Tag: politics

Annual Market Review 2025

Published on by dredheadzLeave a comment

Overview

The year 2025 was extraordinary for the economy and the markets. Sweeping tariffs, a cooling labor market, rising consumer prices, a prolonged U.S. federal government shutdown, turmoil in the Middle East, and the ongoing Russia/Ukraine war were some of the many factors that should have signaled economic contraction and a downturn in the stock market. Yet, the opposite occurred. Gross domestic product expanded, largely driven by strong consumer spending. Each of the major stock market indexes listed here posted solid year-end gains. Corporate profits and earnings grew, despite the unemployment rate increasing to its highest level since September 2021. Throughout the year, there were several major events that impacted the stock market and the economy.

The year began rather benignly until April, when President Trump rolled out a fresh round of tariffs across a wide range of imported goods. Unsuspecting investors were shaken, worried about a possible recession and rising inflation. The immediate response was a major move away from equities, causing a spike in volatility. In addition to a plunge in stock prices, the value of the U.S. dollar fell, while U.S. government Treasuries, normally viewed as a safe haven, also saw a selloff, pulling bond prices lower, while pushing yields higher. Over the course of the next several months, new trade agreements prompted a reduction in some tariff rates on certain imports, helping to calm investors’ concerns. Nevertheless, despite geopolitical headwinds and valuation concerns, equities delivered a robust year, largely fueled by the continued artificial intelligence boom and a resilient consumer.

The “Department of Government Efficiency” (DOGE), led by Elon Musk, implemented aggressive spending cuts and federal workforce reductions. While proponents cited long-term savings, the immediate impact included disruptions to government services and a government shutdown in October.

Consumer prices remained stubbornly elevated for much of the year. Inflation, as measured by the Consumer Price Index (CPI), stayed “sticky,” hovering around 3.0%-3.1%, well above the Fed’s 2.0% target. This persistence was attributed partly to new universal import tariffs and trade disputes that raised costs for goods. In 2025, prices for food rose 2.6%, while shelter prices rose 3.0%. Prices at the wholesale level rose 2.7% for the year, which included a 4.0% rise in prices for food and a 3.8% jump in energy prices.

The economy grew in 2025, despite early-year volatility and aggressive trade policy shifts. Gross domestic product expanded by approximately 1.8% to 2.0% for the full year. Growth was uneven; after a sluggish start in the first quarter, activity accelerated significantly in the third quarter, reaching a robust 4.3% annualized rate of growth before moderating again in quarter four. Consumer spending remained the primary engine of economic growth but became increasingly reliant on higher-income households. Business investment, particularly in artificial intelligence (AI) and software, provided a critical tailwind, offsetting weakness in manufacturing and housing.

According to FactSet, S&P 500 companies were projected to report earnings growth of approximately 12.1%-12.3% for 2025. This performance is well above the 10-year average of 8.6%. Corporate revenues for the year grew by approximately 6.9% to 7.0%, also surpassing the 10-year average of roughly 5.3%. The estimated net profit margin, at 12.9%-13.0%, would mark the highest annual net profit margin since FactSet began tracking the metric in 2008.

The housing sector remained relatively cool for much of the year. While mortgage rates began to recede late in the year due to Fed interest rate cuts, high prices and low inventory kept sale volumes low. Mortgage rates eased in the second half of the year after peaking at just over 7.0% in January, falling to a low of about 6.12% in October before settling at about 6.15% at the end of the year.

A distinct shift in 2025 was the softening of the labor market. The unemployment rate ticked up steadily throughout the year, starting near 4.1% and ending at approximately 4.6% in November, the highest level in four years. The rate of new hires decelerated throughout much of the year. While layoffs remained relatively low historically, the “hiring rate” plummeted. Companies became hesitant to backfill roles due to policy uncertainty and AI integration, making it harder for new entrants and the unemployed to find work. Wage gains moderated to roughly 3.5%, in line with long-term averages but lagging somewhat behind the perceived cost of living for many workers.

Overall industrial production ended the year with a gain of about 2.5%. Mining and utilities bounced up and down throughout the year, while manufacturing fought to keep from contracting, influenced by renewed trade tariffs, policy uncertainty, and the protracted government shutdown.

Market/Index2024 CloseAs of 9/302025 CloseMonth ChangeQ4 Change2025 Change
DJIA42,544.2246,397.8948,063.290.73%3.59%12.97%
Nasdaq19,310.7922,660.0123,241.99-0.53%2.57%20.36%
S&P 5005,881.636,688.466,845.50-0.05%2.35%16.39%
Russell 20002,230.162,436.482,481.91-0.68%1.86%11.29%
Global Dow4,863.015,917.396,169.341.81%4.26%26.86%
fed. funds target rate4.25%-4.50%4.00%-4.25%3.50%-3.75%-25 bps-50 bps-75 bps
10-year Treasuries4.57%4.14%4.16%14 bps2 bps-41 bps
US Dollar-DXY108.4497.8298.26-1.22%0.45%-9.39%
Crude Oil-CL=F$71.76$62.51$57.46-3.38%-8.08%-19.93%
Gold-GC=F$2,638.50$3,882.60$4,323.901.74%11.37%63.88%

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.

Snapshot 2025

The Markets

  • Equities: Despite early-year volatility driven by trade policy uncertainties, 2025 proved to be a strong year for U.S. equities, with the major indexes (the Dow, the S&P 500, and the NASDAQ) delivering solid annual returns. The market’s resilience was supported by solid corporate profitability, a pivot in Federal Reserve monetary policy, and a stabilization of trade relations after a rocky second quarter. Among the major U.S. market indexes, the NASDAQ outperformed, driven by continued strength in AI and tech giants. The S&P 500 notched its eighth straight monthly gain in December, largely influenced by corporate profit growth. The Dow recovered from a deep dive in April to end the year on an upward trend. U.S. small caps, as measured by the Russell 2000, had a decent but choppy year. While a nearly 11.0% annual return was historically solid, it lagged behind the three major U.S. indexes. On the other hand, 2025 was a banner year for global blue chips. After years of U.S. tech dominance, non-U.S. markets (particularly in Europe and parts of Asia) rallied. The Global Dow, which tracks 150 leading companies from around the world, significantly outperformed the major U.S. market indexes. The Global Dow saw consistent growth through Q2 and Q3, accelerating in Q4 to finish 2025 near record highs.
  • Bonds: After years of historic volatility, 2025 offered fixed income investors a “solid” year. While bonds did not match the double-digit rallies seen in equities, they fulfilled their traditional role of providing income and stability, with most core indices finishing firmly in the green. The 2025 U.S. Treasury bond market, however, was defined by significant volatility influenced by new economic legislation, persistent inflation, a shift in fiscal policy expectations, and the conclusion of the Federal Reserve’s restrictive interest rate cycle. The 10-year Treasury yield, which began the year at 4.57%, ended the year around 4.16%. Meanwhile, the two-year yield fell more aggressively to approximately 3.46%, reflecting the Fed’s rate cuts.
  • Oil: In 2025, the crude oil market was defined by a steady downward trend, ending the year at some of its lowest levels since the COVID-19 pandemic. Despite temporary surges driven by geopolitical tensions in Ukraine and the Middle East, a combination of record-breaking U.S. crude production and cooling global demand, particularly from China, led to a cumulative price decline of approximately 20.0% over the year.
  • Prices at the pump trended higher for the first half of the year, only to decline throughout the remainder of the year. Prices largely responded to changes in global economics, supply and demand, and other extraordinary factors attributable to the unrest in the Middle East. The average retail price for a gallon of regular gasoline was $3.047 at the beginning of the year. By the end of June, the price had risen to $3.213 per gallon, then steadily declined for the remainder of the year, closing with an average price of $2.811 on December 29.
  • FOMC/interest rates: The Federal Open Market Committee (FOMC) navigated a complex year defined by “stubborn” inflation, a cooling labor market, and significant geopolitical shifts, including the impact of new trade tariffs. After a period of holding rates steady in the first half of the year, the Fed shifted to a series of 25-basis-point rate cuts starting in September through December, which brought the federal funds target rate range down 75 basis points to 3.50%-3.75%. This brought borrowing costs to their lowest level since 2022. The FOMC is entering 2026 with a cautious stance. Their updated projections suggest only one additional 25-basis-point rate cut for the entirety of 2026.
  • US Dollar-DXY: The U.S. dollar experienced its most challenging year in decades, ending a long period of dominance with a significant annual decline. After starting the year at historic highs, the U.S. Dollar Index (DXY) fell by more than 9.0% over the course of the year, marking its steepest drop since 2017. The dollar’s downturn was driven by a combination of fiscal, political, and technical factors, including broad-based tariffs and fiscal concerns that led to the downgrading of the U.S. long-term sovereign credit rating.
  • Gold: Gold enjoyed a record-breaking year, characterized by an unprecedented rally that saw the precious metal surge nearly 70.0%, its strongest annual gain in over 40 years. Prices rose from roughly $2,600 at the start of the year to an all-time high of over $4,500 per ounce before settling at around $4,324.00.

