government outlays were for Social Security ($89 billion), national defense ($71 billion), and Medicare ($56 billion). Individual income taxes accounted for the majority of receipts ($126 billion), followed by social insurance and retirement receipts ($90 billion).
  • Inflation/consumer spending: According to the Personal Income and Outlays report, inflationary pressures remain weak, as prices for consumer goods and services rose 0.2% in October, the first increase since July. Prices are up 1.3% over the last 12 months. Consumer prices excluding food and energy rose 0.1% in October (0.0% in September) and are up 1.6% year-over-year. Personal income and disposable (after-tax) personal income receded for the first time in several months in October. Personal income showed no gain after advancing 0.3% in September. Disposable personal income dropped 0.1% after climbing 0.3% the prior month. Despite a dip in income, consumers continued to spend. Personal consumption expenditures increased 0.3% in October after expanding 0.2% in September.
  • The Consumer Price Index climbed 0.4% in October following no change in September. Over the 12 months ended in October, the CPI rose 1.8%. Energy prices increased 2.7% on the month with gasoline up 3.7%. Prices less food and energy rose 0.2% in October after increasing 0.1% the previous month. Since last October, core prices (less food and energy) are up 2.3%.
  • Prices producers receive for goods and services rose 0.4% in October, after falling 0.3% in September. The index increased 1.1% for the 12 months ended in October, the smallest rise since a 1.1% increase in the 12 months ended October 2016. Prices for goods jumped 0.7% in October while prices for services advanced 0.3%. Pushing goods prices higher in October was a 2.8% spike in energy prices. The index less foods, energy, and trade services inched up 0.1% in October after no change in September.
  • Housing: The housing sector has been anything but consistent this year. After plunging 2.2% in September, sales of existing homes rebounded in October, jumping 1.9%. Year-over-year, existing home sales are up 4.6%. Existing home prices continued to drop in October, as the median price for existing homes was $270,900, down from September’s median price of $272,100. Nevertheless, existing home prices were up 6.2% from October 2018. Total housing inventory at the end of October sat at 1.77 million units (representing a 3.9-month supply), down approximately 2.7% from September and 4.3% from one year ago (1.85 million). New single-family home sales also fell in October, dropping 0.7% from their September estimate, although sales are more than 31% ahead of last year’s pace. Unlike prices for existing homes for sale, new home prices rose in October. The median sales price was $316,700 ($310,200 in September) and the average sales price was $383,300 ($366,900 in September). Available inventory, at 5.3-month supply, remained about the same in October as it was in September.
  • Manufacturing: Manufacturing and industrial production continued to lag in October. According to the Federal Reserve, industrial production fell 0.8% in October after falling 0.3% (revised) in September. Manufacturing output declined 0.6% following a 0.5% drop the prior month. Much of the decline in manufacturing in October was due to a drop of 7.1% in the output of motor vehicles and parts that resulted from a strike at a major manufacturer of motor vehicles. In October, mining output fell 0.7% (-1.3% in September), while utilities decreased 2.6% after climbing 1.4% in September. Total industrial production was 1.1% lower in October than it was a year earlier. Following a September decrease, new orders for durable goods rose 0.6% in October. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders expanded by 0.1%. Helping drive the increase in durable goods orders were expansions in nondefense aircraft and parts (10.7%), defense aircraft and parts (18.1%), fabricated metal products (1.8%), machinery (1.3%), and computers and related products (2.4%). New orders for capital goods (used by businesses to produce consumer goods) grew 5.4% in October after falling 2.8% in September.
  • Imports and exports: Both import and export prices remained soft in October. Import prices fell 0.5%, driven by lower petroleum prices. Import prices excluding petroleum dropped 0.1%. Over the last 12 months ended in October, import prices are down 3.0% — the largest over-the-year decline since the index fell 3.7% during the period ended July 2016. Export prices fell 0.1% in October following a 0.2% decline in September. Overall, export prices dipped 2.2% over the past year, the largest 12-month decrease since a 2.4% decline in August 2016. Agricultural export prices rose 1.9% in October, while nonagricultural prices for items such as consumer goods, automobiles, and industrial supplies and materials receded 0.3%. The latest information on international trade in goods and services, out November 5, is for September and shows that the goods and services deficit was $52.5 billion, $0.9 billion less than August’s $55.0 billion deficit. September exports were $206.0 billion, $1.8 billion less than August exports. September imports were $258.4 billion, $4.4 billion under August imports. Year-to-date, the goods and services deficit increased $24.8 billion, or 5.4%, from the same period in 2018. Exports decreased $7.0 billion, or 0.4%. Imports increased $17.8 billion, or 0.8%. The advance report on international trade in goods (excluding services) revealed the trade deficit fell to $66.5 billion in October, down from $70.5 billion in September. However, both export and import trading slowed in October. Exports of goods were $135.3 billion, $0.9 billion less than September exports. Imports of goods were $201.8 billion, $5.0 billion less than September imports.
  • International markets: The third-quarter gross domestic product for Germany inched up 0.1% following a 0.1% drop in the second quarter. While consumer spending advanced 0.4%, the main source of growth in the third quarter was net foreign trade where exports increased 1.0%, far exceeding imports, which grew a scant 0.1%. Global price inflation continues to lag. Consumer prices in Japan showed no growth in October and are up only 0.2% over the last 12 months. Great Britain saw consumer prices fall 0.9% in October. On the other hand, China’s consumer prices rose 0.9% in October and are up 3.8% for the year.
  • Consumer confidence: Consumer confidence fell in November following a slight decrease the prior month. The Conference Board Consumer Confidence Index® registered 125.5 in November, down from 126.1 in October. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — decreased from 173.5 to 166.9. The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — increased from 94.5 in October to 97.9.

