What I’m Watching This Week – 11 December 2017

The Markets (as of market close December 8, 2017)

Last week proved to be a mixed bag of market returns as the large caps of the Dow and S&P 500 posted moderate gains, while the tech-heavy Nasdaq and small caps of the Russell 2000 closed the week down. A stronger than expected jobs report may have helped push the Dow and S&P 500 to positive territory by last Friday. Global stocks climbed on news of an agreement between the UK and the European Union, which will allow negotiations on other issues, such as a trade agreement, to move forward.

The price of crude oil (WTI) fell to $57.34 per barrel last Friday, down from the prior week’s closing price of $58.34 per barrel. The price of gold (COMEX) fell to $1,250.50 by early Friday evening, down from the prior week’s price of $1,283.00. The national average retail regular gasoline price decreased to $2.500 per gallon on December 4, 2017, $0.033 lower than the prior week’s price but $0.292 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/8 Weekly Change YTD Change
DJIA 19762.60 24231.59 24329.16 0.40% 23.11%
Nasdaq 5383.12 6847.59 6840.08 -0.11% 27.07%
S&P 500 2238.83 2642.22 2651.50 0.35% 18.43%
Russell 2000 1357.13 1537.02 1521.72 -0.99% 12.13%
Global Dow 2528.21 3007.96 3015.17 0.24% 19.26%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.36% 2.37% 1 bps -7 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 Headlines

  • November provided another strong month for new job hires, according to the latest report from the Bureau of Labor Statistics. Employment increased by 228,000 last month. Employment growth has averaged 174,000 per month thus far this year. Employment continued to trend up in professional and business services, manufacturing, and health care. The unemployment rate remained at 1.4%, and the number of unemployed persons was essentially unchanged at 6.6 million. The average workweek for all employees increased by 0.1 hour to 34.5 hours in November. The average hourly earnings for all employees rose by $0.05 to $26.55. Over the year, average hourly earnings have risen by $0.64, or 2.5%.
  • According to the Census Bureau, the international trade deficit increased $3.8 billion to $48.7 billion in October over September. The October increase in the goods and services deficit reflected an increase in the goods deficit of $3.8 billion to $69.1 billion and a decrease in the services surplus of less than $0.1 billion to $20.3 billion. Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9%, from the same period in 2016.
  • The non-manufacturing (services) sector accelerated in November, but at a slower pace than in October. According to the Institute for Supply Management, the pace of growth slowed in business activity, new orders, employment, and prices.
  • In the week ended December 2, the advance figure for initial claims for unemployment insurance was 236,000, a decrease of 3,000 from the previous week’s level. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended November 25 was 1,908,000, a decrease of 52,000 from the previous week’s level, which was revised up 3,000.

Eye on the Week Ahead

This week, the Federal Open Market Committee formally meets for the final time in 2017 under chairperson Janet Yellen. Some observers predict the FOMC will raise the federal funds rate by 25 basis points to a range of 1.25%-1.50%. The target range hasn’t reached 1.50% since the end of October 2008

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What I’m Watching This Week – 4 December 2017

The Markets (as of market close December 1, 2017)

Equities surged for much of last week until an abrupt decline midday last Friday culled some of the earlier gains. Nevertheless, of the indexes listed here, only the Nasdaq lost value from the prior week. The Dow led the way posting an impressive gain of 2.86%, followed by the S&P 500, which climbed over 1.5%. Reports that the Senate was close to passing a tax reform bill may have heightened investor confidence as trading picked up during the week. However, news surrounding former national security advisor Michael Flynn involving the Russian probe could have squelched investor enthusiasm last Friday.

The price of crude oil (WTI) fell to $58.34 per barrel last Friday, down slightly from the prior week’s closing price of $58.97 per barrel. The price of gold (COMEX) fell to $1,283.00 by early Friday evening, down from the prior week’s price of $1,292.60. The national average retail regular gasoline price decreased to $2.533 per gallon on November 27, 2017, $0.035 lower than the prior week’s price but $0.379 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/1 Weekly Change YTD Change
DJIA 19762.60 23557.99 24231.59 2.86% 22.61%
Nasdaq 5383.12 6889.16 6847.59 -0.60% 27.20%
S&P 500 2238.83 2602.42 2642.22 1.53% 18.02%
Russell 2000 1357.13 1519.16 1537.02 1.17% 13.25%
Global Dow 2528.21 2992.73 3007.96 0.51% 18.98%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.34% 2.36% 2 bps -8 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 Headlines

