Tag: unemployment claims

The Markets (as of market close December 20, 2019)

Stocks continued to surge last week, reaching new record highs ahead of the Christmas holiday. The S&P 500 recorded its largest weekly percentage gain in several months. Both the Dow and Nasdaq also hit new historical highs as solid economic news bolstered by optimism over continued progress in the trade negotiations between the United States and China provided encouraging signs for investors. Long-term bond prices fell, pushing yields 10 basis points higher by the end of the week.

Oil prices rose again last week, closing at $60.34 per barrel by late Friday afternoon, up from the prior week’s price of $59.82. The price of gold (COMEX) inched higher last week, closing at $1,481.70 by late Friday afternoon, up from the prior week’s price of $1,480.20. The national average retail regular gasoline price was $2.536 per gallon on December 16, 2019, $0.025 less than the prior week’s price but $0.167 more than a year ago.

Market/Index	2018 Close	Prior Week	As of 12/20	Weekly Change	YTD Change
DJIA	23327.46	28135.38	28455.09	1.14%	21.98%
Nasdaq	6635.28	8734.88	8924.96	2.18%	34.51%
S&P 500	2506.85	3168.80	3221.22	1.65%	28.50%
Russell 2000	1348.56	1637.98	1671.90	2.07%	23.98%
Global Dow	2736.74	3214.02	3248.06	1.06%	18.68%
Fed. Funds target rate	2.25%-2.50%	1.50%-1.75%	1.50%-1.75%	0 bps	-75 bps
10-year Treasuries	2.68%	1.81%	1.91%	10 bps	-77 bps

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

Last Week’s Economic News

• The final release of the third-quarter gross domestic product was much like the prior iteration. The economy advanced at an annual rate of 2.1%. The GDP grew at an annual rate of 2.0% in the second quarter and 3.1% in the first quarter. Gross domestic income (the net of income and costs incurred in the production of goods and services) also rose 2.1% compared with an increase of 0.9% in the second quarter. Consumer spending slowed from 4.6% in the second quarter to 3.2% in the third quarter. Exports of goods rose 1.0% in the third quarter (-5.9% in the second) while imports increased 1.8% after no change in the second quarter. Still lagging is nonresidential (business) fixed investment, which fell 2.3% after dropping 1.0% in the second quarter.

• Consumer income and spending ramped up in November ahead of the holiday season. Both personal income and disposable (after-tax) personal income increased 0.5% last month. Consumer spending advanced 0.4% in November after rising 0.3% in October. Inflationary pressures showed some upward movement in November as the personal consumption price index climbed 0.2%, the same increase as in October. Excluding food and energy, consumer prices inched ahead 0.1% in November.

• Construction of new homes continued its steady advance in November. According to the latest report from the Census Bureau, building permits increased 1.4% past October’s rate, while single-family permits in November were 0.8% higher. There were more housing starts (3.2%) in November over October, and single-family construction was up 2.4%. Residential completions were down, however, falling 6.6% last month, while single-family home completions dropped 3.6%. From November 2018, building permits are up 11.1%, housing starts are 13.6% ahead, and completions have advanced 7.3%.

• Sales of existing homes fell 1.7% in November from October’s total. That said, sales are still 2.7% ahead of last year’s pace. The number of existing homes for sale slipped from a supply of 3.9% in October to 3.7% in November. The median sales price climbed slightly to $271,300 ($271,000 in October). The sales price is 5.4% ahead of last year ($257,400). Sales of existing single-family homes dropped about 1.25% in November but are up 3.5% from a year ago. The median existing single-family home price is $274,000.

• Industrial production and manufacturing production both rebounded 1.1% in November after declining in October. These sharp November increases were largely due to a resurgence in the output of motor vehicles and parts following the end of a strike at a major manufacturer. Excluding motor vehicles and parts, the indexes for total industrial production and for manufacturing moved up 0.5% and 0.3%, respectively. Mining production edged down 0.2%, while the output of utilities increased 2.9%. Despite the positive movement, total industrial production was 0.8% lower in November than it was a year earlier.

• According to the Job Openings and Labor Turnover report for October, the number of job openings rose by 235,000 (4.6%) with notable increases in retail trade (125,000), finance and insurance (56,000), and durable goods manufacturing (50,000). The largest decreases in job openings were in nondurable goods manufacturing (36,000), information (33,000), and arts, entertainment, and recreation (26,000). Over the 12 months ended in October, hires totaled 69.8 million and separations totaled 67.4 million, yielding a net employment gain of 2.4 million.

• For the week ended December 14, there were 234,000 claims for unemployment insurance, a decrease of 18,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended December 7. The advance number of those receiving unemployment insurance benefits during the week ended December 7 was 1,722,000, an increase of 51,000 from the prior week’s level, which was revised up by 4,000.

