Tag: unemployment claims

The Markets (as of market close October 2, 2015)

Despite poor employment and manufacturing reports, the equities markets rallied to post gains in each of the major indexes listed here except for the Russell 2000, which ultimately lost less than 1% by last week’s end. The late Friday rally was sparked by gains in energy and materials stocks (following a jump in oil prices), coupled with a lessening of concerns over China’s otherwise gloomy economic picture. Nevertheless, investors piled money into U.S. government bonds, sending the yield on 10-year U.S. Treasuries tumbling to below 2% for the first time since April. However, the jobs and manufacturing reports are likely to forestall any talk by the Fed of an interest rate increase at its next meeting in October.

The price of gold (COMEX) fell a bit, selling at $1,137.60 by late Friday afternoon compared to $1,139.10 a week earlier. Crude oil (WTI) prices gained some, selling at $45.66 per barrel by week’s end. For the sixth week in a row, the national average retail regular gasoline price decreased, dropping to $2.322 per gallon on September 28, 2015, $0.005 under the previous week’s price of $2.327 per gallon and $1.032 below a year ago.

Market/Index	2014 Close	Prior Week	As of 10/2	Weekly Change	YTD Change
DJIA	17823.07	16314.67	16472.37	0.97%	-7.58%
Nasdaq	4736.05	4686.50	4707.78	0.45%	-0.60%
S&P 500	2058.90	1931.34	1951.36	1.04%	-5.22%
Russell 2000	1204.70	1122.79	1114.12	-0.77%	-7.52%
Global Dow	2501.66	2259.74	2279.08	0.86%	-8.90%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.16%	1.99%	-17 bps	-18 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 Headlines

• Last week kicked off with a report on personal income and outlays from the Bureau of Economic Analysis. According to the latest figures, personal income increased $52.5 billion, or 0.3%, and disposable personal income (net income after taxes and adjustments for inflation) increased $47.1 billion, or 0.4%, in August compared to July. The price index for personal consumption expenditures–an indication of inflationary trends–was virtually unchanged in August and only 0.3% ahead of August 2014. However, real disposable income (after adjustments for taxes and inflation) has been at a record high for two consecutive months–likely attributable, at least in part, to cheaper gasoline prices.
• Total nonfarm employment increased by only 142,000 in September, while the unemployment rate remained unchanged at 5.1%, according to the recent Bureau of Labor Statistics report. September’s job increase falls far below the monthly average of 198,000 jobs per month in 2015. While the job market expanded prior to this summer, it has definitely slowed down, as U.S. employers slammed the brakes on further job expansion, indicative of fears of an economic slowdown. Further evidence of employment contraction includes declines in the labor force participation rate and the employment-population ratio, while average hourly earnings sit at $25.09–down a cent from August.
• The Institute for Supply Management (ISM) publishes a monthly manufacturing index, which seeks to measure the general direction of production, new orders, backlogs, inventories, imports, exports, and prices. A reading over 50% is considered “expanding.” However, September’s PMI index of 50.2% is 0.9% below August’s reading, and is the lowest reading since May 2013. The New Orders Index registered 50.1%, a decrease of 1.6% from August’s reading of 51.7%, while at 51.8%, the Production Index also fell below the August reading of 53.6%. Although this may be an anomaly, it nevertheless points to a potential weakening in manufacturing and production. Markit’s Manufacturing Purchasing Managers’ Index also indicated another month of relatively subdued growth in September–registering the second-lowest level since October 2013.
• On the heels of the rather gloomy ISM and Markit reports, the Commerce Department reports that new orders for manufactured goods in August decreased $8.2 billion, or 1.7%, to $473.0 billion. Shipments, down four of the last five months, again decreased $3.2 billion, or 0.7%, to $480.1 billion. Unfilled orders and inventories also decreased in August.
• The latest figures from the National Association of Realtors® show pending home sales were down 1.4% in August, but still 6.1% ahead of August 2014. While this report indicates some slowdown in existing home sales, it is more reflective of the demand for housing outpacing the supply, and rising home prices in general.
• The S&P/Case-Shiller Home Price Index measures monthly changes in the value of home prices in 20 metropolitan regions across the country. The latest National Home Price Index recorded a slightly higher year-over-year gain with a 4.7% annual increase in July. On a monthly basis, home prices in July were 0.7% higher than prices in June. According to David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, “Prices of existing homes and housing overall are seeing strong growth and contributing to recent solid growth for the economy.” The National Home Price Index has risen at a 4% or higher annual rate since September 2012.
• Construction spending is a sector that has been picking up of late. The U.S. Census Bureau reported that construction spending during August 2015 was estimated at a seasonally adjusted annual rate of $1,086.2 billion, 0.7% above the revised July estimate of $1,079.1 billion. The August figure is 13.7% above the August 2014 estimate of $955.0 billion.
• Despite downturns in the stock market this month, consumer confidence remained somewhat positive according to The Conference Board’s Consumer Confidence Index®, which increased to 103 in September, compared to 101.3 in August. According to the report, consumers’ appraisal of current conditions was more positive in September, reflective of a more confident outlook for business conditions and the job market.
• Further evidence of an impending global economic slowdown may lie in the latest report from the International Monetary Fund, which warns of rising corporate debt for companies in emerging markets. Low interest rates available in advanced countries such as the United States and Japan have made it easier for emerging market companies to borrow. “These developments make emerging market economies more vulnerable to a rise in interest rates, dollar appreciation, and an increase in global risk aversion,” according to the report.
• According to the Commerce Department’s Advance Report: U.S. International Trade in Goods, sagging exports continue to hinder economic growth as exports of goods fell a seasonally adjusted 3.2% to $123 billion in August. While imports advanced 2.2% to $190 billion, it was not enough to prevent further expansion of the trade deficit by 13.6% to $67 billion. The continued strength of the dollar, coupled with weakness overseas, has shifted the sale of goods from U.S. manufacturers to cheaper markets abroad.
• Jobless claims rose by 10,000 for the week ended September 26, to close at 277,000. The advance seasonally adjusted insured unemployment rate was unchanged at 1.6% for the week ended September 19, while the advance number for continuing unemployment insurance claims decreased 53,000 to 2,191,000.