  • The second estimate of the third-quarter gross domestic product was more favorable than the first reading. The GDP increased at an annual rate of 3.3% in the third quarter ahead of the first estimate’s growth rate of 3.0%. In the second quarter, the GDP increased 3.1%. Gross domestic income (the sum of various incomes earned and costs incurred in the production of GDP) increased 2.5% in the third quarter, compared with an increase of 2.3% (revised) in the second. The increase in the second estimate of the GDP is due to an increase in nonresidential (business) investment and inventory growth, while residential investment and net exports (imports less exports) subtracted less than initially estimated.
  • Consumer price inflation continues to slowly expand. Consumers increased their spending by 0.3% in spite of an increase in income. Personal (pre-tax) income increased 0.4% in October, while disposable personal (after-tax) income jumped 0.5% for the month. Core personal consumption expenditures, excluding food and energy, increased 0.2% over September. The personal consumption price index, a measure of the prices consumers are paying for consumer goods and services, increased a mere 0.1% in October.
  • New home sales continued to increase in October, according to the Census Bureau. Sales of new single-family homes were at an annual rate of 685,000 in October, up 6.2% from September’s rate. The sales rate in October is 18.7% above the October 2016 estimate. The median new-home price in October was $312,800, while the average sales price was $400,200. The estimate of new houses for sale at the end of October was 282,000, representing a supply of 4.9 months at the current sales rate.
  • The Census Bureau announced that the trade deficit in October, the first month of the 2018 fiscal year, was $68.3 billion, up $4.2 billion from September. Exports were $129.1 billion, $1.3 billion less than September exports, while imports increased $2.9 billion in October from the prior month.
  • According to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), the manufacturing sector grew in November, but at a slightly slower pace than the previous month. Goods output slowed as well, while new orders received by manufacturers rose at the second-fastest pace since March.
  • The Conference Board Consumer Confidence Index®, which had improved in October, increased further in November. The index now stands at 129.5, up from 126.2 in October. The Present Situation Index increased from 152.0 to 153.9, while the Expectations Index rose from 109.0 last month to 113.3. Average prices charged by manufacturers in November rose at the fastest rate in the last four years.
  • The Manufacturing ISM® Report On Business® also showed manufacturing accelerated in November, but not quite as fast as in October. Manufacturing production and new orders outpaced October’s rates, while deliveries slowed.
  • Claims for unemployment insurance are on the upswing after falling the past few weeks. In the week ended November 25, the advance figure for initial claims for unemployment insurance was 238,000, a decrease of 2,000 from the previous week’s level, which was revised up by 1,000. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended November 18 was 1,957,000, an increase of 42,000 from the previous week’s level, which was revised up 11,000.

Eye on the Week Ahead

The last week of November reveals some important economic information. The second report on the third-quarter GDP is out this week. The initial estimate in October showed the GDP increased at a 3.0% annualized growth rate. Also revealed this week is the report on personal income and spending for October. This indicator of inflationary trends is one of the economic reports relied on by the Fed in determining whether to raise interest rates.

What I’m Watching This Week – 27 November 2017

The Markets (as of market close November 24, 2017)

Stocks rebounded last week in spite of the market shutting down for the Thanksgiving holiday. Each of the benchmark indexes listed here posted weekly gains, led by the Russell 2000, which posted one of its largest weekly advances this year. The tech-heavy Nasdaq was next, followed by the Global Dow. The large caps of the S&P 500 and Dow enjoyed moderately strong returns. For the year, the Nasdaq is approaching an increase of 30.0%.

The price of crude oil (WTI) rose to $58.97 per barrel last Friday, up from the prior week’s closing price of $56.63 per barrel. The price of gold (COMEX) fell to $1,292.60 by early Friday evening, down from the prior week’s price of $1,294.60. The national average retail regular gasoline price decreased to $2.568 per gallon on November 20, 2017, $0.024 lower than the prior week’s price but $0.413 more than a year ago.