Eye on the Month Ahead

December is typically a slow month for trading. Last December saw stocks plummet, but economic signs in the United States are fairly encouraging. The Federal Reserve reduced interest rates three times so far in 2019, but it is less likely to drop rates again this month. Employment is expected to remain strong, while inflation, fixed business investment, and manufacturing may continue to show weakness.

What I’m Watching This Week – 2 December 2019

The Markets (as of market close November 29, 2019)

The holiday-shortened week was a good one for investors as they were encouraged by the growing likelihood of “phase one” in the resolution of the trade war between China and the United States. The large caps of the Dow and S&P 500 reached record highs earlier in the week as did the tech stocks of the Nasdaq, although the Dow lost some momentum following turkey day. By the close of the markets on Friday, the Russell 2000 had surged by almost 2.25%, followed by the Nasdaq, which gained over 1.70%. The S&P 500 rose by almost 1.0%, the Dow moved ahead by 0.63%, the Global Dow picked up more than 0.25%.

Oil prices fell again last week, closing at $55.17 per barrel by late Friday afternoon, down from the prior week’s price of $57.89. The price of gold (COMEX) inched higher last week, closing at $1,465.60 by late Friday afternoon, up from the prior week’s price of $1,462.50. The national average retail regular gasoline price was $2.579 per gallon on November 25, 2019, $0.013 less than the prior week’s price but $0.040 more than a year ago.

Market/Index
2018 Close
Prior Week
As of 11/29
Weekly Change
YTD Change
DJIA
23327.46
27875.62
28051.41
0.63%
20.25%
Nasdaq
6635.28
8519.88
8665.47
1.71%
30.60%
S&P 500
2506.85
3110.29
3140.98
0.99%
25.30%
Russell 2000
1348.56
1588.94
1624.50
2.24%
20.46%
Global Dow
2736.74
3141.77
3151.08
0.30%
15.14%
Fed. Funds target rate
2.25%-2.50%
1.50%-1.75%
1.50%-1.75%
0 bps
-75 bps
10-year Treasuries
2.68%
1.77%
1.77%
0 bps
-91 bps