Eye on the Week Ahead

The week ahead focuses on manufacturing, imports and exports, and international trade–sectors that have been underperforming to date. The situation in China continues to bear watching as that country’s weakening economy continues to influence global stock markets, particularly the major indexes in the United States.

The Markets (as of market close September 25, 2015)

Like an early fall flu, investor anxiety continued to spread last week as uncertainty around the future of interest rates continued to drag down markets. Even a Friday rally in blue chips spurred by Federal Reserve Chair Janet Yellen’s most recent comments couldn’t cure the malaise. All indexes tracked here posted losses, with the Russell 2000 dropping nearly 3.5%.

Gold rose to $1,145.50, compared to $1,139.10 a week earlier, while crude oil ended the week at $45.34 a barrel. The national average regular gasoline price declined for the fifth week in a row to $2.327 per gallon on September 21, down $0.048 from the previous week and $1.285 lower than a year prior.

Market/Index	2014 Close	Prior Week	As of 9/25	Weekly Change	YTD Change
DJIA	17823.07	16384.58	16314.67	-0.43%	-8.46%
Nasdaq	4736.05	4827.23	4686.50	-2.92%	-1.05%
S&P 500	2058.90	1958.03	1931.34	-1.36%	-6.20%
Russell 2000	1204.70	1163.35	1122.79	-3.49%	-6.80%
Global Dow	2501.66	2326.45	2259.74	-2.87%	-9.67%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.13%	2.17%	4 bps	0 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 Headlines

• In a speech at the University of Massachusetts, Fed Chair Janet Yellen seemed to quell some uncertainty about the U.S. economy, saying she expects the Fed to raise interest rates “sometime later this year.” Of course, she qualified the prediction by saying the organization would continue to rely on economic data.
• In an announcement that came as a surprise to even some of his closest congressional colleagues last Friday, John Boehner (R-OH) announced his resignation as House Speaker and congressman, effective October 30. The announcement follows long-term criticism by members of his own party that the Speaker was not strong enough in supporting GOP principles, and comes amid heated negotiations over a bill that is needed to extend federal funding beyond September 30.
• The third estimate for second-quarter gross domestic product (GDP) was revised upward to 3.9% from the previous estimate of 3.7%, according to the Bureau of Economic Analysis. The growth is primarily due to accelerations in consumer spending, exports, nonresidential fixed investment, and state and local government spending. The upward revision was largely attributed to positive revisions in consumer spending, and nonresidential and residential fixed investment, partially offset by a downward revision in private inventory investment.
• After three months of gains, total existing home sales fell 4.8% in August to 5.31 million. Moreover, July figures were revised downward to 5.58 million, reported the National Association of Realtors® (NAR). Despite the drop, sales are 6.2% higher than one year ago, and have risen year-over-year for 11 consecutive months. The median existing-home price for August was $228,700, 4.7% higher than in August 2014. Lawrence Yun, NAR’s chief economist, attributed the decrease to tight inventories.
• On the other hand, sales of new homes continue to be an economic bright spot, rising 5.7% in August, to 552,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The figure is nearly 22% above the August 2014 estimate. The median sales price of new homes in August was $292,700, while the average was $353,400.
• The September reading from the Markit Flash U.S. Manufacturing Purchasing Managers’ Index remained unchanged from its August 22-month low. At 53.0, the reading is one of the slowest rates of overall manufacturing expansion in nearly two years and is lower than the post-financial-crisis average of 54.3. While output rose at a faster pace in September, the increase was offset by a softening in new business and employment growth.
• After two months of increases, durable goods orders declined by 2% in August. Excluding transportation, which fell by 5.8%, orders were virtually unchanged.
• Jobless claims rose by 3,000 for the week ended September 19, to close at 267,000. The advance seasonally adjusted insured unemployment rate remained unchanged at 1.7%.
• The University of Michigan’s final reading on consumer sentiment for September was 87.2, compared to August’s 91.9. Although at its lowest level in 11 months, the reading is 3% higher than it was a year ago. It is also higher than the mid-September figure reported earlier this month. “The decline in optimism continued to narrow in late September as consumers increasingly concluded that the stock market declines had more to do with the international conditions than the domestic economy,” said Surveys of Consumers chief economist Richard Curtin.