Market/Index 2016 Close Prior Week As of 11/24 Weekly Change YTD Change
DJIA 19762.60 23358.24 23557.99 0.86% 19.20%
Nasdaq 5383.12 6782.79 6889.16 1.57% 27.98%
S&P 500 2238.83 2578.85 2602.42 0.91% 16.24%
Russell 2000 1357.13 1492.82 1519.16 1.76% 11.94%
Global Dow 2528.21 2953.40 2992.73 1.33% 18.37%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.34% 2.34% 0 bps -10 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 Headlines

  • Existing home sales continued to increase in October, according to the National Association of Realtors®. Sales of existing homes (all types) were at an annual rate of 5.48 million in October, up 2.0% from September’s rate. Single-family existing home sales climbed 2.1% for the month. The median existing-home price for all housing types in October was $247,000, up 5.5% from October 2016 ($234,100). The median existing single-family home price was $248,300 in October, up 5.4% from October 2016. Total housing inventory at the end of October decreased 3.2% to 1.80 million existing homes available for sale, which is 10.4% lower than a year ago (2.01 million) and has fallen year-over-year for 29 consecutive months. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago.
  • October saw new orders for long lasting (durable) goods slide following two consecutive monthly increases. New orders for manufactured durable goods decreased $2.8 billion, or 1.2%, in October. Transportation equipment, also down following two consecutive monthly increases, drove the decrease. Excluding transportation, new orders actually increased 0.4%. Manufacturers shipped more goods in October, while the number of unfilled orders remained relatively the same as in September.
  • In the week ended November 18, the advance figure for initial claims for unemployment insurance was 239,000, a decrease of 13,000 from the previous week’s level, which was revised up by 3,000. The advance insured unemployment rate rose slightly to 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended November 11 was 1,904,000, an increase of 36,000 from the previous week’s level, which was revised up 8,000.

Eye on the Week Ahead

The last week of November reveals some important economic information. The second report on the third-quarter GDP is out this week. The initial estimate in October showed the GDP increased at a 3.0% annualized growth rate. Also revealed this week is the report on personal income and spending for October. This indicator of inflationary trends is one of the economic reports relied on by the Fed in determining whether to raise interest rates.

What I’m Watching This Week – 20 November 2017

The Markets (as of market close November 17, 2017)

Last week saw a mixed bag of returns as the large caps of the Dow and S&P 500 lost value for the second consecutive week, while the tech-heavy Nasdaq and small caps of the Russell 2000 posted gains. Major gains from consumer companies such as Wal-Mart Stores, which reported its strongest sales in several years, weren’t enough to offset falling energy stock prices. On the other hand, the Nasdaq posted a gain of almost 50.0%, while the Russell 2000 was the leader by far, climbing 1.19%. Long-term bond prices didn’t move much, as the yield on 10-year Treasuries inched up only 2 basis points.

The price of crude oil (WTI) fell to $56.63 per barrel last Friday, down from the prior week’s closing price of $56.86 per barrel. The price of gold (COMEX) climbed to $1,294.60 by early Friday evening, up from the prior week’s price of $1,276.30. The national average retail regular gasoline price increased to $2.592 per gallon on November 13, 2017, $0.031 higher than the prior week’s price and $0.408 more than a year ago.

Market/Index 2016 Close Prior Week As of 11/17 Weekly Change YTD Change
DJIA 19762.60 23422.21 23358.24 -0.27% 18.19%
Nasdaq 5383.12 6750.94 6782.79 0.47% 26.00%
S&P 500 2238.83 2582.30 2578.85 -0.13% 15.19%
Russell 2000 1357.13 1475.27 1492.82 1.19% 10.00%
Global Dow 2528.21 2961.95 2953.40 -0.29% 16.82%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.32% 2.34% 2 bps -10 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 Headlines