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 saw the economy expand at an annualized rate of 2.1%. The GDP grew at a 2.0% rate in the second quarter. Gross domestic income (the net of income earned and cost incurred in the production of GDP) increased 2.4% in the third quarter, compared with an increase of 0.9% in the second quarter. Compared to the second quarter, personal consumption expenditures fell from 4.6% to 2.9%, nonresidential fixed investment (company expenditures on business-related items) fell at a rate of 2.7%, exports grew from -5.7% to 0.9%, and imports increased from 0.0% to 1.5%. The personal consumption expenditure price index (a measure of consumer prices for goods and services) remained at 1.5% for the third quarter. PCE price index excluding food and energy increased 2.1%. Interestingly, corporate profits increased $4.6 billion in the third quarter, compared with an increase of $75.8 billion in the second quarter.
  • Personal income and disposable (after-tax) personal income slowed in October. Personal income was unchanged from September, while disposable personal income fell 0.1%. Consumer spending advanced 0.3% after climbing 0.2% the previous month. Price inflation remains relatively weak as the personal consumption price index rose 0.2% in October following no increases the previous two months. For the year, consumer prices are up 1.3% — well below the Federal Reserve’s target rate of 2.0%.
  • The international goods trade deficit was $66.5 billion in October, down $4.0 billion from $70.5 billion in September. Exports of goods for October were $135.3 billion, $0.9 billion less than September exports. Imports of goods for October were $201.8 billion, $5.0 billion less than September imports. Exports that notably decreased included industrial supplies (-3.0%), automotive vehicles (-2.4%), and consumer goods (-4.0%). Import items that fell included automotive vehicles (-5.9%), consumer goods (-4.8%), and foods, feeds, and beverages (-2.9%).
  • New orders for durable goods bounced back in October, increasing 0.6% following September’s 1.4% decrease. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 0.1%. Shipments of manufactured durable goods in October were virtually unchanged following three consecutive monthly decreases. New orders for nondefense capital goods in October increased 3.2% after falling 3.4% the prior month.
  • According to the latest report from the Census Bureau, sales of new single-family homes dropped 0.7% in October but are 31.6% above the October 2018 estimate. The median sales price of new houses sold in October 2019 was $316,700. The average sales price was $383,300. The estimated inventory of new homes for sale represents a supply of 5.3 months.
  • For the week ended November 23, there were 213,000 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 dropped 0.1 percentage point to 1.1% for the week ended November 16. The advance number of those receiving unemployment insurance benefits during the week ended November 16 was 1,640,000, a decrease of 57,000 from the prior week’s level, which was revised up by 2,000. This is the lowest level for insured unemployment since August 4, 1973, when it was 1,633,000.

Eye on the Week Ahead

Following the short Thanksgiving week, November reports on manufacturing, trade, and jobs are available this week. Purchasing managers have not been bullish on manufacturing, although November could prove to be a more positive showing. Employment has been solid for quite some time, and November’s results should show more new jobs added.

What I’m Watching This Week – 25 November 2019

The Markets (as of market close November 22, 2019)

The market’s run of weekly gains ended last week as each of the benchmark indexes listed here lost value. Once again, trade concerns may have prompted investors to pull back from stocks. News last Wednesday of new demands from both the United States and China may delay completion of “phase one” of the trade deal until after the new year. In addition, China threatened “strong countermeasures” if President Trump signed a bill supporting human rights in Hong Kong, following the passage of the Hong Kong Human Rights and Democracy Act by the Senate. As of last Friday, the president had not signed the bill.

By the close of the week, the large caps of the Dow and S&P 500 each fell by less than 0.5%, while the tech stocks of the Nasdaq dropped a quarter of a percent. The small caps of the Russell 2000 lost the most by week’s end, but still only a modest 0.47%.

Oil prices fell slightly last week, closing at $57.89 per barrel by late Friday afternoon, down from the prior week’s price of $57.93. The price of gold (COMEX) dropped last week, closing at $1,462.50 by late Friday afternoon, down from the prior week’s price of $1,468.70. The national average retail regular gasoline price was $2.592 per gallon on November 18, 2019, $0.023 less than the prior week’s price and $0.019 less than a year ago.