Last Month’s Economic News

  • The following section contains a review of the latest economic data available as of December 31, 2025.
  • Employment: Job growth was little changed in November, with the addition of 64,000 new jobs and has shown little change since April. Employment in August was revised down by 22,000, from -4,000 to -26,000, and the change for September was revised down by 11,000, from +119,000 to +108,000. With these revisions, employment in August and September combined was 33,000 lower than previously reported. The unemployment rate was 4.6% in November, 0.2 percentage point higher than the September rate and 0.4 percentage point above the November 2024 estimate. The number of unemployed persons in November, at 7.8 million, edged up 228,000 from September and 710,000 from November 2024. The number of long-term unemployed (those jobless for 27 weeks or more) changed minimally at 1.9 million from September and accounted for 24.3% of all unemployed persons. The total number of long-term unemployed was 256,000 above the estimate from a year earlier. The labor force participation rate inched up 0.1 percentage point to 62.5% in November from September and was unchanged from last November. The employment-population ratio in November, at 59.6%, increased 0.1 percentage point from September and 0.2 percentage point from November 2024 (59.8%). In November, average hourly earnings increased by $0.05 to $36.86. Over the past 12 months ended in November, average hourly earnings rose by 3.5%. The average workweek increased by 0.1 hour to 34.3 hours in November, the same as in November 2024.
  • There were 199,000 initial claims for unemployment insurance for the week ended December 27, 2025. During the same period, the total number of workers receiving unemployment insurance was 1,866,000. The insured unemployment rate was 1.2%, the same rate as a year earlier. There were 209,000 initial claims a year ago, while the total number of workers receiving unemployment insurance was 1,828,000.
  • FOMC/interest rates: As expected, the Federal Open Market Committee reduced the target range for the federal funds rate by 25.0 basis points to the current 3.50%-3.75% following its meeting in December. In arriving at its decision, the Committee noted that economic activity continued to expand at a moderate pace, job gains have slowed, the unemployment rate increased, while inflation moved up since earlier in the year and remained somewhat elevated. As to future policy actions, the FOMC stated that “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.” As to projections for future rate adjustments, the FOMC estimates very gradual declines in the fed funds target rate range over the next few years.
  • GDP/budget: The economy, as measured by gross domestic product, accelerated at an annualized rate of 4.3% in the third quarter, following an increase of 3.8% in the second quarter. A year ago, GDP expanded at an annualized rate of 3.3% in the third quarter. Consumer spending, as measured by the personal consumption expenditures index, rose 3.5% in the third quarter, higher than in the second quarter (2.5%) but below the 2024 pace of 3.9%. Spending on services rose 3.7% in the third quarter, compared with a 2.6% increase in the second quarter. Consumer spending on goods increased 3.1% in the third quarter (2.2% in the second quarter). Fixed investment advanced 1.0% in the third quarter (4.4% in the second quarter). Nonresidential (business) fixed investment rose 2.8% in the third quarter compared to a 7.3% increase in the second quarter. Residential fixed investment declined 5.1% in the third quarter, unchanged from the second quarter. Exports rose 8.8% in the third quarter, compared with a 1.8% decrease in the previous quarter. Imports, which are a negative in the calculation of GDP, declined 4.7% in the third quarter after falling 29.3% in the second quarter. Consumer prices increased 2.8% in the third quarter (2.1% in the second quarter). Excluding food and energy, consumer prices advanced 2.9% in the third quarter (2.6% in the second quarter).
  • November 2025 saw the federal budget deficit come in at $173 billion, roughly $194 billion less than the deficit of $367 billion from a year earlier. The deficit for the first two months of fiscal year 2026, at $458 billion, is $166 billion lower than the first two months of the previous fiscal year. For fiscal year 2025, which ended September 2025, the government deficit was $1,775 billion, which was $42 billion below the government deficit for fiscal year 2024 ($1,817 billion). For fiscal year 2025, government outlays increased $275 billion, while government receipts increased $317 billion. Compared to the previous fiscal year, individual income tax receipts rose by roughly $250 billion in fiscal year 2025, and corporate income tax receipts decreased by $78 billion.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report, personal income rose 0.4% in September and disposable (after-tax) personal income advanced 0.3%. Consumer spending increased 0.3% in September, unchanged from the previous month. In September, the Personal Consumption Expenditures (PCE) price index rose 0.3% after increasing 0.2% in August. Core prices advanced 0.2% in September, unchanged from the August estimate. The PCE price index rose 3.0% since September 2024, while core prices also rose 3.0% over the same period.
  • The Consumer Price Index rose 0.2% in November over the two months from September 2025 to November 2025. Over the 12 months ended in November, the CPI rose 2.7% after rising 3.0% over the 12 months ended in September. Core prices rose 0.2% in November and 2.6% since November 2024. Prices less food and energy rose 2.6% over the last 12 months. Energy prices increased 4.2% for the 12 months ended in November. Prices for food increased 2.6% over the last year. The Bureau of Labor Statistics did not collect survey data for October 2025 due to a lapse in appropriations.
  • The latest data reveals that the Producer Price Index increased 0.3% in September after declining 0.1% in August. Producer prices increased 2.7% for the 12 months ended in September, the same 12-month increase for the period ended in August. Excluding food and energy, producer prices ticked up 0.1% in September and 2.6% for the year. In September, prices for goods increased 0.9% from the previous month and 3.3% since September 2024. Last month, prices for services were unchanged but rose 2.5% for the 12 months ended in September.
  • Housing: Sales of existing homes increased 0.5% in November but were down 1.0% from November 2024. The median existing home price was $409,200 in November, lower than the October price of $414,900 but 1.2% higher than the November 2024 price of $404,400. Unsold inventory of existing homes represented a 4.2-month supply at the current sales pace, down from October (4.4 months) but above the 3.8-month supply in November 2024. Sales of existing single-family homes increased 0.8% in November. Over the 12 months ended in November, sales of existing single-family homes declined 0.8%. The median existing single-family home price was $413,300 in November, down from $420,200 in October but 1.2% above the November 2024 price of $409,200.
  • Sales of new single-family homes jumped higher in August, exceeding expectations, although the inventory of available new homes for sale plunged lower from the previous month. Sales of new single-family homes rose 20.5% in August and were 15.4% above the August 2024 figure. The median sales price of new single-family houses sold in August was $413,500 ($395,100 in July), which was higher than the August 2024 estimate of $405,800. The August average sales price was $534,100 ($478,200 in July), up from the August 2024 average sales price of $475,600. Inventory of new single-family homes for sale in August represented a supply of 7.4 months at the current sales pace, 17.8% below the July estimate of 9.0 months and 9.8% below the August 2024 estimate of 8.2 months.
  • Manufacturing: Industrial production (IP) rose 0.2% in November after ticking down 0.1% in October. On average, IP rose 0.1% per month across October and November, the same as the rate of increase in September but a somewhat slower average pace than the past 12 months. Manufacturing output was flat in November after dropping 0.4% in October. There were swings in both mining and utilities output over October and November, though, on net, both sectors posted gains. Mining dipped 0.8% in October but rose 1.7% in November. Utilities fell 0.4% in November after climbing 2.6% in October. IP in November was 2.5% above its year-earlier level.
  • New orders for durable goods in October, down following two consecutive monthly increases, fell 2.2%. This followed a 0.7% September increase. Excluding transportation, new orders increased 0.2%. Excluding defense, new orders decreased 1.5%. Transportation equipment, down 6.5%, drove the October decline following two consecutive monthly increases.
  • Imports and exports: Import prices were unchanged in September after ticking up 0.1% in August. Higher prices for nonfuel imports (+0.2%) offset lower prices for fuel imports (-1.5%) in September. Prices for U.S. imports rose 0.3% from September 2024 to September 2025. The September increase was the first 12-month advance since the prices rose 0.8% for the year ended March 2025. Prices for U.S. exports were unchanged in September after rising 0.1% the previous month. U.S. export prices increased 3.8% over the 12-month period ended in September, the largest such advance since the prices rose 4.6% for the year ended December 2022.
  • The international trade in goods deficit for August was $85.5 billion, 16.8% under the July estimate. Exports of goods for August dipped 1.3%, while imports of goods declined 7.0%. Over the 12 months ended in August, exports decreased 0.4% and imports fell 4.1%.
  • The latest information on international trade in goods and services, released December 11, was for September and revealed that the goods and services trade deficit was $52.8 billion, a decrease of $6.4 billion, or 10.9%, from the August deficit. September exports were $289.3 billion, $8.4 billion, or 3.0% more than August exports. September imports were $342.1 billion, $1.9 billion, or 0.6% above the August estimate. Year to date, the goods and services deficit increased $112.6 billion, or 17.2%, from the same period in 2024. Exports increased $125.1 billion, or 5.2%. Imports increased $237.7 billion, or 7.7%.
  • International markets: In December 2025, European and Asian stock markets both capped off a strong year with record-breaking performances, though the month began with cautious trading and a brief correction. By the end of the year, the rally was revitalized by a U.S. Federal Reserve interest rate cut and continued optimism surrounding artificial intelligence. For 2025, the STOXX Europe 600 Index rose 19.0%; the United Kingdom’s FTSE advanced 20.53%; Japan’s Nikkei 225 Index gained 26.18%; and China’s Shanghai Composite Index increased 18.41%.
  • Consumer confidence: December saw consumer confidence wane, ending the year on a down note. The Conference Board Consumer Confidence Index® decreased in December to 89.1 from 92.9 in November. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell 9.5 points to 116.8 in December. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, held steady at 70.7 in December but has tracked under 80.0 for 11 consecutive months, running below the threshold of 80.0 that usually signals a recession ahead.

Eye on the Year Ahead

Looking toward to 2026, persistent inflation and a cooling labor market remain key concerns. Potential tax cuts and investment in AI could offer a balance against higher tariffs, rising prices, and a stagnant labor market.

What I’m Watching This Week – 15 December 2025

Published on by dredheadz

The Markets (as of market close December 12, 2025)

Wall Street experienced a mixed week highlighted by the Federal Reserve’s policy decision (see below) and a retreat from technology shares. Illustrative of the week’s volatility, the Dow and the S&P 500 reached record highs mid-week following the Fed’s latest rate cut, before retreating at the end of the week. Despite a negative close last Friday, the Dow, the Global Dow, and the Russell 2000 ended the week higher, while the NASDAQ and the S&P 500 finished the week in the red. Investors moved out of technology and AI stocks and into more cyclical shares like financials, materials, and small-cap stocks. Treasury yields, which move inversely to bond prices, were mixed for the most part, ultimately trending upward by week’s end. The Fed’s overall sentiment that the economy, particularly the labor market, should hold up in 2026 reduced the demand for long-term bonds. Ongoing expectations of a global surplus pulled crude oil prices lower again last week.