  • Prices producers receive for goods and services climbed 0.4% in October. This gain follows a 0.4% increase in September and a 0.2% jump in August. Over the past 12 months ended in October, producer prices are up 2.8% — the largest rise since an advance of 2.8% for the 12 months ended February 2012. Prices less foods, energy, and trade services rose 0.2% for the month and have increased 2.3% over the 12 months ended in October. Generally, as producer prices rise, these increases get passed through to consumers.
  • While producer prices have risen, that increase hasn’t been reflected in consumer prices — at least not yet. For October, consumer prices rose a scant 0.1%, according to the Consumer Price Index. This follows a 0.5% price jump in September. Core prices, which excludes food and energy, increased 0.2% for the month. The CPI rose 2.0% for the 12 months ended in October, a smaller increase than the 2.2% increase for the period ended in September. Core prices increased 1.8% over the past 12 months.
  • Soft consumer prices may be encouraging increased consumer purchases as retail sales were $486.6 billion in October, up 0.2% from September. Sales at the retail level are up 4.7% over the last 12 months.
  • October, the first month of fiscal 2018 for the federal Treasury, saw a monthly deficit of $63.2 billion. Government receipts for the month totaled $235.3 billion, while outlays totaled $298.6 billion. By comparison, the deficit for October 2016 was $45.8 billion.
  • According to the Bureau of Labor Statistics, import prices advanced 0.2% in October after increasing 0.8% in September. Excluding fuel import prices, which swung sharply higher (1.4%) last month, import prices only managed a 0.2% monthly increase. Year-on-year, import prices, excluding petroleum, have risen only 1.4%. Export prices recorded no change in October, after increasing 0.7% in September. The price index for agricultural exports increased 1.9% in October, the largest monthly rise since a 2.5% advance in June 2016. Excluding agriculture, export prices actually declined 0.3% in October.
  • Industrial production rose 0.9% in October, and manufacturing increased 1.3%. The index for utilities rose 2.0%, but mining output fell 1.3%, as Hurricane Nate caused a sharp but short-lived decline in oil and gas drilling and extraction. Even so, industrial activity was boosted in October by a return to normal operations after hurricanes Harvey and Irma suppressed production in August and September.
  • October was a very solid month for new home construction. According to the Census Bureau, building permits were up 5.9%, housing starts increased 13.7%, and housing completions jumped 12.6% over September.
  • In the week ended November 11, the advance figure for initial claims for unemployment insurance was 249,000, an increase of 10,000 from the previous week’s level. The advance insured unemployment rate fell slightly to 1.3%. The advance number of those receiving unemployment insurance benefits during the week ended November 4 was 1,860,000, a decrease of 44,000 from the previous week’s level, which was revised up 3,000. This remains the lowest level for insured unemployment since December 29, 1973, when it was 1,805,000.

Eye on the Week Ahead

Thanksgiving week is relatively quiet in terms of economic news. The report on existing home sales for October follows on the heels of September’s positive returns. Another important economic report on orders for durable goods is also out this week. For the year, new orders placed with domestic manufacturers are up 8.3% compared to 2016.

What I’m Watching This Week – 13 November 2017

The Markets (as of market close November 10, 2017)

Trepidation over proposed tax reform took a toll on large caps last week, ending what had been a run of consecutive weekly positive returns. The small caps of the Russell 2000 were particularly hit, sending that index down over 1.30%. Rising oil prices pushed energy stocks higher, but not enough to offset falling stock prices across much of the market. A light economic calendar probably accounted for long-term bond yields remaining largely unchanged from the prior week.

The price of crude oil (WTI) rose to $56.86 per barrel last Friday, up from the prior week’s closing price of $55.73 per barrel. The price of gold (COMEX) climbed to $1,276.30 by early Friday evening, up from the prior week’s price of $1,270.00. The national average retail regular gasoline price increased to $2.561 per gallon on November 6, 2017, $0.073 higher than the prior week’s price and $0.328 more than a year ago.

Market/Index 2016 Close Prior Week As of 11/10 Weekly Change YTD Change
DJIA 19762.60 23539.19 23422.21 -0.50% 18.52%
Nasdaq 5383.12 6764.44 6750.94 -0.20% 25.41%
S&P 500 2238.83 2587.84 2582.30 -0.21% 15.34%
Russell 2000 1357.13 1494.91 1475.27 -1.31% 8.71%
Global Dow 2528.21 2976.80 2961.95 -0.50% 17.16%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.33% 2.32% -1 bps -12 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 Headlines

  • The number of job openings was little changed at 6.1 million on the last business day of September, according to the Job Openings and Labor Turnover (JOLTS) report. The number of hires fell slightly from 5.4 million in August to 5.3 million in September, while total separations remained essentially the same at 5.2 million. Job openings increased in professional and business services (+156,000), other services (+52,000), state and local government education (+36,000), and federal government (+15,000). Job openings decreased in accommodation and food services (-111,000) and information (-28,000). Over the 12 months ended in September, hires totaled 63.9 million and separations totaled 62.1 million, yielding a net employment gain of 1.8 million.
  • In the week ended November 4, the advance figure for initial claims for unemployment insurance was 239,000, an increase of 10,000 from the previous week’s level. The advance insured unemployment rate increased slightly to 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended October 28 was 1,901,000, an increase of 17,000 from the previous week’s level. This remains the lowest level for insured unemployment since January 12, 1974, when it was 1,881,000.