Market/Index
2018 Close
Prior Week
As of 11/22
Weekly Change
YTD Change
DJIA
23327.46
28004.89
27875.62
-0.46%
19.50%
Nasdaq
6635.28
8540.83
8519.88
-0.25%
28.40%
S&P 500
2506.85
3120.46
3110.29
-0.33%
24.07%
Russell 2000
1348.56
1596.45
1588.94
-0.47%
17.82%
Global Dow
2736.74
3154.39
3141.77
-0.40%
14.80%
Fed. Funds target rate
2.25%-2.50%
1.50%-1.75%
1.50%-1.75%
0 bps
-75 bps
10-year Treasuries
2.68%
1.83%
1.77%
-6 bps
-91 bps

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

  • New home construction should be solid heading into the winter months based on a jump in building permits issued in October. Building permits rose 5.0% last month and 14.1% over last October’s rate. Single-family authorizations were up 3.2% over September’s annualized figure. Housing starts also climbed 3.8% in October, with single-family home starts up 2.0% over the prior month’s total. New home inventory should also get a boost as housing completions soared 10.3% in October over September’s rate. Single-family housing completions in October were 4.5% above the September total.
  • Sales of existing homes bounced back somewhat in October after a drab September. Sales increased 1.9% last month over the prior month’s totals. Overall, existing home sales are up 4.6% from a year ago. The median existing-home price for all housing types in October was $270,900, continuing a downward trend ($272,100 in September) this year, but still ahead of the median sales price from last October ($255,100). Total housing inventory at the end of October sat at 1.77 million units, down approximately 2.7% from September and 4.3% from one year ago. Sales of single-family homes increased 2.1% in October over September. The median single-family home sales price dropped in October to $273,600 from September’s $274,400.
  • For the week ended November 16, there were 227,000 claims for unemployment insurance, unchanged 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 remained at 1.2% for the week ended November 9. The advance number of those receiving unemployment insurance benefits during the week ended November 9 was 1,695,000, an increase of 3,000 from the prior week’s level, which was revised up by 9,000.

Eye on the Week Ahead

Thanksgiving week should be a slow one in the market, but it will yield some important economic reports. The international trade in goods report for November is expected to show an expanding trade balance with both imports and exports continuing to decrease. Manufacturing has been a sector in decline. Durable goods orders fell 1.1% in October and may not be much better when November’s numbers are revealed this week. The second estimate of the third-quarter gross domestic product is also out this week. The advance estimate had the economy growing at an annualized rate of 1.9% — down from the second quarter’s 2.0% increase.

What I’m Watching This Week – 18 November 2019

The Markets (as of market close November 15, 2019)

The large caps of the Dow and S&P 500 surged last week. The Dow reached 28000 for the first time in its history while the S&P 500 posted solid gains for the sixth consecutive week. Investors continued to be bullish on hopes that a trade deal between the United States and China is on the horizon. The tech stocks of the Nasdaq also climbed last week while the small-cap Russell 2000 and the Global Dow dropped back. Year-to-date, each of the benchmark indexes listed here are well ahead of their 2018 closing values, led by the Nasdaq, which is nearly 30% ahead of last year’s ending mark.

Oil prices rose last week, closing at $57.93 per barrel by late Friday afternoon, up from the prior week’s price of $57.39. The price of gold (COMEX) rebounded last week, closing at $1,468.70 by late Friday afternoon, up from the prior week’s price of $1,459.20. The national average retail regular gasoline price was $2.615 per gallon on November 11, 2019, $0.010 more than the prior week’s price but $0.071 less than a year ago.

Market/Index 2018 Close Prior Week As of 11/15 Weekly Change YTD Change
DJIA 23327.46 27681.24 28004.89 1.17% 20.05%
Nasdaq 6635.28 8475.31 8540.83 0.77% 28.72%
S&P 500 2506.85 3093.08 3120.46 0.89% 24.48%
Russell 2000 1348.56 1598.86 1596.45 -0.15% 18.38%
Global Dow 2736.74 3157.91 3154.39 -0.11% 15.26%
Fed. Funds target rate 2.25%-2.50% 1.50%-1.75% 1.50%-1.75% 0 bps -75 bps
10-year Treasuries 2.68% 1.93% 1.83% -10 bps -85 bps