Stock Market Indexes

Market/Index2024 ClosePrior WeekAs of 12/12Weekly ChangeYTD Change
DJIA42,544.2247,954.9948,458.051.05%13.90%
NASDAQ19,310.7923,578.1323,195.17-1.62%20.12%
S&P 5005,881.636,870.406,827.41-0.63%16.08%
Russell 20002,230.162,521.482,551.461.19%14.41%
Global Dow4,863.016,089.506,139.980.83%26.26%
fed. funds target rate4.25%-4.50%3.75%-4.00%3.50%-3.75%-25 bps-75 bps
10-year Treasuries4.57%4.13%4.19%6 bps-38 bps
US Dollar-DXY108.4498.9998.40-0.60%-9.26%
Crude Oil-CL=F$71.76$60.17$57.46-4.50%-19.93%
Gold-GC=F$2,638.50$4,225.50$4,333.702.56%64.25%

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 cut the target range for the federal funds rate by 25 basis points to 3.50%-3.75% following its December meeting. The latest reduction was in line with expectations and followed similar reductions in September and October. This most recent reduction brings the target rate range to its lowest level since 2022. The decision to reduce interest rates was not unanimous, with two members voting to maintain the current range, while a third member voted for a 50-basis-point cut. The Fed did not change its projections from September, which call for one more 25-basis-point cut in 2026. In reaching its decision, the Fed noted that job gains had slowed, while inflation moved up since earlier in the year and remained somewhat elevated.
  • The Treasury deficit for November was $173 billion, $111 billion less than the October deficit. November receipts were $336 billion, while outlays totaled $509 billion. In November, individual income tax receipts ($147 billion) were the largest contributor to total monthly receipts, while Social Security payments ($134 billion) were the largest outlay. Through the first two months of the fiscal year, the total deficit sat at $458 billion, about $167 billion less than the comparable period in the previous fiscal year.
  • According to the latest Job Openings and Labor Turnover Summary, the number of job openings was unchanged at 7.7 million in October from the previous month. The total number of hires slipped by 218,000 to 5.1 million. Total separations, at 5.1 million, declined 214,000 in October.
  • The international trade in goods and services deficit fell 10.9% to $52.8 billion in September, according to the latest information from the Bureau of Economic Analysis. Exports rose 3.0% to $289.3 billion, while imports increased 0.6% to $342.1 billion. Year to date, the goods and services deficit increased $112.6 billion, or 17.2%, from the same period in 2024. Exports increased $125.1 billion, or 5.2%. Imports increased $237.7 billion, or 7.7%.
  • For the week ended December 6, there were 236,000 new claims for unemployment insurance, an increase of 44,000 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 29 was 1.2%, 0.1 percentage point lower than the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 29 was 1,838,000, a decrease of 99,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended November 22 were New Jersey (2.2%), Washington (2.2%), Massachusetts (1.9%), Alaska (1.8%), Connecticut (1.8%), Nevada (1.8%), Puerto Rico (1.8%), Rhode Island (1.8%), California (1.7%), and Oregon (1.7%). The largest increases in initial claims for unemployment insurance for the week ended November 29 were in Pennsylvania (+2,208), Wisconsin (+1,092), Nebraska (+870), Iowa (+605), and Ohio (+493), while the largest decreases were in California (-19,844), Texas (-7,836), New York (-3,453), Illinois (-2,216), and Florida (-2,185).
  • The national average retail price for regular gasoline was $2.940 per gallon on December 8, $0.045 per gallon below the prior week’s price and $0.068 per gallon less than a year ago. Also, as of December 8, the East Coast price decreased $0.039 to $2.892 per gallon; the Midwest price fell $0.020 to $2.720 per gallon; the Gulf Coast price dropped $0.058 to $2.493 per gallon; the Rocky Mountain price declined $0.139 to $2.644 per gallon; and the West Coast price fell $0.075 to $3.956 per gallon.

Eye on the Week Ahead

There’s plenty of important economic data released this week as various government agencies try to catch up following the reopening of the Federal government. Of particular interest this week is the latest jobs report and the release of the Consumer Price Index.

What I’m Watching This Week – 11 August 2025

Published on by dredheadz

The Markets (as of market close August 8, 2025)

Wall Street rebounded from the previous week’s sell-off. Stocks jumped higher last Monday, aided by major dip-buying. However, investors pulled away from risk midweek, particularly following President Trump’s sweeping tariffs, which took effect last Thursday. Nevertheless, stocks experienced a major uptick last Friday to end the week higher. The S&P 500 and the NASDAQ hit record highs, while the Dow and the Russell 2000 also made solid gains. Speculation increased that the Federal Reserve would cut interest rates in September following the latest weak jobs report and the imposition of last week’s new tariffs. Information technology, consumer discretionary, and consumer staples led the market sectors. Bond values trended higher, pulling yields lower. Crude oil prices fell to a nearly two-month low amid concerns over growing tariffs.

Stock Market Indexes

Market/Index2024 ClosePrior WeekAs of 8/8Weekly ChangeYTD Change
DJIA42,544.2243,588.5844,175.611.35%3.83%
NASDAQ19,310.7920,650.1321,450.023.87%11.08%
S&P 5005,881.636,238.016,389.452.43%8.63%
Russell 20002,230.162,166.782,218.422.38%-0.53%
Global Dow4,863.015,471.415,615.852.64%15.48%
fed. funds target rate4.25%-4.50%4.25%-4.50%4.25%-4.50%0 bps0 bps
10-year Treasuries4.57%4.22%4.28%6 bps-29 bps
US Dollar-DXY108.4498.7098.26-0.45%-9.39%
Crude Oil-CL=F$71.76$67.23$63.44-5.64%-11.59%
Gold-GC=F$2,638.50$3,413.50$3,452.401.14%30.85%

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 latest report on the goods and services trade deficit was released on August 5 and showed that the goods and services deficit was $60.2 billion in June, down $11.5 billion, or 16.0%, from the revised May estimate. June exports were $277.3 billion, $1.3 billion, or 0.5%, less than May exports. June imports were $337.5 billion, $12.8 billion, or 3.7%, less than May imports. Since June 2024, the goods and services deficit increased $161.5 billion, or 38.3%. Exports increased $82.2 billion, or 5.2%. Imports increased $243.7 billion, or 12.1%.
  • Business activity in the services sector increased at its sharpest pace so far this year amid solid and accelerated expansion in new business. Companies responded to higher workloads by hiring additional staff, albeit only modestly. Meanwhile, tariffs continued to add to inflationary pressures, resulting in faster increases in both input costs and output prices. The S&P Global US Services PMI® Business Activity Index rose to a seven-month high of 55.7 in July, up from 52.9 in June.
  • The national average retail price for regular gasoline was $3.140 per gallon on August 4, $0.017 per gallon above the prior week’s price but $0.308 per gallon less than a year ago. Also, as of August 4, the East Coast price increased $0.017 to $3.016 per gallon; the Midwest price rose $0.029 to $3.043 per gallon; the Gulf Coast price ticked down $0.017 to $2.731 per gallon; the Rocky Mountain price increased $0.006 to $3.127 per gallon; and the West Coast price rose $0.028 to $4.023 per gallon.
  • For the week ended August 2, there were 226,000 new claims for unemployment insurance, an increase of 7,000 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 July 26 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 26 was 1,974,000, an increase of 38,000 from the previous week’s level, which was revised down by 10,000. This was the highest level for insured unemployment since November 6, 2021, when it was 2,041,000. States and territories with the highest insured unemployment rates for the week ended July 19 were New Jersey (2.8%), Puerto Rico (2.7%), Rhode Island (2.6%), California (2.2%), Minnesota (2.2%), the District of Columbia (2.1%), Massachusetts (2.1%), Washington (2.1%), Oregon (1.9%), and Pennsylvania (1.9%). The largest increases in initial claims for unemployment insurance for the week ended July 26 were in Kansas (+254), Vermont (+252), Louisiana (+87), Maryland (+75), and Mississippi (+58), while the largest decreases were in Kentucky (-6,212), Texas (-2,720), Georgia (-1,949), New York (-1,464), and California (-1,174).

Eye on the Week Ahead

Inflation data is on the docket this week with the releases of the July Consumer Price Index and the Producer Price Index. June saw the CPI increase 0.3%, while the PPI was flat.

What I’m Watching This Week – 4 August 2025

Published on by dredheadz

The Markets (as of market close August 1, 2025)

The U.S. stock market endured a significant downturn last week, largely due to unexpectedly weak hiring data (see below) and the imposition of new tariffs by President Trump. After reaching record highs for six straight sessions in the prior week, the S&P 500 ended last week in the red, with last Friday marking the worst single-day performance since May. The remaining benchmark indexes listed here also closed last week lower. Investors moved from risk on the heels of an underwhelming jobs report for July, which led to concerns of slowing economic growth, while new tariffs on imports from several U.S. trading partners heightened fears of accelerating inflation. Weak hiring numbers also increased expectations for a Federal Reserve interest rate cut in September. This sent Treasury yields sharply lower, with 10-year Treasury yields hitting their lowest rates since the end of April. Crude oil prices ended last week higher, although reports that OPEC+ may agree to increase production could drag prices lower.