Eye on the Week Ahead

Inflation has been moving upward, but not enough to influence the Fed to raise interest rates. This week, inflationary trackers including the Consumer Price Index and the Producer Price Index provide price information for October.

What I’m Watching This Week – 6 November 2017

The Markets (as of market close November 3, 2017)

The benchmark indexes were mixed last week as large caps and tech stocks performed well, while small caps took quite a hit. The S&P 500 closed the week posting gains for the eighth straight week. The small caps of the Russell 2000 lost almost 1.0%. Technology and energy stocks performed well. Economic and political news also may have shaped the market last week as the Fed decided to hold short-term interest rates steady, and the president nominated a new chairman of the central bank to succeed Janet Yellen. Long-term bond yields fell as investors pushed bond prices higher.

The price of crude oil (WTI) rose to $55.73 per barrel last Friday, up from the prior week’s closing price of $54.02 per barrel. The price of gold (COMEX) dropped to $1,270.00 by early Friday evening, decreasing from the prior week’s price of $1,273.90. The national average retail regular gasoline price increased for the first time in several weeks to $2.488 per gallon on October 30, 2017, $0.009 higher than the prior week’s price and $0.258 more than a year ago.

Market/Index 2016 Close Prior Week As of 11/3 Weekly Change YTD Change
DJIA 19762.60 23434.19 23539.19 0.45% 19.11%
Nasdaq 5383.12 6701.26 6764.44 0.94% 25.66%
S&P 500 2238.83 2581.07 2587.84 0.26% 15.59%
Russell 2000 1357.13 1508.32 1494.91 -0.89% 10.15%
Global Dow 2528.21 2962.88 2976.80 0.47% 17.74%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.41% 2.33% -8 bps -11 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 Headlines

  • Released just ahead of the Federal Open Market Committee’s meeting, the report on personal income and consumer spending showed notable upward movement in September. Both personal (pre-tax) income and disposable (after-tax) income increased 0.4% for the month. Consumer spending, as measured by personal consumption expenditures, spiked 1.0% following a 0.1% increase in August. However, excluding volatile food and energy segments, core personal consumption expenditures inched up by only 0.1%. Over the last 12 months, consumer spending has expanded at a rate of 1.6%, while core spending is up 1.3%.
  • Slow inflationary growth kept interest rates at their current level in November. The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 1.00%-1.25%. While noting that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions, inflation for items other than food and energy has remained soft. Nevertheless, a December rate hike is considered likely.
  • The labor sector added 261,000 new jobs in October, and the unemployment rate edged down 0.1% to 4.1%. Employment in food services and drinking places increased sharply, mostly offsetting a decline in September that largely reflected the impact of hurricanes Irma and Harvey. In October, job gains also occurred in professional and business services, manufacturing, and health care. The average workweek was unchanged at 34.4 hours. Average hourly earnings fell $0.01 to $26.53 after climbing $0.12 in September. Over the past 12 months, average hourly earnings have increased by $0.63, or 2.4%.
  • The international trade deficit for goods and services increased by $0.7 billion in September to $43.5 billion. September exports were $196.8 billion, $2.1 billion more than August exports. September imports were $240.3 billion, $2.8 billion more than August imports.
  • According to IHS Markit, October saw the manufacturing sector grow at the fastest pace since the beginning of the year. The IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 54.6 in October, up from 53.1 in September. Purchasing managers noted improvements in manufacturing output and new orders, while export sales increased at the quickest pace since August 2016.
  • On the other hand, the Institute for Supply Management’s purchasing managers survey had the October purchasing managers index fall 2.1 percentage points to 58.7, which still indicates growth in the manufacturing sector, but at a slightly slower pace than in September. Unlike Markit’s report, new orders and production dropped in October, according to the ISM® survey.
  • Business in the non-manufacturing (services) sector grew in October, according to the Institute for Supply Management. The NMI® registered 60.1%, which is the highest reading since the index debut in 2008.
  • Consumer confidence reached its highest level in almost 17 years in October, according to The Conference Board’s Consumer Confidence Survey®. Boosted by what is perceived as a strong jobs market and improving business conditions, consumers expressed confidence in the present economy while expecting it to improve in the near term.
  • In the week ended October 28, the advance figure for initial claims for unemployment insurance was 229,000, a decrease of 5,000 from the previous week’s level, which was revised up by 1,000. The advance insured unemployment rate remained 1.3%. The advance number of those receiving unemployment insurance benefits during the week ended October 21 was 1,884,000, a decrease of 15,000 from the previous week’s level, which was revised up 6,000. This remains the lowest level for insured unemployment since December 29, 1973, when it was 1,805,000.