Eye on the Week Ahead

Eyes will be on Washington this week, to see if lawmakers can agree on a measure to continue funding the federal government through early December. Investors will monitor whether Boehner’s resignation announcement will affect the negotiation process. Also on tap are more housing market and manufacturing data, as well as information on personal income and expenditures and the overall job picture.

The Markets (as of market close September 18, 2015)

Despite news that interest rates would not be increased in September, the stock market endured a significant sell-off by week’s end, presumably in response to the Federal Reserve’s report that the economy isn’t strong enough to warrant an interest rate hike. Of the indexes listed here, the Nasdaq and Russell 2000 posted slight gains, while the large-cap Dow and S&P 500 regressed. Only the Nasdaq has posted positive returns year-to-date while the other listed indexes have all lost compared to the close of 2014.

The price of gold (COMEX) jumped a bit higher, selling at about $1,139.10 by late Friday afternoon compared to $1,107.90 a week earlier. Crude oil (WTI) prices remained relatively the same, selling at $44.98 per barrel by week’s end. The national average retail regular gasoline price decreased to $2.375 per gallon on September 14, 2015, $0.062 under the previous week’s price of $2.437 per gallon and $1.033 below a year ago.

Market/Index	2014 Close	Prior Week	As of 9/18	Weekly Change	YTD Change
DJIA	17823.07	16433.09	16384.58	-0.30%	-8.07%
Nasdaq	4736.05	4822.34	4827.23	0.10%	1.93%
S&P 500	2058.90	1961.05	1958.03	-0.15%	-4.90%
Russell 2000	1204.70	1157.79	1163.35	0.48%	-3.43%
Global Dow	2501.66	2328.19	2326.45	-0.07%	-7.00%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.19%	2.13%	-6 bps	-4 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 Headlines

• The Federal Open Market Committee (FOMC) determined at its September meeting that economic conditions have not shown sufficient progress to warrant an increase in short-term interest rates. According to the FOMC press release, while there were improvements in the labor market with solid job gains and declining unemployment, inflation has “continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports.” Also, “recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.” As to when interest rates might be increased, “the Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.”
• Growth continues in retail sales and services. According to the latest Census Bureau report, retail and food services sales increased 0.2% for August from the previous month and 2.2% from August 2014. Continuing its positive trend, total sales for the June 2015 through August 2015 period were up 2.2% from the same period a year ago.
• Industrial production decreased 0.4% in August after increasing 0.9% in July, according to the latest figures released by the Federal Reserve. The increase in July is now estimated to be greater than originally reported last month, largely as a result of upward revisions for mining and utilities. Manufacturing output fell 0.5% in August primarily because of a large drop in motor vehicles and parts that reversed a substantial portion of its jump in July; production elsewhere in manufacturing was unchanged.
• Business inventories moved up 0.1% in July over June–the smallest gain since March, according to the Census Bureau report. Inventories were up 2.6% compared to July 2014. The total business inventories/sales ratio at the end of July was 1.36. The July 2014 ratio was 1.29. Softening inventories may be an indication that businesses are less optimistic about near-term growth in sales.
• Inflationary trends took a slight step back as consumer prices fell 0.1% in August, primarily caused by a sharp decline in gasoline prices, according to the latest report from the Bureau of Labor Statistics. The index for all items less food and energy increased 0.1% in August, the same increase as in July. For the last 12 months ended in August, the all items index rose 0.2% before seasonal adjustment.
• The National Association of Home Builders Housing Market Index of single-family homes for September (preliminary) increased a point to 62 over August’s revised index of 61. This reading continues this year’s sentiment of respondent home builders that housing market conditions are favorable with moderate to low inventories, which likely will boost demand and prices.
• The Census Bureau’s latest report on new residential construction for August was a bit of a mixed bag. Building permits for privately owned housing units rose 3.5% above the revised July rate and 12.5% ahead of August 2014. On the other hand, housing starts (beginning of actual construction) dropped 3.0% below July’s estimate, but still 16.6% ahead of August 2014.
• The Census Bureau’s report on Income, Poverty and Health Insurance Coverage in the United States: 2014 reveals that 2014 produced no statistically significant change from 2013 in either real median household income or the official poverty rate. At the same time, the percentage of people without health insurance coverage declined. Median household income in the United States in 2014 was $53,657, not statistically different in real terms from the 2013 median income. This is the third consecutive year that the annual change was not statistically significant, following two consecutive annual declines.
• For the week ended September 12, new claims for unemployment insurance dropped 11,000 from the previous week, according to the Department of Labor. The insured unemployment rate remained at 1.7% for the week ended September 5, while the advance number for continuing unemployment claims decreased 26,000 from the prior week.

Eye on the Week Ahead

The housing market, which has performed consistently so far this year, offers the latest information on new and existing home sales. The week ends with reports that focus on the economy, including the durable goods orders and the gross domestic product.