Stock Market Indexes

Market/Index2024 ClosePrior WeekAs of 8/1Weekly ChangeYTD Change
DJIA42,544.2244,901.9243,588.58-2.92%2.45%
NASDAQ19,310.7921,108.3220,650.13-2.17%6.94%
S&P 5005,881.636,388.646,238.01-2.36%6.06%
Russell 20002,230.162,261.072,166.78-4.17%-2.84%
Global Dow4,863.015,639.915,471.41-2.99%12.51%
fed. funds target rate4.25%-4.50%4.25%-4.50%4.25%-4.50%0 bps0 bps
10-year Treasuries4.57%4.38%4.22%-16 bps-35 bps
US Dollar-DXY108.4497.6998.701.03%-8.98%
Crude Oil-CL=F$71.76$65.04$67.233.37%-6.31%
Gold-GC=F$2,638.50$3,337.80$3,413.502.27%29.37%

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 9-2 tally, with one member absent, the Federal Open Market Committee voted to maintain interest rates at their current 4.25%-4.50% range. In making its decision, the Committee noted that growth of economic activity moderated in the first half of the year, while swings in net exports continued to affect data. However, the unemployment rate remained low, and labor market conditions were solid, although inflation was somewhat elevated. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee indicated that it would carefully assess incoming data, the evolving outlook, and the balance of risks. Nevertheless, the Committee observed that uncertainty about the economic outlook remained elevated.
  • Job growth in July came in well below expectations, with the addition of only 73,000 new jobs. July’s total follows larger-than-normal downward revisions in May and June, which combined, were 258,000 lower than previously reported. The unemployment rate ticked up 0.1 percentage point to 4.2%. Both the labor force participation rate and the employment-population ratio dipped 0.1 percentage point to 62.2% and 59.6%, respectively. The number of unemployed, at 7.2 million, rose by 221,000 last month. In July, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 179,000 to 1.8 million, accounting for 24.9% of all unemployed people. Average hourly earnings rose by $0.12, or 0.3%, to $36.44 in July. Over the past 12 months, average hourly earnings have increased by 3.9%. The average workweek edged up by 0.1 hour to 34.3 hours in July.
  • The economy expanded at an annualized rate of 3.0%, according to the initial estimate of second-quarter gross domestic product (GDP). In the first quarter, GDP decreased 0.5%. The increase in real GDP in the second quarter primarily reflected a decrease in imports (-30.3%), which are a subtraction in the calculation of GDP, and an increase in consumer spending (1.4%). These movements were partly offset by decreases in private domestic investment (-15.6%) and exports (-1.8%).
  • According to the latest report from the Bureau of Economic Analysis, consumer spending increased 0.3% in June. Prices consumers paid for goods and services advanced 0.3% last month. Prices excluding food and energy (core prices) also increased 0.3%. Both personal income and disposable (after-tax) personal income each advanced 0.3% in June.
  • The international trade in goods deficit was $86.0 billion in June, down $10.4 billion, or 10.8%, from the May estimate. Exports of goods for June were $178.2 billion, $1.1 billion, or 0.6%, less than May exports. Imports of goods for June were $264.2 billion, $11.5 billion, or 4.2%, less than May imports. Since June 2024, exports have risen 3.6%, while imports declined 2.5%.
  • According to the latest Job Openings and Labor Turnover Summary, there were 7.4 million job openings in June, down from 7.7 million in May. The number of hires in June, at 5.2 million, fell from the May estimate of 5.5 million. Total separations in June were 5.1 million compared to 5.2 million in May. The number of job openings for May was revised down by 57,000 to 7.7 million, the number of hires was revised down by 38,000 to 5.5 million, and the number of total separations was revised down by 29,000 to 5.2 million.
  • Operating conditions in the manufacturing sector worsened slightly in July as demand stagnated and tariff uncertainty continued to dominate. International sales fell and uncertainty over federal government policies weighed on sentiment, which led to a decline in employment. On the price front, input costs continued to rise steeply, again linked to tariffs, as selling prices continued to increase markedly, rising to the second-highest level since November 2022. The S&P Global US Manufacturing Purchasing Managers’ Index™ recorded 49.8 in July. That was down noticeably from June’s 52.9 following six successive months of growth, while representing the first overall deterioration of operating conditions in 2025.
  • The national average retail price for regular gasoline was $3.123 per gallon on July 28, $0.002 per gallon above the prior week’s price but $0.361 per gallon less than a year ago. Also, as of July 28, the East Coast price decreased $0.007 to $2.999 per gallon; the Midwest price rose $0.028 to $3.014 per gallon; the Gulf Coast price ticked up $0.009 to $2.748 per gallon; the Rocky Mountain price declined $0.016 to $3.121 per gallon; and the West Coast price fell $0.027 to $3.995 per gallon.
  • For the week ended July 26, there were 218,000 new claims for unemployment insurance, an increase of 1,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 19 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended July 19 was 1,946,000, unchanged from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended July 12 were New Jersey (2.8%), Puerto Rico (2.7%), Rhode Island (2.6%), Minnesota (2.2%), California (2.1%), the District of Columbia (2.1%), Massachusetts (2.1%), Washington (2.1%), Oregon (1.9%), and Pennsylvania (1.9%). The largest increases in initial claims for unemployment insurance for the week ended July 19 were in Kentucky (+4,895), Texas (+424), Iowa (+298), Indiana (+5), and Vermont (+1), while the largest decreases were in New York (-12,505), California (-4,618), Michigan (-4,116), Pennsylvania (-3,350), and New Jersey (-2,655).

Eye on the Week Ahead

This is a slow week for economic reports. Investors, instead, will look toward next week when the latest inflation data is released.

What I’m Watching This Week – 7 July 2025

Published on by dredheadz

The Markets (as of market close July 3, 2025)

Stocks advanced notably during the Fourth of July holiday-shortened week. Both the S&P 500 and the NASDAQ recorded record highs as investors were encouraged by a better-than-expected labor report (see below). Tech stocks and AI-driven companies moved higher following the White House’s decision to lift export restrictions on chip-design software to China. All 11 market sectors gained last week, led by materials, financials, industrials, and consumer discretionary. The favorable jobs report also helped drive bond yields higher, with 10-year Treasury yields climbing 6.0 basis points. Crude oil prices posted weekly gains, despite slipping at the end of the week. Prices rose during the week after Iran decided to halt cooperation with the United Nations’ nuclear watchdog, which heightened global tensions and threatened production and demand. Gold prices also closed last week higher, after a strong labor report dulled hopes for a Federal Reserve interest rate decrease.

Stock Market Indexes

Market/Index2024 ClosePrior WeekAs of 7/3Weekly ChangeYTD Change
DJIA42,544.2243,819.2744,828.532.30%5.37%
NASDAQ19,310.7920,273.4620,601.101.62%6.68%
S&P 5005,881.636,173.076,279.351.72%6.76%
Russell 20002,230.162,172.532,249.043.52%0.85%
Global Dow4,863.015,501.935,573.041.29%14.60%
fed. funds target rate4.25%-4.50%4.25%-4.50%4.25%-4.50%0 bps0 bps
10-year Treasuries4.57%4.28%4.34%6 bps-23 bps
US Dollar-DXY108.4497.2997.18-0.11%-10.38%
Crude Oil-CL=F$71.76$65.12$67.002.89%-6.63%
Gold-GC=F$2,638.50$3,287.10$3,342.901.70%26.70%

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 grew by 147,000 in June, which exceeded expectations but was in line with the average monthly gain of 146,000 over the prior 12 months. Job gains occurred in state government and health care. The federal government continued to lose jobs. Employment in April and May was revised up by 16,000 combined. The unemployment rate ticked down 0.1 percentage point to 4.1%. The labor force participation rate also dipped 0.1 percentage point to 62.3%, while the employment-population ratio, at 59.7%, was unchanged from the previous month. The total number of unemployed fell by 222,000 to 7.0 million. In June, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 190,000 to 1.6 million, largely offsetting a decrease in the prior month. The long-term unemployed accounted for 23.3% of all unemployed people. Average hourly earnings rose by $0.08, or 0.2%, to $36.30 in June. Over the past 12 months, average hourly earnings have increased by 3.7%. The average workweek edged down by 0.1 hour to 34.2 hours in June.
  • The number of job openings in May increased by 374,000 to 7.8 million, according to the latest Job Openings and Labor Turnover Summary. The number of job openings increased in accommodation and food services (314,000) and in finance and insurance (91,000). The number of job openings decreased in federal government (39,000). The number of hires ticked down by about 100,000 to 5.5 million, while the number of total separations was little changed at 5.2 million. In May, the number of layoffs and discharges were little changed at 1.6 million and 1.0 million, respectively.
  • The goods and services trade deficit was $71.5 billion in May, up $11.3 billion, or 18.7%, from April. May exports were $279.0 billion, $11.6 billion, or 4.0%, less than April exports. May imports were $350.5 billion, $0.3 billion, or 0.1%, less than April imports. The May increase in the goods and services deficit reflected an increase in the goods deficit of $11.2 billion to $97.5 billion and a decrease in the services surplus of $0.1 billion to $26.0 billion. Year to date, the goods and services deficit increased $175.0 billion, or 50.4%, from the same period in 2024. Exports increased $73.6 billion, or 5.5%. Imports increased $248.7 billion, or 14.8%.
  • According to S&P Global, the U.S. manufacturing sector expanded again in June, with operating conditions improving to the greatest degree in over three years. Output increased for the first time since February, while new orders rose for a sixth successive month due to improved domestic and international demand. However, tariffs remained a prevalent theme, notably affecting purchasing decisions and prices. The latest data showed manufacturers increasing their purchases to the greatest extent since April 2022, reflecting efforts to build up inventories given ongoing trade and price uncertainty. Nonetheless, input costs still rose sharply, with inflation hitting its highest level for nearly three years. This prompted a rise in output charges, which increased to the highest level since September 2022.
  • The services sector saw expansion in June, but at a slower pace than in the previous month. The S&P Global US Services PMI® Business Activity Index registered 52.9 in June, down from 53.7 in May. The increase in business activity in June marked the 29th successive month of gains. However, business activity in the services sector remained well below levels recorded in the second half of 2024. An increase in domestic economic activity drove the overall June advance, while international sales fell for the third straight month as tariffs and U.S. trade policy uncertainty continued to weigh on foreign demand.
  • The national average retail price for regular gasoline was $3.164 per gallon on June 30, $0.049 per gallon below the prior week’s price and $0.315 per gallon less than a year ago. Also, as of June 30, the East Coast price decreased $0.041 to $3.031 per gallon; the Midwest price dropped $0.036 to $3.051 per gallon; the Gulf Coast price declined $0.105 to $2.739 per gallon; the Rocky Mountain price dipped $0.002 to $3.175 per gallon; and the West Coast price fell 0.053 to $4.109 per gallon.
  • For the week ended June 28, there were 233,000 new claims for unemployment insurance, a decrease of 4,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended June 21 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 21 was 1,964,000, unchanged from the previous week’s level, which was revised down by 10,000. States and territories with the highest insured unemployment rates for the week ended June 14 were California (2.2%), Minnesota (2.2%), New Jersey (2.2%), Puerto Rico (2.2%), Rhode Island (2.0%), Washington (2.0%), the District of Columbia (1.9%), Massachusetts (1.8%), Illinois (1.7%), and Pennsylvania (1.7%). The largest increases in initial claims for unemployment insurance for the week ended June 21 were in New Jersey (+5,923), Connecticut (+2,333), Oregon (+1,171), Massachusetts (+1,091), and Rhode Island (+710), while the largest decreases were in Minnesota (-5,193), Pennsylvania (-3,515), Texas (-2,419), Illinois (-1,849), and Virginia (-1,206).