Eye on the Week Ahead

This week is a relatively slow one for economic news. Third-quarter earnings reports are still filtering in, helping to push stocks higher. However, the impact (if any) on the market from the first indictments out of special counsel Robert Mueller’s investigation is still playing out. Last week’s FOMC decision to maintain short-term interest rates may nudge investors toward equities.

Monthly Market Review – October 2017

The Markets (as of market close October 31, 2017)

Despite continuing drama in the White House and the fury of Mother Nature, stock growth remained steady for much of October. Favorable corporate earnings reports, a strong jobs sector, and growing consumer income overcame any trepidations investors may have had. Each of the benchmark indexes listed here posted monthly gains, led by the large caps of the Dow, which gained over 4% for the month and is up over 18% year-to-date. The tech-heavy Nasdaq has remained steady throughout the year, reaching new highs in October. The small caps of the Russell 2000 gained less than 1.0% for the month but is up over 10.0% since the end of 2016.

By the close of trading on October 31, the price of crude oil (WTI) was $54.54 per barrel, up from the September 29 price of $47.07 per barrel. The national average retail regular gasoline price was $2.488 per gallon on October 30, down from the September 25 selling price of $2.583 and $0.258 more than a year ago. The price of gold increased by the end of October, closing at $1,271.80 on the last trading day of the month, down $18.04 from its September 29 price of $1,289.84.

Market/Index 2016 Close Prior Month As of October 31 Month Change YTD Change
DJIA 19762.60 22405.09 23377.24 4.34% 18.29%
NASDAQ 5383.12 6495.96 6727.67 3.57% 24.98%
S&P 500 2238.83 2519.36 2575.26 2.22% 15.03%
Russell 2000 1357.13 1490.86 1502.87 0.81% 10.74%
Global Dow 2528.21 2907.67 2959.78 1.79% 17.07%
Fed. Funds 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.33% 2.37% 4 bps -7 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 Month’s Economic News