The Markets (as of market close September 4, 2015)

While the stock markets gained some momentum during the last week of August, they could not maintain that positive trend for the first week of September. Each of the indices listed here lost week-on-week, with the large-cap S&P 500 dropping almost 68 points, and the Global Dow falling more than 91 points. All of these indices are now in negative territory year-to-date, led by the Dow, which lost 9.65% from the 2014 market close.

The price of gold (COMEX) dropped again, selling at about $1,122.30 by late Friday afternoon compared to $1,133.30 a week earlier. Crude oil (WTI) prices remained relatively the same, selling at $45.77/barrel by week’s end. The national average retail regular gasoline price decreased to $2.510 per gallon on August 31, 2015, $0.127 under last week’s price of $2.637 per gallon and $0.949 below a year ago.

Market/Index	2014 Close	Prior Week	As of 9/4	Weekly Change	YTD Change
DJIA	17823.07	16643.01	16102.38	-3.25%	-9.65%
Nasdaq	4736.05	4828.32	4683.92	-2.99%	-1.10%
S&P 500	2058.90	1988.87	1921.22	-3.40%	-6.69%
Russell 2000	1204.70	1162.91	1136.17	-2.30%	-5.69%
Global Dow	2501.66	2373.32	2281.91	-3.85%	-8.78%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.18%	2.12%	-6 bps	-5 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 Headlines

• The nation’s trade gap closed a bit in July, according to the U.S. Bureau of Economic Analysis report on international trade of goods and services. The goods and services deficit was $41.9 billion in July, down $3.3 billion from June. The narrowing of the deficit is reflective of increased exports in July ($188.5 billion, $0.8 billion more than June exports) and decreased imports ($230.4 billion, $2.5 billion less than June imports). Year-to-date, the goods and services deficit increased $10.6 billion, or 3.6%, from the same period in 2014.
• The Institute for Supply Management (ISM) Manufacturing Index is based on a monthly survey of purchasing managers at about 300 or so manufacturing firms across the United States. An index of 50 or higher signifies growth. The index for August came in at 51.1%, which evidences growth in the manufacturing sector. However, it is 1.6% lower than July, and is expanding at its slowest pace in more than two years.
• Growth continued in the non-manufacturing sector in August, albeit at a slightly slower pace compared to July. The ISM Non-Manufacturing Index came in at 59% for August, 1.3% lower than July’s reading of 60.3%. The Non-Manufacturing Business Activity Index decreased 1%, the New Orders Index dropped 0.4%, and the Employment Index was 3.6% lower than July, while the Prices Index declined 2.9%.
• Construction spending has risen to its highest level in seven years, led by private construction growth in both the residential and nonresidential sectors. According to the Department of Commerce, construction spending during July 2015 was estimated at a seasonally adjusted annual rate of $1,083.4 billion, 0.7% above the revised June estimate of $1,075.9 billion. The July figure is 13.7% above the July 2014 estimate of $952.5 billion.
• Total nonfarm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1%, according to the U.S. Bureau of Labor Statistics’ latest report on the employment situation. Job gains occurred in health care and social assistance and in financial activities. Manufacturing and mining lost jobs. Over the year, the unemployment rate is down 1.0%, and the number of unemployed persons dropped to 1.5 million.
• Also, the U.S. Bureau of Labor Statistics reported that nonfarm business sector labor productivity increased at a 3.3% annual rate during the second quarter of 2015, as output increased 4.7%, and hours worked increased 1.4%. This is the best quarterly performance since the fourth quarter of 2013. From the second quarter of 2014 to the second quarter of 2015, productivity has increased 0.7%, reflecting increases in output and hours worked of 3.3% and 2.6%, respectively.
• The U.S. Census Bureau reported that new orders for manufactured goods in July increased a modest $2.0 billion, or 0.4%, to $482.0 billion. This followed a 2.2% June increase. Falling energy prices and the continued strength of the dollar offset a gain in motor vehicle orders (up 4%), and durable goods orders, which increased 2.2% in July from June.
• For the week ended August 29, new claims for unemployment insurance increased 12,000 to 282,000 from the prior week’s revised level. The seasonally adjusted insured unemployment rate remained at 1.7% for the week ended August 22, with 2.26 million continuing claims.

Eye on the Week Ahead

Job openings and the producer prices–two key indicators considered by the Federal Reserve in determining whether to raise interest rates–are on the docket for next week. The government’s budget deficit is expected to decrease compared to last month when the Treasury’s budget report comes out at the end of the week.

The Markets (as of market close August 31, 2015)

Despite favorable economic news later in the month, the U.S. stock market was unable to recover all of its losses and closed in negative territory compared to July. Key factors in the downturn include fear that China’s economy is weakening, the steep drop in the price of oil, lackluster corporate earnings reports, and the potential for an imminent interest rate hike. Each of the major market indexes listed here dropped between 6% and 7.50% for the month. The Dow, down more than 6.50%, marked its largest percentage decline since May 2010. Year-to-date, only the Nasdaq remained in positive territory–but only barely.