Eye on the Week Ahead

Next week is very light on economic reports, with only the release of the Treasury budget statement for June.

What I’m Watching This Week – 12 October 2020

Published on by dredheadz

The Markets (as of market close October 9, 2020)

Last Monday saw stocks start the week on a high note, with each of the indexes listed here posting notable gains. The Russell 2000 led the way, adding 2.8%, followed by the Nasdaq (2.3%), the S&P 500 (1.8%), the Dow (1.7%), and the Global Dow (1.7%). Treasury yields and crude oil prices rose while the dollar fell. Energy, health care, and tech stocks led the market gains. Investors were encouraged by word that President Trump was expected to leave the hospital and return to the White House. That news, coupled with the possibility of fiscal stimulus in the near term, also helped propel stocks higher on the day.

Stocks plunged last Tuesday after President Trump called off stimulus talks until after the November election. The announcement came after Fed Chair Powell warned that the economy would likely regress without additional fiscal stimulus. Prior to that announcement, stocks were up as investors anticipated a deal was in the offing. By the end of trading, mega-caps, technology, communication services, and airlines were sectors that were hard hit. Each of the benchmark indexes listed here fell. The Nasdaq lost 1.6%, the S&P 500 fell 1.4%, the Dow dropped 1.3%, the Russell 2000 declined 0.3%, and the Global Dow sank 0.2%. Treasury prices surged pushing yields lower. Crude oil prices and the dollar advanced.

Equities rebounded last Wednesday as the president appeared to soften his stance on halting stimulus negotiations until after the election. Each of the major indexes listed here climbed higher, led by the Russell 2000 (2.1%), followed by the Dow (1.9%), the Nasdaq (1.9%), the S&P 500 (1.7%), and the Global Dow (0.9%). Treasury yields jumped ahead by 5.8%. Crude oil prices fell after a report showed that stockpiles increased. The dollar fell against a basket of currencies. Sectors that performed well include communication services, consumer discretionary, industrials, materials, and information technology.

Stocks posted a second consecutive day of gains last Thursday. Hopes for fiscal stimulus outweighed a larger-than-expected number of unemployment claims. Treasury bond yields and the dollar fell while crude oil prices rebounded from the prior day’s retreat. Energy, utilities, financials, and real estate led the market surge. The Russell 2000 (1.1%) posted the largest gain for the second day in a row, followed by the Global Dow (0.9%), the S&P 500 (0.8%), the Nasdaq (0.5%), and the Dow (0.4%).

Equities got a jolt last Friday following President Trump’s call for a bigger fiscal relief package. While the president said he favored a relief package larger than what has been proposed by either Democrats or Republicans, Senate Majority Leader McConnell warned that no deal was likely before the November election. The number of COVID-19 cases rose in several areas, with Europe emerging as a new hot spot. Nevertheless, each of the indexes listed here advanced by the close of Friday’s trading, led by the Nasdaq (1.4%), followed by the S&P 500 (0.9%), the Dow (0.6%), the Russell 2000 (0.6%), and the Global Dow (0.5%). Treasury yields rose while crude oil and the dollar fell.

For the week, the Nasdaq and the S&P 500 each posted their best weekly gains since July, climbing 4.6% and 3.8%, respectively. The Dow advanced 3.3% and the Global Dow gained 3.9%. But the week’s big winner was the Russell 2000, which shot up 6.4%. Sectors that helped drive the market last week include energy, health care, industrials, and information technology. For the year, the Dow is back in the black after this latest surge, joining the Nasdaq and the S&P 500 as the benchmark indexes with values ahead of their respective 2019 closing values. Crude oil prices rebounded last week, closing at $40.54 per barrel by late Friday afternoon, up from the prior week’s price of $37.00. The price of gold (COMEX) climbed for the second consecutive week, closing at $1,934.20, up from the prior week’s price of $1,905.40. The national average retail price for regular gasoline was $2.172 per gallon on October 5, $0.003 higher than the prior week’s price but $0.473 less than a year ago.

Stock Market Indexes

Market/Index2019 ClosePrior WeekAs of 10/9Weekly ChangeYTD Change
DJIA28,538.4427,682.8128,586.903.27%0.17%
Nasdaq8,972.6011,075.0211,579.944.56%29.06%
S&P 5003,230.783,348.423,477.143.84%7.63%
Russell 20001,668.471,539.301,637.556.38%-1.85%
Global Dow3,251.242,957.083,073.413.93%-5.47%
Fed. Funds target rate1.50%-1.75%0.00%-0.25%0.00%-0.25%0 bps-150 bps
10-year Treasuries1.91%0.69%0.77%8 bps-114 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

  • According to the latest Services ISM® Report On Business®, the services purchasing managers’ index registered 57.8% last month, 0.9 percentage point higher than the August reading. Not surprisingly, with expanded demand, deliveries slowed in September. Prices also fell in the services sector, while new orders, employment, and inventories each grew in September over August.
  • According to the latest report from the Bureau of Economic Analysis, the goods and services trade deficit was $67.1 billion in August, up $3.7 billion from July. August exports were $171.9 billion, $3.6 billion more than July exports. August imports were $239.0 billion, $7.4 billion more than July imports. The August increase in the goods and services deficit reflected an increase in the goods deficit of $3.0 billion to $83.9 billion and a decrease in the services surplus of $0.7 billion to $16.8 billion. Year to date, the goods and services deficit increased $22.6 billion, or 5.7%, from the same period in 2019. Exports decreased $296.1 billion, or 17.6%. Imports decreased $273.5 billion, or 13.1%. The trade balance with notable trade partners, the deficit with Germany increased $1.6 billion to $4.6 billion in August; the deficit with Japan increased $1.0 billion to $4.3 billion; and the deficit with China decreased $1.9 billion to $26.4 billion.
  • There were 6.5 million job openings in August, according to the latest Job Openings and Labor Turnover report from the Bureau of Labor Statistics. The August total of job openings is slightly below the July figure of 6.7 million. There were 5.9 million hires in August, roughly the same number as from the prior month. August saw total separations decrease to 4.6 million from July’s 5.0 million total. The number of job openings in August decreased over the year to 6.6 million (-685,000), reflecting the continued impact of the COVID-19 pandemic on the labor market.
  • For the week ended October 3, there were 840,000 new claims for unemployment insurance, a decrease of 9,000 from the previous week’s level, which was revised up by 12,000. According to the Department of Labor, the advance rate for insured unemployment claims was 7.5% for the week ended September 26, a decrease of 0.7 percentage point from the prior week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 26 was 10,976,000, a decrease of 1,003,000 from the prior week’s level, which was revised up by 212,000.

Eye on the Week Ahead The latest inflation indicators are available this week with the September release of the Consumer Price Index, the Producer Price Index, and the retail sales report. The CPI is up 1.3% year to date, while prices at the producer level are down 0.2%.

What I’m Watching This Week – 5 October 2020

Published on by dredheadz

The Markets (as of market close October 2, 2020)

Stocks began last week on a high note, with bank and energy stocks leading the way. European shares vaulted to heights not seen in more than three months. News from a large pharmaceutical company that its COVID-19 vaccine was yielding very favorable results helped drive cyclical stocks higher, while industrials, airlines, and energy shares also rallied. By the end of trading last Monday, the Russell 2000 climbed 2.4%, the Global Dow jumped 2.0%, the Nasdaq gained 1.9%, the S&P 500 advanced 1.6%, and the Dow gained 1.5%. Treasury yields and crude oil prices while the dollar dipped.

Equities reversed course last Tuesday, giving back most of the gains garnered the day before. Each of the benchmarks listed here lost value, led by the Global Dow (-0.6%), followed by the Dow and the S&P 500, each of which lost 0.5%. The Russell 2000 dropped 0.4% and the Nasdaq fell 0.3%. Investors may have been waiting for the first presidential debate as trading was light. Energy, airlines, and bank stocks led the decline, while communications and technology stocks held their own. Crude oil, Treasury yields, and the dollar fell.

Following last Tuesday’s presidential debate and renewed hopes for a fiscal stimulus package, stocks surged by the close of trading last Wednesday. The Dow jumped 1.2%, the S&P 500 gained 0.8%, the Nasdaq climbed 0.7%, the Global Dow advanced 0.3%, and the Russell 2000 added 0.2%. Crude oil prices and Treasury yields rose, while the dollar sank.

Last Thursday saw a dip in the number of jobless claims and ongoing negotiations between Congress and the White House toward more virus stimulus. Investors, buoyed by those favorable developments, turned to stocks. Tech stocks pushed the Nasdaq ahead 1.4%, while the S&P 500 (0.5%) and the Dow (0.1%) posted modest gains. The big winner last Thursday, however, was the Russell 2000, which surged by 1.6%. Crude oil prices, Treasury yields, and the dollar each fell by the end of trading.

Stocks slumped last Friday as news that President Trump tested positive for COVID-19 seemed to outweigh passage of a $2.2 trillion stimulus package in the House. Weakness in mega-caps and tech shares dragged the major indexes lower by the end of trading last Friday. The Nasdaq fell 2.2%, followed by the S&P 500 (-1.0%), the Dow (-0.5%), and the Global Dow (-0.1%). The Russell 2000 rebounded from a poor start to post a positive gain of 0.5%. The dollar was little changed, crude oil fell for the second consecutive day, and Treasury yields rose as bond prices fell.

Despite the drop last Friday, stocks still managed to gain over the prior week. The Russell 2000 climbed 4.4%, followed by the Dow, which gained 1.9%. The S&P 500 climbed 1.5%, followed by the Nasdaq (1.5%) and the Global Dow (1.4%). Year to date, the Nasdaq is 23.4% over last year’s pace, followed by the S&P 500 (3.6%), the only two benchmark indexes ahead of their 2019 year-end closing marks. Crude oil prices plunged last week, closing at $37.00 per barrel by late Friday afternoon, down from the prior week’s price of $40.12. The price of gold (COMEX) surged last week, closing at $1,905.40, up from the prior week’s price of $1,866.10. The national average retail price for regular gasoline was $2.169 per gallon on September 28, $0.001 higher than the prior week’s price but $0.473 less than a year ago.