Eye on the Week Ahead

The holiday week is traditionally a slow one in the market and for economic news, however, two important reports are available this week. Information on new home sales for November is out. While sales were down in October, they are expected to rebound in November. Another important economic indicator is the durable goods report from the Census Bureau. October saw new orders for long-lasting goods rise following a September drop. However, new orders are not as robust in 2019 as they were the previous year.

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The Markets (as of market close December 13, 2019)

Positive developments finally arrived in the ongoing trade war between the United States and China. Last Friday, President Trump announced phase one of a trade deal with China. The president indicated that he would forgo the imposition of tariffs scheduled for December 15 and reduce existing tariffs on about $120 billion of Chinese imports. According to the president’s tweets, China has agreed to make large purchases of targeted farm, energy, and manufactured goods. A representative of the Chinese government said the purchases would total about $200 billion over two years. Meanwhile, United Kingdom Prime Minister Boris Johnson’s Conservative Party enjoyed a robust victory in last week’s elections, securing a strong majority in Parliament. This development should give Johnson the votes needed to secure a Brexit deal and foster a new relationship with the European Union. Finally, the Federal Reserve maintained interest rates, noting strong consumer spending and steady economic growth.

All of this helped push stocks marginally higher for the week. Each of the benchmark indexes listed here posted gains, led by the Global Dow, most likely on the probability of a Brexit deal. The Nasdaq advanced close to 1.0%, followed by the S&P 500, the Dow, and the Russell 2000.

Oil prices inched higher last week, closing at $59.82 per barrel by late Friday afternoon, up from the prior week’s price of $59.12. The price of gold (COMEX) climbed last week, closing at $1,480.20 by late Friday afternoon, up from the prior week’s price of $1,464.50. The national average retail regular gasoline price was $2.561 per gallon on December 9, 2019, $0.014 less than the prior week’s price but $0.140 more than a year ago.

Market/Index	2018 Close	Prior Week	As of 12/13	Weekly Change	YTD Change
DJIA	23327.46	28015.06	28135.38	0.43%	20.61%
Nasdaq	6635.28	8656.53	8734.88	0.91%	31.64%
S&P 500	2506.85	3145.91	3168.80	0.73%	26.41%
Russell 2000	1348.56	1633.84	1637.98	0.25%	21.46%
Global Dow	2736.74	3162.32	3214.02	1.63%	17.44%
Fed. Funds target rate	2.25%-2.50%	1.50%-1.75%	1.50%-1.75%	0 bps	-75 bps
10-year Treasuries	2.68%	1.84%	1.81%	-3 bps	-87 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

• As expected, the Federal Open Market Committee maintained interest rates at their current 1.50%-1.75% range. For the first time in several months, the Committee’s vote was unanimous. In support of its decision to maintain rates, the Committee noted that the labor market remained strong and that economic activity has been rising at a moderate rate. In addition, while household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2%. Based on quarterly projections, the Committee sees the funds target rate ending 2020 at 1.625%, down from the previous projection of 1.875%.

• The November deficit for the federal government increased to $208.8 billion, $74.0 billion over October’s deficit. Compared to last October and November, the deficit for the first two months of fiscal year 2020 is larger by about $38.0 billion.

• Inflationary pressures may finally be gaining some momentum, likely influenced by the trade war between the United States and China. The Consumer Price Index for November advanced 0.3% after rising 0.4% in October. Over the last 12 months, the CPI is up 2.1%. Energy prices jumped 0.8% (gasoline increased 1.1%) last month, while food prices rose 0.1%. Consumer prices less food and energy advanced 0.2% in November, the same increase as in October.

• Prices at the producer level showed no change in November, but they advanced 0.4% in October and are up 1.1% for the 12 months ended in November. A 0.3% rise in goods prices was offset by a comparable drop in prices for services. Producer prices less foods, energy, and trade services was unchanged in November after inching up 0.1% in October. For the 12 months ended in November, prices less foods, energy, and trade services moved up 1.3%, the smallest advance since climbing 1.3% in the 12 months ended September 2016.

• Retail sales increased 0.2% last month and are up 3.3% over November 2018. In November, motor vehicle and parts dealers sales advanced 0.5%, electronics and appliance store sales jumped 0.7%, and gasoline station sales rose 0.7%, while health and personal care store sales fell 1.1% and clothing and clothing accessory store sales dropped 0.6%. Nonstore (online) sales increased 0.8% in November and are up 11.5% from November 2018.

• Import prices increased 0.2% in November following a 0.5% drop in October. The increase in import prices was driven by a 2.6% jump in import fuel prices — the largest monthly increase since prices rose 3.6% in May. Export prices also rose 0.2% last month after declining 0.1% in October.

• For the week ended December 7, there were 252,000 claims for unemployment insurance, an increase of 49,000 from the previous week’s level. This is the highest level for initial claims since September 30, 2017, when it was 257,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended November 30. The advance number of those receiving unemployment insurance benefits during the week ended November 30 was 1,667,000, a decrease of 31,000 from the prior week’s level, which was revised up by 5,000.