At the close of August, the price of gold (COMEX) was $1,134.90. Crude oil (WTI) prices remained below $50 a barrel, selling at $47.86/barrel by month’s end.

Market/Index	2014 Close	Prior Month	As of 8/31	Month Change	YTD Change
DJIA	17823.07	17689.86	16528.03	-6.57%	-7.27%
Nasdaq	4736.05	5128.28	4776.51	-6.86%	0.85%
S&P 500	2058.90	2103.84	1972.18	-6.26%	-4.21%
Russell 2000	1204.70	1238.68	1159.45	-6.40%	-3.76%
Global Dow	2501.66	2543.35	2354.75	-7.42%	-5.87%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.18%	2.21%	3 bps	4 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.

The Month in Review

• August saw Greece and its creditors formally agree on the terms of an 86 billion euro bailout, which may have allowed the country to remain in the eurozone. Greek Prime Minister Alexis Tsipras, despite campaign promises to write off debt and ease austerity, negotiated the terms of the new deal, which ultimately included stricter austerity measures than had previously existed. With the new debt agreement formalized and his ruling party split, Tsipras resigned, paving the way for an election likely to be held sometime in September. Nevertheless, it would appear that the latest deal has eased economic tensions in Greece, at least for now.
• August also saw China’s economy continue its dramatic slowdown, causing turmoil in stock markets around the globe. When the second-largest economy contracts, other markets feel the heat. The Chinese government has responded by cutting interest rates and lowering bank reserve requirement ratios, allowing for more money to be available to borrow for investment. It is to be determined whether these measures will increase investors’ confidence concerning China’s economic growth, which is presently predicted to be at its slowest pace in over 20 years.
• The second quarter GDP continued to expand, increasing at an annual rate of 3.7% compared to the first quarter’s growth rate of 0.6%. The second quarter showed increased consumer spending, strong residential investment, and an uptick in exports. Also of note is the GDP’s price index, which came in at 2.1%–right at the Fed’s stated policy goal of 2.0% inflation.
• Speaking of the Federal Open Market Committee, it did not meet in August, but provided enough discourse on a potential interest rate increase to draw significant attention. Nevertheless, the August release of the minutes of the committee’s July meeting revealed no clear consensus among committee members as to when rates should be raised.
• August’s U.S. Treasury report for July revealed a budget deficit of $149.2 billion, attributable, in part, to a shifting of payments up to July that had previously been scheduled for August. The total budget deficit through July 2015 was $465.5 billion, or about $5.0 billion over the same ten-month period last year.
• S. retail and food services sales advance estimates for July were $446.5 billion, an increase of 0.6% from June, and up 2.4% over July 2014, according to the U.S. Census Bureau. Total sales for the three-month period of May 2015 through July 2015 were up 2.3% compared to the same period in 2014.
• Inflation increased in July, but only by the slightest of margins. The overall Consumer Price Index rose 0.1% in July from a month earlier, according to the Bureau of Labor Statistics. Over the last 12 months, the unadjusted price index for all items increased by 0.2%. However, excluding the volatile food and energy components, the index has gained 1.8% for the 12 months ended July 2015.
• S. producers in July received slightly higher prices for their goods and services. The Bureau of Labor Statistics Producer Price Index for goods and services rose a seasonally adjusted 0.2% in July, following an increase of 0.4% in June and 0.5% in May. Even with these moderate price increases, the PPI has generally declined over the past year with overall producer prices down 0.8% compared to the 12-month period ended July 2014.
• Despite lagging a month, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) provides useful information on the labor market–particularly job openings, hires, and separations. The number of job openings in June fell slightly to 5.25 million from 5.56 million in May. The decrease in the number of job openings may be due, in part, to an increase in the number of new hires, which rose 0.1% to 3.7%. Over the 12 month period ended June 2015, hires totaled 60.6 million while separations totaled 57.9 million, yielding a net employment gain of 2.7 million.
• Evidencing continuing weakness in goods exports, the U.S. trade deficit for June came in at $43.8 billion–up $2.9 billion from May’s revised total. Compared to May, exports for June dropped by $136 million, while imports increased by $2.8 billion.
• Imports and exports prices continue to feel deflationary pressures. Import prices for goods bought in the United States, but produced abroad fell 0.9% in July, after recording no change in June. Export prices for goods sold abroad but produced domestically were down 0.2% following a 0.3% drop in June, according to the Bureau of Labor Statistics.
• The housing market has remained a consistently performing sector. Compared to June, sales of new homes rose 5.4%, while existing home sales were up 2.0%. In both cases, demand has thinned supply to around five months.
• In other developments, for the week ended August 22, there were 271,000 initial claims for unemployment insurance, and 2,269,000 continuing claims for the week ended August 15, which yielded an insured unemployment rate of 1.7%. Compared to last month, the national average retail regular gasoline price dropped from $2.745 per gallon on July 27, 2015, to $2.637 per gallon on August 24–a fairly significant decrease of $0.108. Overall, consumer confidence rebounded in August, increasing to 101.5 compared to 90.9 in July, according to The Conference Board’s Consumer Confidence Index.