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

  • Inflation, as measured by the Consumer Price Index, rose 0.4% in October. However, core prices (less food and energy) inched up 0.2%. After recent monthly declines, energy prices increased 2.7% last month, accounting for more than half of the increase in the overall CPI. Within the energy index, gasoline prices rose 3.7% in October. Food prices rose 0.2%. Over the last 12 months, the CPI has risen 1.8%. Over the same period, core prices are up 2.3%.
  • Retail sales rose 0.3% in October and are up 3.1% since October 2018. Last month turned out to be a bounce-back for retail sales, which fell 0.3% in September. In October, motor vehicle sales rose 0.5%, gasoline sales climbed 1.1%, and nonstore (online) sales surged 0.9%. On the downside, sales at clothing stores fell 1.0% and furniture store sales dropped 0.9%.
  • Producer prices rose 0.4% in October after falling 0.3% in September. Prices are up 1.1% for the 12 months ended in October, the smallest increase since a comparable rise in the 12-month period ended October 2016. Prices for services rose 0.3% last month, boosted by a 0.8% advance in margins for trade services, which measure changes in margins received by wholesalers and retailers. The index for goods advanced 0.7% in October, the largest increase since a 1.0% jump in March. Seventy percent of the October rise in goods is attributable to prices for energy, which moved up 2.8%.
  • Both import and export prices fell in October, further evidencing waning global inflation. Import prices dropped 0.5% while export prices dipped 0.1%. For the year, import prices are down 3.0% and export prices are off 2.2%. Driving import prices lower was a 3.7% drop in petroleum prices, which more than offset a 32.0% increase in natural gas prices. Fuel prices declined 13.7% over the past year. For exports, a 0.6% decline in prices of nonagricultural industrial supplies and materials offset a 1.9% increase in agricultural export prices.
  • Manufacturing continues to lag in 2019. The Federal Reserve’s industrial production index fell 0.8% in October after dropping 0.3% in September. Manufacturing production decreased 0.6%, primarily due to a 7.1% drop in the output of motor vehicles and parts that resulted from a strike at a major auto manufacturer. The decreases for total industrial production, manufacturing, and motor vehicles and parts were their largest since May 2018, April 2019, and January 2019, respectively. Mining production decreased 0.7%, while utilities output fell 2.6%. Overall, total industrial production was 1.1% lower in October than it was a year earlier.
  • The first month of the new fiscal year for the federal government saw October start off with a deficit of $134.5 billion, 34% higher than the $100.5 billion deficit the prior October. Government receipts totaled $245.5 billion, with $126.4 billion coming from individual income taxes and $6.6 billion received from corporate income taxes. The federal government spent $380.0 billion in October, with Social Security ($89.0 billion), National Defense ($71.0 billion), and Medicare ($56.0 billion) accounting for most of the expenditures, as usual.
  • For the week ended November 9, there were 225,000 claims for unemployment insurance, an increase of 14,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended November 2. The advance number of those receiving unemployment insurance benefits during the week ended November 2 was 1,683,000, a decrease of 10,000 from the prior week’s level, which was revised up by 4,000.

Eye on the Week Ahead

This week the focus is on the continuing trade negotiations between the United States and China — clearly a market mover. Also, economic reports center on the housing sector, with October housing starts figures as well as the latest on existing home sales.

What I’m Watching This Week – 11 November 2019

The Markets (as of market close November 8, 2019)

The Dow hit a new record high last week, and each of the benchmark indexes listed here posted solid gains as investors received encouraging news on the trade front. Both the United States and China sent signals out that an initial trade agreement would be signed in the near future, marking the first phase of the trade deal between the economic giants. As money flowed into stocks, long-term bond prices fell, pushing yields higher. For the week, the S&P 500 posted its fifth straight week of gains, while the Nasdaq advanced for the sixth consecutive week. The largest gainer last week was the Global Dow, which climbed over 1.50%.

Oil prices rose last week, closing at $57.39 per barrel by late Friday afternoon, up from the prior week’s price of $56.14. The price of gold (COMEX) fell for the first time in several weeks, closing at $1,459.20 by late Friday afternoon, down from the prior week’s price of $1,515.70. The national average retail regular gasoline price was $2.605 per gallon on November 4, 2019, $0.009 more than the prior week’s price but $0.148 less than a year ago.