Stock Market Indexes

Market/Index2019 ClosePrior WeekAs of 10/2Weekly ChangeYTD Change
DJIA28,538.4427,173.9627,682.811.87%-3.00%
Nasdaq8,972.6010,913.5611,075.021.48%23.43%
S&P 5003,230.783,298.463,348.421.51%3.64%
Russell 20001,668.471,474.911,539.304.37%-7.74%
Global Dow3,251.242,916.012,957.081.41%-9.05%
Fed. Funds target rate1.50%-1.75%0.00%-0.25%0.00%-0.25%0 bps-150 bps
10-year Treasuries1.91%0.65%0.69%4 bps-122 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

  • Employment rose by 661,000 in September after adding 1.5 million new jobs the previous month. September’s job gains was below their February level by 10.7 million, or 7.0%. Notable job gains occurred in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services. Employment declined in government, mainly in state and local government education. Last month saw the unemployment rate decline by 0.5 percentage point to 7.9%, and the number of unemployed persons fell by 1.0 million to 12.6 million. Both measures have declined for five consecutive months but are higher than in February, by 4.4 percentage points and 6.8 million, respectively. In September, 22.7% of employed persons teleworked because of the COVID-19 pandemic, down from 24.3% in August. Also last month, 19.4 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. In September, average hourly earnings, at $29.47, increased by $0.02 over the prior month. Over the past 12 months, average hourly earnings have increased by 4.65%. The average work week rose by 0.1 hour to 34.7 hours in September.
  • The third and final estimate for the second-quarter gross domestic product showed the economy regressed at an annual rate of 31.4%. The decline in second-quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued to work remotely and consumers and businesses canceled, restricted, or redirected their spending. The decrease in GDP reflected decreases in personal consumption expenditures (consumer spending), exports, nonresidential (business) fixed investment, private inventory investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased. Consumer spending, as measured by personal consumption expenditures, contracted by an annual rate of 33.2%. The price index for gross domestic purchases decreased 1.4% in the second quarter, in contrast to a 1.4% increase in the first quarter. The personal consumption expenditures (PCE) price index (prices for consumer goods and services) decreased 1.6%, after increasing 1.3% in the first quarter. Excluding food and energy prices, the PCE price index decreased 0.8%, following a 1.6% gain in the first quarter.
  • Personal income decreased in August, falling 2.7% after advancing 0.5% in July. Disposable, or after-tax, personal income also dropped, decreasing 3.2% in August after climbing 0.3% the previous month. Consumer spending, as measured by personal consumption expenditures, ticked up 1.0% following July’s 1.5% gain. Prices for consumer goods and services, as measured by the personal consumption expenditures price index, rose 0.3% in August after advancing 0.4% in July. Over the past 12 months, consumer prices have risen 1.4%.
  • The international trade in goods deficit was $82.9 billion in August, up 3.5% from July’s deficit. August exports were $118.3 billion, 2.8% greater than July exports. Imports in August were $201.3 billion, 3.1% above July imports. Exports of industrial supplies increased 10.6% in August over July, while automotive vehicle exports fell 0.7% after vaulting 46.3% in July. Driving imports were consumer goods (7.0%) and automotive vehicles (6.2%).
  • According to the latest Manufacturing ISM® Report On Business®, manufacturing grew in September, but at a slower pace than in August. The September purchasing managers index (PMI®) registered 55.4%, down 0.6 percentage point from the August PMI®. Any reading over 50.0% indicates growth. The New Orders Index fell 7.4 percentage points from the August reading of 67.6%. The Production Index dropped 2.3 percentage points compared to the August reading of 63.3%. The Employment Index increased 3.2 percentage points from the August reading of 46.4%. The Inventories Index came in 2.7 percentage points higher than the August reading of 44.4%. The Prices Index climbed 3.3 percentage points compared to the August reading of 59.5%. The New Export Orders Index increased of 1 percentage point compared to the August reading of 53.3%. And the Imports Index was1.6 percentage point lower than the August reading of 55.6%.
  • For the week ended September 26, there were 837,000 new claims for unemployment insurance, a decrease of 36,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims was 8.1% for the week ended September 19, a decrease of 0.6 percentage point from the prior week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 19 was 11,767,000, a decrease of 980,000 from the prior week’s level, which was revised up by 167,000.

Eye on the Week Ahead This week is a slow one for market-moving economic information. The Institute for Supply Management® report on the services sector for September is out this week. Services grew in August for the third consecutive month, and September is expected to continue that trend. Also out this week is the latest report on the international trade deficit for August. The July trade deficit was $63.6 billion, an increase of $10.1 billion over the June deficit.

QUARTERLY MARKET REVIEW: JULY-SEPTEMBER 2020

Published on by dredheadz

The Markets (third quarter through September 30, 2020)

July kicked off the third quarter with a bang as stocks surged throughout much of the month. Investors were encouraged by solid employment growth, a rise in personal income and consumer spending, a surge in the housing sector, and an increase in industrial production. All news was not positive, however. The second-quarter gross domestic product fell more than 31% and many states saw an increase in the number of reported COVID-19 cases. Nevertheless, investors stayed with equities, pushing values higher for the fourth consecutive month. Tech stocks drove the Nasdaq to a 6.8% gain, followed by the S&P 500 (5.5%), the Global Dow (3.5%), the small caps of the Russell 2000 (2.7%), and the Dow (2.4%). Treasury bond prices climbed, sending yields lower in July. Crude oil prices settled at $40.40 per barrel, nearly $1.00 ahead of their June closing values. Gold prices closed July at $1,990.00, about 11% higher than June’s closing price.

The positive run for stocks continued in August, as each of the benchmark indexes listed here advanced notably. The Nasdaq climbed nearly 9.6%, the Dow rose 7.6%, the S&P 500 advanced 7.0%, the Global Dow vaulted 6.0%, and the Russell 2000 gained 5.5%. Crude oil and gas prices rose marginally, while the price of gold fell. Throughout the month, states struggled to settle on appropriate protocols for reopening schools. Testing for the virus increased, and the number of reported COVID-19 cases and deaths rose.

September saw stocks fall on waning hopes of a second round of stimulus. Also, discord between the United States and China ramped up following President Trump’s threatened recourse against American companies that create jobs overseas or that do business with China. Technology shares took a sizable hit, particularly early in the month. September saw several days of favorable returns, likely due to bargain hunters. Unfortunately, there wasn’t enough buyers to prevent the benchmark indexes from falling lower by the end of each week of the month. September saw each of the indexes fall, led by the Nasdaq (-5.2%), followed by the Global Dow (-4.3%), the S&P 500 (-3.92%), the Russell 2000 (-3.45%), and the Dow (-2.28%).

Overall, the third quarter of 2020 produced the second consecutive quarter of notable market gains. Of the benchmark indexes listed here, the Nasdaq again proved the strongest, climbing more than 11.0% for the quarter, followed by the large caps of the S&P 500 and the Dow, which gained 8.5% and 7.6%, respectively. The Global Dow advanced 5.0% for the quarter, and the small caps of the Russell 2000 ended the quarter up 4.6%.

Year to date, the Nasdaq remains well ahead of its 2019 year-end closing value, while the S&P 500 is more than 4.0% over last year’s closing mark. The remaining benchmarks continue to gain ground, with the closest to its year-end value being the Dow, followed by the Global Dow and the Russell 2000. By the close of trading on September 30, the price of crude oil (CL=F) closed at $39.64 per barrel, below the August 31 price of $42.81 per barrel and slightly higher than the June 30 price of $39.35. The national average retail regular gasoline price was $2.169 per gallon on September 28, down from the August 31 price of $2.222 and lower than the June 28 selling price of $2.174. The price of gold finished September at $1,891.80 per ounce, lower than the August 31 price of $1,940.60 per ounce but higher than its June 30 closing value of $1,798.80 per ounce.

Stock Market Indexes

Market/Index2019 CloseAs of September 30Monthly ChangeQuarterly ChangeYTD Change
DJIA28,538.4427,781.70-2.28%7.63%-2.65%
Nasdaq8,972.6011,167.51-5.16%11.02%24.46%
S&P 5003,230.783,363.00-3.92%8.47%4.09%
Russell 20001,668.471,507.69-3.47%4.60%-9.64%
Global Dow3,251.242,960.93-4.31%4.96%-8.93%
Fed. Funds1.50%-1.75%0.00%-0.25%0 bps0 bps-150 bps
10-year Treasuries1.91%0.67%-2 bps1 bps-124 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.