Eye on the Month Ahead

China’s tumbling stock market clearly impacted U.S. stocks in August. Market recovery in September will be tied, at least in part, to whether China can boost its sagging economy. The results of the FOMC meeting in September may finally provide a firm indication of when interest rates will be increased and by how much. It appears that as the third quarter comes to a close, market volatility may continue.

The Markets (as of market close August 28, 2015)

The latest stock sell-off in China sent U.S. stocks reeling at the beginning of the week. However, good economic news spurred by a favorable GDP report shifted momentum as stocks rallied to close ahead of last week. For the week, the Dow and Nasdaq were the biggest gainers. However, of the major markets listed here, only the Nasdaq remains in positive territory year-to-date.

The price of gold (COMEX) lost a bit, selling at about $1,133.30 by late Friday afternoon compared to $1,159.90 a week earlier. Crude oil (WTI) prices ended the week up, selling at $45.33/barrel by week’s end. The national average retail regular gasoline price decreased from $2.716 per gallon on August 17, 2015, to 2.637 on August 24–a drop of $0.079–$0.817 below a year ago.

Market/Index	2014 Close	Prior Week	As of 8/28	Weekly Change	YTD Change
DJIA	17823.07	16459.75	16643.01	1.11%	-6.62%
Nasdaq	4736.05	4706.04	4828.32	2.60%	1.95%
S&P 500	2058.90	1970.89	1988.87	0.91%	-3.40%
Russell 2000	1204.70	1156.79	1162.91	0.53%	-3.47%
Global Dow	2501.66	2368.40	2373.32	0.21%	-5.13%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.04%	2.18%	14 bps	1 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 Headlines

• Real gross domestic product increased at an annual rate of 3.7% in the second quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6%. The latest GDP estimate is based on more complete source data than was available for the “advance” estimate issued last month. The second quarter’s increase was driven, in part, by an upturn in business investment (spending on construction, equipment, and R&D), exports, and personal consumption.
• Personal income enjoyed a healthy increase last month. However, consumers appeared to focus on saving rather than spending. Compared to June, personal income increased $67.1 billion, or 0.4%, and disposable personal income (DPI) increased $61.5 billion, or 0.5%, in July, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $37.4 billion, or 0.3%. It’s important to note that this data came before fears of a slowing Chinese economy, and the downturn in oil prices.
• For the week ended August 22, new claims for unemployment insurance dropped 6,000 to 271,000. For the week ended August 15, the seasonally adjusted insured unemployment rate was 1.7%, representing about 2.27 million continuing claims for unemployment insurance.
• Consumer confidence rebounded in August from July, according to The Conference Board’s Consumer Confidence Index. For August, the index came in at 101.5, compared to July’s 91.0. Lynn Franco, Director of Economic Indicators at The Conference Board said, “Consumers’ assessment of current conditions was considerably more upbeat, primarily due to a more favorable appraisal of the labor market.”
• The housing market continues to flourish. Sales of new single-family houses in July were at a seasonally adjusted annual rate of 507,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.4% above the revised June rate of 481,000 and 25.8% above the July 2014 estimate of 403,000. The median sales price of new houses sold in July 2015 was $285,900; the average sales price was $361,600. The seasonally adjusted estimate of the number of new houses for sale at the end of July was 218,000. Demand has picked up as the supply of available new homes for sale has dropped to 5.2 months, down from 5.3 months in June, and 6.1 months at the end of July 2014.
• The National Association of Realtors® reported that pending home sales based on contract signings for existing homes (not new construction) increased 0.5% in July compared to June. The index, at 110.9, is 7.4% above July 2014.

Eye on the Week Ahead

China has been proactive in trying to quell the economic turmoil that has impacted its own stock market and the markets of other countries, including the United States. Will the stock markets recover, or are we in for what may be a legitimate market correction? The first week of September focuses on industrial productivity, international trade, and the employment situation.

The Markets

Stock markets closed the holiday week on a sour note for the second week in a row. While several domestic indicators have been favorable, such as housing and unemployment, the markets across the board continued to lose value on the heels of Greece closing its banks for a week and missing a debt payment, coupled with China cutting lending rates in an attempt to support its sagging economy, while Puerto Rico has indicated it can’t pay its bills. The S&P 500, the Dow, Nasdaq, the Russell 2000, and the Global Dow all lost more than 1% compared to their respective closes last week. Year-to-date, the Dow has reached negative territory, down 0.52%.

The national average retail regular gasoline price decreased to $2.801 per gallon on June 29, 2015, $0.011 under last week’s price and $0.903 below a year ago. Gold closed Friday’s trading period selling at $1,167.80, down $5.40 from a week ago ($1,173.20).