Market/Index 2018 Close Prior Week As of 11/8 Weekly Change YTD Change
DJIA 23327.46 27347.36 27681.24 1.22% 18.66%
Nasdaq 6635.28 8386.40 8475.31 1.06% 27.73%
S&P 500 2506.85 3066.91 3093.08 0.85% 23.39%
Russell 2000 1348.56 1589.33 1598.86 0.60% 18.56%
Global Dow 2736.74 3109.68 3157.91 1.55% 15.39%
Fed. Funds target rate 2.25%-2.50% 1.50%-1.75% 1.50%-1.75% 0 bps -75 bps
10-year Treasuries 2.68% 1.72% 1.93% 21 bps -75 bps

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 goods and services trade deficit was $52.5 billion in September, according to the latest report from the Bureau of Economic Analysis. The deficit in September was down $2.6 billion from August’s total. September exports were $1.8 billion less than August exports, while imports in September were $4.4 billion under the prior month’s figure. Year-to-date, the goods, and services deficit increased $24.8 billion, or 5.4%, from the same period in 2018. Over that 12-month period, exports fell 0.4% while imports increased 0.8%. The goods trade figures showed surpluses with several trade partners, including South and Central America ($5.0 billion), Hong Kong ($2.8 billion), and the United Kingdom ($0.7 billion). Notable goods trade deficits were recorded with China ($28.0 billion), the European Union ($15.7 billion), Mexico ($9.1 billion), and Japan ($5.9 billion).
  • The services sector of the economy continues to outpace the manufacturing sector. According to the latest report from the Institute for Supply Management, the October Non-Manufacturing Index increased 2.1 percentage points above its September reading. Survey respondents noted growth in business activity, new orders, and employment. Only prices received for services decreased in October from the prior month. The report indicated that, despite the positive results, “respondents continue to be concerned about tariffs, labor resources, and the geopolitical climate.”
  • The Bureau of Labor Statistics reported last week that the number of job openings fell 277,000 (3.8%) in September from the prior month. The job openings rate was 4.4% in September (4.6% in August) as the number of total private job openings edged down (-262,000). In September, the number of hires increased slightly (+50,000), as did the number of separations (+76,000). Hires increased in construction, manufacturing, professional and business services, leisure and hospitality, and trade, transportation, and utilities. Hires decreased in federal government, financial activities, and information.
  • For the week ended November 2, there were 211,000 claims for unemployment insurance, a decrease of 8,000 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 remained at 1.2% for the week ended October 26. The advance number of those receiving unemployment insurance benefits during the week ended October 26 was 1,689,000, a decrease of 3,000 from the prior week’s level, which was revised up by 2,000.

Eye on the Week Ahead

Inflation indicators are available this week with reports on consumer prices, producer prices, retail sales, and import and export prices. Inflation has been running lower than the Fed’s 2.0% target rate for much of the year. Also, the Federal Reserve’s report on industrial production is out this week. Manufacturing production was off in September, pulled down by weakening demand for U.S. exports.

What I’m Watching This Week – 4 November 2019

The Markets (as of market close November 1, 2019)

A better-than-expected jobs report and strong third-quarter earnings from some major companies drove stock prices higher for the fourth consecutive week. The S&P 500 and the Nasdaq reached closing highs while the other benchmark indexes listed here posted solid returns. The small caps of the Russell 2000 recorded the largest weekly gain, followed by the Nasdaq, the S&P 500, the Dow, and the Global Dow. Long-term bond prices rose, pulling yields lower as the yield on 10-year Treasuries fell 8 basis points.

Oil prices fell last week, closing at $56.14 per barrel by late Friday afternoon, down from the prior week’s price of $56.65. The price of gold (COMEX) rose for the third week in a row last week, closing at $1,515.70 by late Friday afternoon, up from the prior week’s price of $1,507.10. The national average retail regular gasoline price was $2.596 per gallon on October 28, 2019, $0.042 less than the prior week’s price and $0.215 less than a year ago.