  • Employment: September saw a loss of 33,000 jobs after averaging 172,000 new jobs over the prior 12 months. The unemployment rate fell slightly to 4.2%. The number of unemployed persons declined by 331,000 to 6.8 million. The labor participation rate increased from 62.9% in August to 63.1%. The average workweek for all employees remained at 34.4 hours in September. Average hourly earnings rose by $0.12 to $26.55. Over the 12 months ended in September, average hourly earnings have risen $0.74, or 2.9%. According to the Bureau of Labor Statistics, hurricanes Harvey and Irma impacted the number of jobs available, but not the national unemployment rate. This report appears to indicate that the labor market is tightening with fewer jobs available and increasing wages needed to attract workers.
  • FOMC/interest rates: The Federal Open Market Committee met in September following its last meeting in July and left the target federal funds rate range at 1.00%-1.25%. However, some economic indicators are showing mild inflationary pressures, which, when coupled with a labor market that could be nearing full employment, may lead to another interest rate hike when the Committee next meets in early November.
  • GDP/budget: The first estimate of the third-quarter gross domestic product showed expansion at an annual rate of 3.0%, according to the Bureau of Economic Analysis. The second-quarter GDP grew at an annualized rate of 3.1%. Gross domestic income, which estimates all income earned while producing goods and services, increased 1.8% in the third quarter compared to an increase of 0.9% in the second quarter. As to the government’s budget, September marked the end of the fiscal year. The federal deficit for FY 2017 was $665.7 billion, more than $80 billion, or 13.7%, higher than the 2016 deficit. For the 2017 fiscal year, government expenses increased by about 3.0%, while receipts rose 1.5%.
  • Inflation/consumer spending: Inflationary pressures may be mounting. The personal consumption expenditures (PCE) price index (a measure of what consumers pay for goods and services) ticked up 0.4% in September after climbing only 0.2% in August. The core PCE price index (excluding energy and food) inched ahead 0.1% for the month. Personal (pre-tax) income increased 0.4% and disposable personal (after-tax) income also gained 0.4% from the prior month. Personal consumption expenditures (the value of the goods and services purchased by consumers) jumped a robust 1.0%.
  • According to the Consumer Price Index, consumer prices rose 0.5% in September, after recording a 0.4% gain in August. For the 12 months ended in September, consumer prices are up 2.2%, a mark that approaches the Fed’s 2.0% target for inflation. Core prices, which exclude food and energy, edged up 0.1% in September, and are up 1.7% since September 2016.
  • The Producer Price Index showed the prices companies receive for goods and services advanced 0.4% in September from August. Year-over-year, producer prices have increased 2.6%. Prices less food and energy increased 0.4% for the month and are up 2.2% over the past 12 months.
  • Housing: The housing sector started to gain momentum heading into the fall season. Total existing-home sales climbed 0.7% for September following a 1.7% drop in August. Over the last 12 months, sales of existing homes are down 1.5%. The September median price for existing homes was $245,100, 3.4% lower than August’s median price of $253,500 but up 4.2% from the median price last September. Inventory for existing homes rose 1.6% for the month following an August decline of 2.1%. The Census Bureau’s latest report reveals sales of new single-family homes climbed a whopping 18.9% in September to an annual rate of 667,000 — far outpacing August’s rate of 561,000. The median sales price of new houses sold in September was $319,700 compared to $300,200 in August. The average sales price was $385,200 ($368,100 in August). The number of houses for sale at the end of September was 279,000 (284,000 in August), which represents a supply of 5.0 months at the current sales rate.
  • Manufacturing: Industrial production increased 0.3% in September following a 0.9% decline in August. The continued effects of Hurricane Harvey and, to a lesser degree, the effects of Hurricane Irma combined to hold down the growth in total production in September by 0.25 percentage point. Capacity utilization increased slightly from 75.8% in August to 76.0% in September. Manufacturing output edged up 0.1%. Mining output rose 0.4% in September after declining 0.8% in August. The index for utilities jumped 1.5% after falling 5.5% in August. New orders for manufactured durable goods increased 2.2% in September after climbing 1.7% in August. Shipments of manufactured goods increased 1.0%, while unfilled orders, which fell the prior two months, increased 0.2% in September.
  • Imports and exports: The advance report on international trade in goods revealed that the trade gap for September was $64.138 billion, $0.8 billion (or about 1.3%) greater than the deficit in August. Exports of goods for September were $129.6 billion, $0.9 billion more than August exports. Imports of goods for September were $193.7 billion, $1.7 billion more than August imports.
  • International markets: In a sign that the European economy is heading in the right direction, the European Central Bank is scaling back its bond-buying program, while extending its duration well into 2018. The ECB will continue to buy bonds into September of 2018 but at a slower pace. The province of Catalonia, Spain, held a controversial independence referendum on October 1, where voters were heavily in favor of splitting from Spain. The Spanish high court declared the referendum vote illegal. Nevertheless, Catalonia’s regional president signed a declaration of independence about a week later, which has since prompted the Spanish prime minister to consider imposition of direct rule. Experts have estimated that a Catalonian break from Spain, a Catalexit, could have a significant impact on the Spanish economy.
  • Consumer sentiment: Consumer confidence in the economy rose in October, reaching its highest level in almost 17 years. The Conference Board Consumer Confidence Index® for October climbed to 125.9 from September’s revised 120.6. Consumers expressed growing optimism about present economic conditions as well as future growth. A strong job market and improving business conditions were the primary reasons for the upbeat consumer sentiment.

Eye on the Month Ahead

The president is expected to name a new Federal Reserve chairperson this month, and the Federal Open Market Committee will likely raise the short-term interest rate following its meeting in the first week of November. Consumer spending should pick up entering the holiday season, which could nudge inflation higher.