Market/Index	2014 Close	Prior Week	As of 7/3	Weekly Change	YTD Change
DJIA	17823.07	17946.68	17730.11	-1.21%	-0.52%
Nasdaq	4736.05	5080.51	5009.21	-1.40%	5.77%
S&P 500	2058.90	2101.49	2076.78	-1.18%	0.87%
Russell 2000	1204.70	1279.79	1248.26	-2.46%	3.62%
Global Dow	2501.66	2577.80	2523.08	-2.12%	0.86%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.47%	2.38%	-9 bps	21 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 Headlines

• Furthering a positive trend in the housing market, the number of pending home sales continued to rise in May reaching their highest level in over nine years, according to the National Association of Realtors®. The pending home sales index, which is based on the volume of signed residential contracts for existing homes, jumped 0.9% in May from April, and is at its highest level (112.6) since April 2006.
• The U.S. Census Bureau reports that construction spending in May rose 0.8% compared to April. Building of manufacturing facilities, up 6.2%, outpaced residential construction, which increased by a moderate 0.3%.
• Following last week’s favorable consumer sentiment report from the University of Michigan, the Conference Board’s consumer confidence index reached 101.4 in June, up from 94.6 in May. According to the report, consumers’ confidence in the economy is growing as an increasing percentage of those polled thought business conditions were good (26.4%) and starting jobs were plentiful (21.4%), while the percentage of consumers expecting business conditions to improve over the next six months rose from 16.0% to 18.5%.
• Hit with weak exports, the manufacturing sector continues to trend downward. New orders for manufactured goods in May, down nine of the last ten months, decreased $4.5 billion or 1.0% to $470.5 billion, the Census Bureau reported last week.
• June was not much better for the business sector. Data indicated a tempered improvement in overall business conditions across the U. S. manufacturing sector, with softer output growth offsetting a slight pickup in the pace of new business gains and job creation according to reports from the Institute for Supply Management and Markit’s U.S. Manufacturing Purchasing Managers’ Index™. Both indexes registered over 50.0, which indicates expansion. PMI came in at 53.6 in June, slightly down from 54.0 in May, while June’s ISM index registered 53.5 compared to 52.8 in May. However, each survey noted that export orders are still lagging.
• According to the Energy Information Administration report, gasoline production increased for the week ending June 26, averaging over 10.0 million barrels per day. Compared to the previous week, crude oil inventories were up 2.4 million barrels, partly attributable to increasing crude oil imports, which were up by 748,000 barrels per day. At 465.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.
• According to the U.S. Bureau of Labor Statistics report for June, total nonfarm payroll employment increased by 223,000, the unemployment rate declined by 0.2% to 5.3%, and the number of unemployed persons declined by 375,000 to 8.3 million. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing. On the other hand, seasonally adjusted new claims for unemployment insurance increased 10,000 to 281,000 for the week ending June 27, although the number of initial claims is significantly lower compared to this time last year (313,000).

Eye on the Week Ahead

The recent gains achieved in the stock market were virtually wiped out this past week, primarily due to the financial upheaval involving Greece. There is plenty of uncertainty relating to what will happen after Greece’s June 5th referendum. How will the markets, domestically and abroad, react to the vote? Of particular interest this week will be the FOMC meeting and whether the committee is able to provide any indication as to when they will raise interest rates.

The Markets

The markets responded favorably following the Federal Reserve’s announcement that interest rates would not be raised next month. Both the large-cap Dow and S&P 500 closed ahead of last week. But the biggest weekly gainers were the Nasdaq, which gained 1.3%, and the Russell 2000, which closed the week 1.55% better than last Friday’s close. The national average for gas prices was $2.835–up $0.055 from last week. Gold finished the week up $21 from last week, selling at $1,200.20.

Market/Index	2014 Close	Prior Week	As of 6/19	Weekly Change	YTD Change
DJIA	17823.07	17898.84	18015.95	0.65%	1.08%
Nasdaq	4736.05	5051.10	5117.00	1.30%	8.04%
S&P 500	2058.90	2094.11	2109.99	0.76%	2.48%
Russell 2000	1204.70	1265.02	1284.66	1.55%	6.64%
Global Dow	2501.66	2566.43	2565.76	-0.03%	2.56%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.39%	2.26%	-13 bps	9 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 Headlines

• Economic activity has been “expanding moderately” according to the statement from the latest Federal Open Market Committee meeting. But short-term interest rates will remain as is, at least through the next monthly meeting. The FOMC noted that the “pace of job gains picked up while the unemployment rate remained steady,” there has been growth in household spending, and the “housing sector has shown some improvement; however, business fixed investment and net exports stayed soft.” Inflation continued to run below the committee’s longer-run objective (2%). Ultimately, the committee determined that the current federal funds rate is appropriate pending progress “toward maximum employment and price stability.” Before federal fund rates will be increased, the committee “would like to see more decisive evidence that moderate pace of economic activity can be sustained,” according to Federal Reserve Chairwoman Janet Yellen.
• Initial claims for unemployment insurance fell to 267,000 for the week ending June 13, which is a decrease of 12,000 from the previous week. The advanced seasonally adjusted insured unemployment rate was 1.7% for the week ending June 6, while the total number of insured unemployment claimants was 2.22 million, a decrease of 50,000 from the previous week. Evidencing signs of consistent job creation, new claims have remained under 300,000 over the past 15 weeks–the longest such stretch since 2000, according to the Wall Street Journal. Nevertheless, “at 5.5%, we have an unemployment rate that still exceeds the (Federal Reserve) committee’s best attempts to estimate what is a normal unemployment rate for this economy,” according to Chairwoman Yellen.
• The Federal Reserve reported on Monday that industrial production decreased 0.2% in May after falling 0.5% in April. Manufacturing output decreased 0.2% in May and was little changed, on net, from its level in January. Meager industrial production is likely due to weak exports and a relatively strong dollar, which could further strengthen if interest rates are raised later this year.
• Housing starts dropped off in May, but the number of residential building permits soared according to the latest report from the Census Bureau. Privately owned housing starts (e.g., the actual start of construction of a new building) in May were 11.1% below the revised April estimate, but are 5.1% above the May 2014 rate. On the other hand, building permits for housing units were 11.8% above the revised April rate, and 25.4% higher than May 2014. This increase in anticipated new construction is cause for builder optimism according to the National Association of Home Builders. Their housing market index rose 5 points to a reading of 59 for June.
• The Consumer Price Index rose 0.4% in May over April, which is its largest monthly increase since February 2013. According to the Bureau of Labor Statistics, the largest cost increase belonged to energy, particularly gasoline, which increased 10.4%. The index for all items less food and energy increased 0.1% in May following a 0.3% increase in April.