Latest Economic Reports

  • Employment: Employment increased by 1.4 million in August after adding 1.8 million jobs in July. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the COVID-19 pandemic and efforts to contain it. Nevertheless, the number of job gains in August is 7.6% below the pre-pandemic level of February, which saw 11.5 million new jobs added. In August, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, and education and health services. The unemployment rate dropped 1.8 percentage points to 8.4% for August as the number of unemployed persons dropped by 2.8 million to 13.6 million. These measures remain well above their pre-pandemic February figures of 4.9% and 7.8 million, respectively. In August, average hourly earnings rose by $0.11 to $29.47. Average hourly earnings increased by 4.7% over the last 12 months ended in August. The average workweek increased by 0.1 hour to 34.6 hours in August. The labor participation rate increased 0.3 percentage point to 61.7%. The employment-population ratio rose by 1.4 percentage points to 56.5%.
  • Claims for unemployment insurance continue to drop in September. According to the latest weekly totals, as of September 19 there were nearly 11.8 million workers still receiving unemployment insurance. The insured unemployment rate was 8.1% (9.9% as of August 15). The highest insured unemployment rates in the week ended September 12 compared to their respective rates on August 8 were in Hawaii (21.3% vs 19.8%), California (16.1%, unchanged), Nevada (14.7% vs 17.3%), New York (13.7% vs 15.4%), Puerto Rico (12.8% vs 19.2%), Louisiana (12.6% vs 13.5%), Georgia (12.2% vs 12.6%), and the Virgin Islands (11.9% vs 12.8%). During the week ended September 12, 50 states reported 11.8 million individuals claiming Pandemic Unemployment Assistance benefits and 50 states reported 1.8 million individuals claiming Pandemic Emergency Unemployment Compensation benefits.
  • FOMC/interest rates: The Federal Open Market Committee (FOMC) voted to maintain the federal funds rate range at 0.00%-0.25% following the Committee’s September meeting. The FOMC expects to maintain this target range until labor market conditions have reached maximum employment and inflation has risen to at least 2.0%, or exceeds 2.0% for some time. The Committee noted that, although economic activity and employment have picked up in recent months, they remain well below their levels at the beginning of the year. The FOMC predicted that the path of the economy will depend on the course of COVID-19, which will continue to weigh on economic activity, employment, and inflation in the near term, while posing considerable risks to the economic outlook over the medium term.
  • GDP/budget: According to the third and final estimate for second-quarter gross domestic product, the economy decelerated at an annualized rate of 31.4%. GDP decreased 5.0% in the first quarter. Stay-at-home orders issued in March and April in response to the COVID-19 pandemic greatly impacted the economy. Consumer spending was a big drag, falling 33.2%, reeling from the initial effects of the pandemic. Fixed investment fell 29.2% in the second quarter (-1.4% in the first quarter), and nonresidential fixed investment dropped 27.2% in the second quarter, compared to a 6.7% decline in the prior quarter. Exports were down 64.4%, and imports sank 51.1%. Nondefense government expenditures increased 37.6% due to stimulus spending programs initiated in response to the pandemic.
  • The monthly Treasury budget deficit for August was $200 billion, essentially equal to the August 2019 monthly deficit. Through 11 months of the fiscal year, the government deficit sits at $3.007 trillion, a 182% increase over the same period from the previous fiscal year. Government outlays for the current fiscal year are 46% greater than expenditures for fiscal year 2019.
  • Inflation/consumer spending: According to the Personal Income and Outlays report for August, personal income decreased 2.7% and disposable (after-tax) personal income dropped 3.2% after advancing 0.4% and 0.2%, respectively, in July. Consumer spending increased in August, climbing 1.0% for the month, well short of July’s 6.2% advance. Inflation remained somewhat muted as consumer prices inched ahead by 0.3% in August after increasing 0.4% in July. Consumer prices have increased by a mere 1.4% over the last 12 months.
  • Consumer prices continued to slowly increase in August. Prices for goods and services rose 0.4% in August, marking the third consecutive monthly increase. Over the last 12 months ended in August, consumer prices are up 1.3%. Contributing to August’s increase in consumer prices was a sharp rise in prices for used cars and trucks, which climbed 5.4%. Also increasing were prices for fuel oil (3.9%), gasoline (2.0%), and energy (0.9%). Food prices rose 0.1%.
  • Prices that producers receive for goods and services rose 0.3% in August after climbing 0.6% in July. Producer prices are down 0.2% over the last 12 months ended in August. A 0.5% spike in prices for services pushed producer prices higher. Prices for goods inched up 0.1%.
  • Housing: The housing sector continued to post strong sales numbers in August. Sales of existing homes jumped 2.4% last month after climbing 24.7% in July. Over the 12 months ended in August, existing home sales are up 10.5%. The median existing-home price in August was $310,600 ($304,100 in July). Unsold inventory of existing homes represents a 3.0-month supply at the current sales pace, down slightly from 3.1 months in July. Sales of existing single-family homes increased 1.7% in August following a 23.9% jump in July. Over the last 12 months, sales of existing single-family homes are up 11.0%. The median existing single-family home price was $315,000 in August, up from $307,800 in July.
  • After climbing 13.9% in July, sales of new single-family homes surged again in August, increasing 4.8% for the month. The median sales price of new houses sold in August was $312,800 ($330,600 in July). The August average sales price was $369,000 ($391,300 in July). August’s inventory of new single-family homes for sale represents a supply of 3.3 months at the current sales pace, down from July’s estimate of 4.0 months.
  • Manufacturing: Total industrial production rose 0.4% in August after increasing 3.0% in July. Although industrial production has risen in each of the past four months, it has remained 7.3% below its pre-pandemic February level. Manufacturing output continued to improve in August, rising 1.0% (3.4% advance in July). Most major industries posted increases, but gains have gradually slowed since June. Mining production fell 2.5% in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling. The output of utilities moved down 0.4%. Overall, the level of total industrial production was 7.7% lower in August than it was a year earlier.
  • For the fourth consecutive month, new orders for durable goods increased in August, climbing 0.4% following an 11.7% jump in July. Despite the trend of monthly increases, new orders for manufactured durable goods are 11.3% lower than a year ago. Excluding transportation, new orders increased 0.4% in August. Excluding defense, new orders increased 0.7%. Machinery, also up four consecutive months, led the August increase, advancing 1.5%. Nondefense new orders for capital goods in August increased 7.8%.
  • Imports and exports: The price index for U.S. imports rose 0.9% in August, following a 0.7% jump in July. Higher prices for both fuel (+3.3%) and nonfuel (+0.7%) imports contributed to the August increase. The rise in nonfuel prices was the largest since April 2011. Driving the nonfuel price increase was a 3.6% rise in prices for industrial supplies and materials. Prices for U.S. exports also rose in August, rising 0.5% after increasing 0.9% in July.
  • The international trade in goods deficit was $82.9 billion in August, up $2.8 billion, or 3.5% over July. Exports of goods for August were $118.3 billion, 2.8% more than July exports. Imports of goods for August were $201.3 billion, or 3.1% more than July imports. Exports of industrial supplies increased 10.6% in August. Imports of consumer goods climbed 7.0% in August.
  • The latest information on international trade in goods and services, out September 3, is for July and shows that the goods and services trade deficit was $63.6 billion, an increase of nearly $10.0 billion, or 18.9%, over the June deficit. July exports were $168.1 billion, or 8.1% more than June exports. July imports were $231.7 billion, or 10.9% more than June imports. Year to date, the goods and services deficit increased $6.4 billion, or 1.8%, from the same period in 2019. Exports decreased $257.8 billion, or 17.5%. Imports decreased $251.3 billion, or 13.8%.
  • International markets: Europe saw an increase in COVID-19 cases reported, likely impacting stocks. STOXX Europe 600 index lost value by the end of September, Germany’s DAX Performance index fell, while the UK’s FTSE 100 was flat. France, Spain, and the United Kingdom took steps to stem the latest wave of virus cases. Stocks in China fell as the Shanghai Composite index and CSI 300 lost value. On the economic front, Japan’s purchasing managers index remains in contraction territory as calls increase for new stimulus from the Bank of Japan.
  • Consumer confidence: The Conference Board Consumer Confidence Index® increased in September after declining in August. The index stands at 101.8, up from 86.3 in August. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased from 85.8 to 98.5. The Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, increased from 86.6 in August to 104.0 in September.

Eye on the Month Ahead The economy is expected to continue its slow, upward trend in October. The market took a hit in September but showed signs of recovering toward the end of the month. Certainly, the run for the presidency will garner increasing attention and influence the economy in general and the stock market in particular.

What I’m Watching This Week – 28 September 2020

Published on by dredheadz

The Markets (as of market close September 25, 2020)

The major market indexes continued their slide to begin last week. With last Monday’s losses, the S&P 500 endured its longest losing streak since February, the Dow fell 1.8%, and the Nasdaq dropped for the fifth consecutive trading session. Among market sectors, commodity, industrial, and financial shares plunged. Sobering news that the COVID-19 virus could accelerate in the fall and winter raised the prospect of further shutdowns here and abroad. On the subject of shutdowns, the government faces one following the Republicans’ rejection of a Democrat-proposed funding bill. Treasury yields sank as bond prices rose. Crude oil fell while the dollar soared to an almost six-week high.

Tech stocks and mega-cap growth shares led the market rebound last Tuesday. Each of the benchmark indexes listed here posted solid gains, with the Nasdaq leading the way after advancing 1.7%, followed by the S&P 500 (1.1%), the Russell 2000 (0.8%), the Dow (0.5%), and the Global Dow (0.0%). Crude oil prices and the dollar rose while Treasury yields sank. The market surge could be the result of investors trying to clip some bargains following the selloff. Federal Reserve Chair Jerome Powell said the economy is a long way from where it needs to be and predicted that growth would be a slow ordeal. Congress still hasn’t agreed on a stimulus package. However the House overwhelmingly passed a temporary funding bill, now headed to the Senate, which would avoid a government shutdown. British Prime Minister Boris Johnson imposed new business restrictions and recommended continuing a work-from-home policy to counter a second wave of COVID-19 in the United Kingdom.

Despite promising reports on the development of a COVID-19 vaccine, stocks slid dramatically by the close of trading last Wednesday. Among the sectors, tech stocks, energy shares, communication stocks, and mega-caps took a collective nosedive, pulling the rest of the market down as well. The Dow lost 1.9%, the small caps of the Russell 2000 gave back 3.0%, and the Global Dow sank 1.3%. The Nasdaq and the S&P 500 were closing in on correction territory after dropping 3.0% and 2.4%, respectively. Crude oil prices declined, the dollar climbed, and 10-year Treasury yields rose.

Stocks moved in the opposite direction last Thursday, posting moderate gains by the end of the day’s trading. The Nasdaq gained 0.4%, followed by the S&P 500 (0.3%) and the Dow (0.2%). The Russell 2000 was flat and the Global Dow fell 0.6%. Treasury prices climbed, pulling bond yields lower. Crude oil prices climbed above $40.20 per barrel, and the dollar fell.

The close of last week saw stocks continue to rally. Tech stocks, real estate, and mega-caps advanced. The Nasdaq climbed 2.3%, its biggest one-day jump in two weeks. Crude oil prices and Treasury yields dipped, while the dollar gained against a basket of currencies.