Market/Index 2018 Close Prior Week As of 11/1 Weekly Change YTD Change
DJIA 23327.46 26958.06 27347.36 1.44% 17.23%
Nasdaq 6635.28 8243.12 8386.40 1.74% 26.39%
S&P 500 2506.85 3022.55 3066.91 1.47% 22.34%
Russell 2000 1348.56 1558.71 1589.33 1.96% 17.85%
Global Dow 2736.74 3079.14 3109.68 0.99% 13.63%
Fed. Funds target rate 2.25%-2.50% 1.75%-2.00% 1.50%-1.75% 25 bps -75 bps
10-year Treasuries 2.68% 1.80% 1.72% -8 bps -96 bps

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

Last Week’s Economic News

  • The Federal Reserve lowered interest rates for the third consecutive time, dropping the target range for the federal funds rate 25 basis points to 1.50%-1.75%. The Committee noted that while the labor market remains strong, economic activity has been rising at a moderate rate, and household spending has been accelerating at a strong pace, business fixed investment and exports remain weak. In addition, inflation continues to run below the Fed’s target rate of 2.0%. The Committee vote was 8 in favor and 2 voting to maintain the target range at 1.75%-2.00%. Further rate cuts are on hold for the time being. The Committee next meets in December.
  • The initial, or “advance,” estimate of the third-quarter gross domestic product showed the economy grew at an annualized rate of 1.9%. The second-quarter GDP increased 2.0%. While economic growth decelerated in the third quarter, it is better than most experts expected, primarily due to consumer spending, which offset weakness in other sectors of the economy. In the third quarter, personal income increased $172.8 billion compared with an increase of $244.2 billion in the second quarter. Disposable personal income increased $181.7 billion last quarter compared to $192.6 billion in the second quarter. With a reduction in consumer income in the third quarter came a deceleration in consumer spending (accounting for more than two-thirds of economic activity). However, consumer spending was enough to offset weak business investment, which turned negative for the first time since 2016.
  • There were 128,000 new jobs added in October, and the unemployment rate inched up one-tenth to 3.6%. Job growth has averaged 167,000 per month thus far in 2019. The number of unemployed persons also climbed marginally from 5.8 million in September to 5.9 million. The labor participation rate rose from 63.2% to 63.3% last month. The employment-population ratio held at 61.0%. Notable job gains in October occurred in food services and drinking places (48,000), social assistance (20,000), professional and business services (22,000), and financial activities (16,000). Indicative of the slowdown in manufacturing production, that sector declined by 36,000 jobs in October. The average workweek was unchanged at 34.4 hours in October. Average hourly earnings rose by $0.06 to $28.18. Over the past 12 months, average hourly earnings have increased by 3.0%.
  • Prices for consumer goods and services decreased less than 0.1% in September as inflationary pressures remained muted. Personal income and disposable (after-tax) personal income each climbed 0.3%. Consumer spending ramped up 0.2% in September, helped by robust employment and rising wages.
  • Manufacturing continued to lag in October, according to the latest Manufacturing ISM® Report On Business®. The purchasing managers’ index registered 48,3%, which, while better than September’s 47.8%, still represents contraction in the manufacturing sector (a reading below 50% constitutes contraction). Survey respondents noted an increase in new orders, up 1.8% at 49.1%, but still contracting. Production, supplier deliveries, and prices each fell in October and are all below 50.0%. Employment, inventories and new export orders increased, respectively.
  • The international trade in goods (excluding services) deficit for September was $70.4 billion, down $2.7 billion from August. Exports of goods for September were $135.9 billion, $2.2 billion less than August exports. Imports of goods for September were $206.3 billion, $4.9 billion less than August imports. While the goods deficit shrank last month, both import and export trading contracted — evidence of a slowing global economy.
  • For the week ended October 26, there were 218,000 claims for unemployment insurance, an increase of 5,000 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 remained at 1.2% for the week ended October 19. The advance number of those receiving unemployment insurance benefits during the week ended October 19 was 1,690,000, an increase of 7,000 from the prior week’s level, which was revised up by 1,000.

Eye on the Week Ahead

While the last week of October was full of economic information and reports, the first week of November is relatively calm. The goods and services trade report for September is available this week. The 2019 goods and services international trade deficit sat at $429 billion for January through August — about $28 billion higher than the deficit over the same eight-month period in 2018.

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