Eye on the Week Ahead

How will the markets respond to results of the FOMC meeting and Chairwoman Yellen’s speech? Will Greece and its creditors reach a bailout resolution? Throughout the second quarter of 2015, the housing market has been consistently trending upward. Will this week’s reports on new and existing home sales show continued growth?

The Markets

Reports from this past week revealed that the number of job openings is increasing, and the federal deficit and crude oil inventories are shrinking, while consumers are spending more of their hard-earned money. Unfortunately, news out of Europe is that negotiations between Greece and its creditors are regressing with default seemingly inevitable. The Dow, which had crept above 18000 during the week, closed at 17898.84, while the S&P 500 moved very little from last week’s close. The Nasdaq lost 0.34%, but remains ahead of the major indexes year-to-date. The Global Dow closed the week ahead of last week, while the euro remained relatively stable against the dollar, finishing the week at $1.1268. Crude oil closed ahead of last week at $59.94 as did gold, which reached $1180.50 as of the end of trading on Friday.

Market/Index	2014 Close	Prior Week	As of 6/12	Weekly Change	YTD Change
DJIA	17823.07	17849.46	17898.84	0.28%	0.43%
Nasdaq	4736.05	5068.46	5051.10	-0.34%	6.65%
S&P 500	2058.90	2092.83	2094.11	0.06%	1.71%
Russell 2000	1204.70	1261.01	1265.02	0.32%	5.01%
Global Dow	2501.66	2556.18	2566.43	0.40%	2.59%
Fed. Funds	0.25%	0.25%	0.25%	0%	0%
10-year Treasuries	2.17%	2.41%	2.39%	-2 bps	22 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 Headlines

• The number of job openings rose to 5.376 million on the last business day of April, the highest since December 2000, the U.S. Bureau of Labor Statistics reported. The job openings rate for April 2015 was 3.7%, up from 3.5% in March. Open jobs could mean a spike in wages as employers look to fill those positions.
• According to the U.S. Energy and Information Administration for the June 5 week, crude oil inventories dropped 6.8 million barrels, while crude oil imports were down by 750,000 barrels per day. However, refineries increased production, averaging 10 million barrels per day. At the pumps, the national average retail regular gasoline price remained about the same at $2.78 per gallon, $0.894 lower than this time last year.
• Through May the federal deficit for fiscal 2015 was $365.2 billion, which is about 16.3% lower compared to the same period last year ($436.4 billion) according to the monthly Treasury statement. Government receipts are running 9% ahead of last year, although government spending is up about 6% as well.
• Consumers are spending more according to the U.S. Census Bureau, which announced that advance estimates of sales of U.S. retail and food services for May increased 1.2% from April, and 2.7% above May 2014. Big movers were motor vehicle and parts dealers and food services and drinking places, each of which experienced increased sales over May 2014.
• In the week ending June 6, the advance figure for seasonally adjusted initial claims for unemployment benefits was 279,000, an increase of 2,000 from the previous week’s revised level of 277,000, according to the Department of Labor. Yet, this is a far cry from March 2009, when initial claims peaked at 665,000.
• Reflective of higher oil prices, the costs for imported goods increased 1.3% in May following declines in each of the previous 10 months. The Bureau of Labor Statistics also reported that the price of U.S. exports rose 0.6% in May, the largest increase since March 2014. Still, import prices dropped 9.6% on the year. Overall, the strong dollar is making imports cheaper while softness in foreign economies is keeping down export prices.
• In May, the prices producers received for their goods and services increased a seasonally adjusted 0.5% from April according to Friday’s Labor Department report. Still, compared to a year earlier, producer prices are down 1.1%. Next week’s consumer price report may shed more light on inflationary trends.

Eye on the Week Ahead

Housing starts, business production, and jobs reports will be available next week. But most of the attention will be focused on Wednesday’s Federal Open Market Committee announcements and forecasts, along with the Federal Reserve Chair’s press conference. We may have a better idea of when interest rates will increase by the end of the week.