Equity gains at the end of the week weren’t enough to push the benchmark indexes ahead of the prior week’s closing values. Only the Nasdaq posted a weekly gain. The S&P 500, the Dow, the Russell 2000, and the Global Dow each fell. The end-of-the-week push may have been driven by dip buyers, looking for stocks with depressed values. Otherwise, there wasn’t much positive news to spur investors. After continued haggling, it doesn’t appear that Congress and the White House can agree on a stimulus package, leading some to speculate that nothing of substance will happen until after the November election. An uptick in worldwide COVID-19 cases, coupled with a lack of government aid is not an encouraging combination for investors.

Crude oil prices dipped last week, closing at $40.12 per barrel by late Friday afternoon, down from the prior week’s price of $40.84. The price of gold (COMEX) plunged last week, closing at $1,866.10, down from the prior week’s price of $1,958.10. The national average retail price for regular gasoline was $2.168 per gallon on September 21, $0.015 lower than the prior week’s price and $0.486 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 9/25 Weekly Change YTD Change
DJIA 28,538.44 27,657.42 27,173.96 -1.75% -4.78%
Nasdaq 8,972.60 10,793.28 10,913.56 1.11% 21.63%
S&P 500 3,230.78 3,319.47 3,298.46 -0.63% 2.09%
Russell 2000 1,668.47 1,536.78 1,474.91 -4.03% -11.60%
Global Dow 3,251.24 3,041.96 2,916.01 -4.14% -10.31%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.69% 0.65% -4 bps -126 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

  • Existing home sales continued to soar in August, marking the third consecutive month of advancing sales gains. Total existing-home sales rose 2.4% in August from July. Total sales are ahead of last year’s pace by 10.5%. Single-family home sales climbed 1.7% in August. The median existing-home price was $310,600 in August ($304,100 in July), which is 11.4% above the August 2019 median price of $278,800. The median price for existing single-family home sales was $315,000 last month ($307,800 in July). Total housing inventory fell 0.7% in August from July and sits at a 3.0-month supply.
  • Sales of new single-family homes also climbed last month. According to the Census Bureau, new single-family home sales rose 4.8% in August over July and are 43.2% above the August 2019 estimate. The median sales price of new houses sold in August 2020 was $312,800 ($327,800 in July). The average sales price was $369,000 ($371,900 in July). The estimate of new houses for sale at the end of August was 282,000, representing a 3.3-month supply at the current sales rate.
  • Orders for durable goods increased for the fourth consecutive month in August, according to the latest information from the Census Bureau. New orders for durable goods advanced 0.4% last month. Although new orders are rising, they’re still 11.3% lower than a year ago. Excluding transportation, new orders also rose 0.4%. Excluding defense orders, new orders climbed 0.7%. Machinery led the increase in August, surging 1.5%. With the increase in new orders, it isn’t surprising that shipments (-0.3%), unfilled orders (-0.6%), and inventories (-0.1%) decreased. Nondefense new orders for capital goods in August increased 7.8%.
  • For the week ended September 19, there were 870,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level, which was revised up by 6,000. According to the Department of Labor, the advance rate for insured unemployment claims was 8.6% for the week ended September 12, a decrease of 0.1 percentage point from the prior week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 12 was 12,580,000, a decrease of 167,000 from the prior week’s level, which was revised up by 119,000.

Eye on the Week Ahead

The final report on gross domestic product for the second quarter is out this week and should have the economy retracting at a rate of nearly 32%. The other important economic report out this week focuses on personal income, consumer spending, and consumer prices for August. The prior month saw personal income rise 0.4%, consumer spending jump 1.9%, and prices advance 0.3%.

What I’m Watching This Week – 21 September 2020

Published on by dredheadz

The Markets (as of market close September 18, 2020)

Stocks rebounded to begin last week on a positive note, as each of the benchmark indexes listed here posted notable gains by the close of trading last Monday. Tech stocks surged, pushing the Nasdaq up 1.9%. Hopes for a COVID-19 vaccine moved pharmaceutical shares higher. Energy shares fell as crude oil prices dropped. The dollar declined, while Treasury yields moved slightly higher.

Last Tuesday saw stocks post their second consecutive session of gains. Tech stocks and mega-caps continued to rebound. Other than the Dow, which was flat, each of the benchmark indexes listed here posted gains, led by the Nasdaq (1.2%), followed by the S&P 500 (0.5%), the Russell 2000, and the Global Dow, each of which gained 0.8%. Crude oil prices and Treasury yields rose, and the dollar was mixed against a basket of currencies.

Stocks were mixed last Wednesday, with the Dow, the Russell 2000, and the Global Dow posting modest gains, while the S&P 500 and the Nasdaq fell. Mega-caps and tech stocks reversed course from the prior few days and sank. Energy shares rose, boosted by advancing oil prices. Value stocks performed better along with financial shares. Treasury yields, the dollar, and crude oil prices each rose.

Last Thursday, each of the benchmark indexes gave back any gains from earlier in the week. Word that Congress and the president may be nearing an accord on a new round of stimulus wasn’t enough to keep money from flowing out of the market. Investors may have been perplexed by the confusing government rhetoric on when a COVID-19 vaccine would be available. Tech stocks and mega-caps took a big hit, pulling stock indexes lower. The Nasdaq lost 1.3%, the S&P 500 fell 0.8%, both the Russell 2000 and the Global Dow dropped 0.6%, and the Dow declined 0.5%. Treasury yields and the dollar fell, while crude oil prices rose.

Tech stocks and mega-caps continued to slide last Friday. Each of the benchmark indexes listed here lost value by the end of the day, with the S&P 500 and the Nasdaq each falling 1.1%, closely followed by the Dow (-0.9%), the Global Dow (-0.7%), and the Russell 2000 (-0.4%). Treasury yields advanced, crude oil prices fell, and the dollar rose.

Overall, stocks lost value for the week. Mixed signals from the federal government as to whether and when a virus vaccine would be available, coupled with the Federal Reserve’s somber assessment of the state of the economy, prompted investors to pull away from equities. Only the small caps of the Russell 2000 gained value last week. The S&P 500, the Nasdaq, the Dow, and the Global Dow each fell behind. Despite the past few weeks of downturns, the Nasdaq remains solidly ahead of its year-end value. The S&P 500 is marginally ahead, while the other indexes listed here remain below their respective 2019 closing marks.

Crude oil prices rebounded last week, closing at $40.84 per barrel by late Friday afternoon, up from the prior week’s price of $37.76. The price of gold (COMEX) advanced last week, closing at $1,958.10, up from the prior week’s price of $1,950.00. The national average retail price for regular gasoline was $2.183 per gallon on September 14, $0.028 lower than the prior week’s price but $0.369 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 9/18 Weekly Change YTD Change
DJIA 28,538.44 27,665.64 27,657.42 -0.03% -3.09%
Nasdaq 8,972.60 10,853.54 10,793.28 -0.56% 20.29%
S&P 500 3,230.78 3,340.97 3,319.47 -0.64% 2.75%
Russell 2000 1,668.47 1,497.27 1,536.78 2.64% -7.89%
Global Dow 3,251.24 3,042.09 3,041.96 -0.01% -6.44%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.66% 0.69% 3 bps -122 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

  • Following its meeting held last week, the Federal Open Market Committee decided to keep the target range for the federal funds rate at 0.00%-0.25% and expects to maintain this target range until labor market conditions have reached maximum employment and inflation has risen to at least 2.0%, or exceeds 2% for some time. The Committee noted that economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses. Nevertheless, the Committee noted that the path of the economy will depend on the course of COVID-19, which will continue to weigh on economic activity, employment, and inflation in the near term while posing considerable risks to the economic outlook over the medium term.
  • U.S. import prices rose 0.9% in August, following advances of 1.2% in July and 1.4% in June. Higher prices for both fuel (+3.3%) and nonfuel (+0.7%) imports contributed to the August increase. The increase in nonfuel prices was the largest since April 2011. Driving the nonfuel price increase was a 3.6% jump in industrial supplies and materials prices. Prices for U.S. exports also advanced in August, rising 0.5% after increasing 0.9% the previous month.
  • According to the Federal Reserve, industrial production rose 0.4% in August for its fourth consecutive monthly increase. However, even after the recent gains, industrial production in August was 7.3% below its February pre-pandemic level. Manufacturing output continued to improve in August, rising 1.0%, but the gains for most manufacturing industries have gradually slowed since June. Mining production fell 2.5% in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling. The output of utilities moved down 0.4%. The level of total industrial production was 7.7% lower in August than it was a year earlier.
  • Sales at the retail level advanced 0.6% in August from the previous month and 2.6% above their August 2019 pace. Retail trade sales inched ahead 0.1% in August. Nonstore (online) retail sales were flat last month but are 22.4% ahead of August 2019. Retailers that had a favorable August include furniture and home furnishing stores (2.1%); building material and garden equipment and supplies dealers (2.0%); clothing and clothing accessories stores (2.9%); and food services and drinking places (4.7%). Retailers that slumped last month include sporting goods, hobby, musical instrument, and book stores (-5.7%); department stores (-2.3%); grocery stores (-1.6%); and food and beverage stores (-1.2%).
  • Overall, housing starts and building permits fell in August, although the market for new single-family residential construction excelled. The number of building permits issued in August was 0.9% below the July total. However, single-family building permits were 6.0% higher than July. Housing starts also fell in August, dropping 5.1% below the prior month’s figure. Single-family housing starts rose by 4.1% last month. Housing completions fell 7.5% in August from July. Single-family housing completions were 4.4% below the July rate.
  • For the week ended September 12, there were 860,000 new claims for unemployment insurance, a decrease of 33,000 from the previous week’s level, which was revised up by 9,000. According to the Department of Labor, the advance rate for insured unemployment claims was 8.6% for the week ended September 5, a decrease of 0.7 percentage point from the prior week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended September 5 was 12,628,000, a decrease of 916,000 from the prior week’s level, which was revised up by 159,000.

Eye on the Week Ahead

Two important reports in the housing sector are available this week. August data for both new and existing home sales should reveal continued growth, following July’s robust sales report. Orders for durable goods are also out this week for August. July saw new orders jump more than 11.0% as the economy continues to slowly pick up steam.