Eye on the Week Ahead

Aside from the impeachment news, there’s plenty of market-moving economic information available this week, including the final report for the third-quarter gross domestic product. Residential reports out this week include November’s figures for housing starts and existing home sales, which increased almost 2.0% in October. Also of note is the November report from the Federal Reserve on industrial production, which fell 0.8% in October.

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

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

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

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

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

Last Week’s Economic News

• November saw a whopping 266,000 new jobs added and the unemployment rate dip 0.01 percentage point to 3.5%. Job growth has averaged 180,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018. There were 5.811 million unemployed persons in November (5.855 in October), the labor force participation rate decreased from October’s 63.3% to 63.2%, and the employment-population ratio remained at 61.0%. In November, notable job gains occurred in health care and in professional and technical services. Employment also increased in manufacturing, reflecting the return of workers from a strike. Employment continued to trend up in leisure and hospitality, transportation and warehousing, and financial activities, while mining lost jobs. The average workweek was unchanged at 34.4 hours in November. Average hourly earnings rose by $0.07 to $28.29. Over the last 12 months, average hourly earnings have increased by 3.1%.

• According to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™, manufacturing improved in November. The purchasing managers’ index climbed from 51.3 in October to 52.6 last month, marking the strongest improvement in the manufacturing sector since April. Also increasing were new orders, output growth, and workforce numbers.

• The other major report on the health of the manufacturing sector, the Manufacturing ISM® Report On Business®, saw its purchasing managers’ index decrease 0.2 percentage point in November, coming in at 48.1%. Anything below 50.0% indicates a slowdown. New orders fell 1.9 percentage points, employment fell 1.1 percentage points, inventories dropped 3.4 percentage points, and new export orders plummeted 2.5 percentage points. While the ISM® and Markit® indexes are based on surveys of purchasing managers, the ISM® index is based on a larger survey field and the questions are qualitative and ask about general direction rather than specific level of activity. The Markit® index is based on a smaller survey field and is based on more quantitative information.

• The services sector also slowed in November, according to the Non-Manufacturing ISM® Report On Business®. The Non-Manufacturing Index fell to 53.9%, down from November’s 54.7%. While business activity regressed last month, new orders, employment, and prices each improved in November over October’s readings. Some industries reporting growth in business activity include real estate, rental, and leasing; health care and social assistance; arts, entertainment, and recreation; finance and insurance; retail trade; and accommodation and food services. Service industries reporting a slowdown in business activity include agriculture, forestry, fishing and hunting; construction; mining; public administration; wholesale trade; and professional, scientific and technical services.

• The goods and services deficit was $47.2 billion in October, down $3.9 billion from $51.1 billion in September, revised. October exports were $207.1 billion, $0.4 billion less than September exports. October imports were $254.3 billion, $4.3 billion less than September imports. Year-to-date, the goods, and services deficit increased $6.9 billion, or 1.3%, from the same period in 2018. Exports decreased $0.8 billion, or less than 0.1%. Imports increased $6.1 billion, or 0.2%.

• For the week ended November 30, there were 203,000 claims for unemployment insurance, a decrease of 10,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims increased 0.1 percentage point to 1.2% for the week ended November 23. The advance number of those receiving unemployment insurance benefits during the week ended November 23 was 1,693,000, an increase of 51,000 from the prior week’s level, which was revised up by 2,000.

Eye on the Week Ahead

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

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

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

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

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

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

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

• Employment: The unemployment rate inched up 0.1 percentage point to 3.6% in October as the number of unemployed persons reached 5.86 million (5.77 million in September). Total employment increased by 128,000 in October after adding 180,000 (revised) new jobs in September. The average monthly job gain so far in 2019 is 167,000 (223,000 in 2018). Notable employment increases for October occurred in restaurants and bars (48,000), social assistance (20,000), financial activities (16,000), professional and business services (22,000), and health care (15,000). Sectors seeing a drop in employed persons include government (17,000) and manufacturing (36,000). The labor participation rate rose 0.1 percentage point to 63.3%, and the employment-population ratio remained at 61.0%. The average workweek remained at 34.4 hours for October. Average hourly earnings rose by $0.06 to $28.18. Over the last 12 months ended in October, average hourly earnings have risen 3.0%.

• FOMC/interest rates: The Federal Open Market Committee did not meet in November. Following October’s interest rate decrease, the target range remains at 1.50%-1.75%. The Committee next meets December 10-11.

• GDP/budget: According to the second estimate for the third-quarter gross domestic product, the economy accelerated at a rate of 2.1%, up from the second quarter’s 2.0% annual growth rate. The first quarter saw an annualized growth of 3.1%. Growth in consumer spending (personal consumption expenditures), which accounts for roughly two-thirds of the GDP, slowed to 2.9% from the second quarter’s 4.6%. Consumer prices for goods and services grew by 1.5% in the third quarter compared to an increase of 2.4% in the second quarter. A positive from the report comes from residential investment, which rose 5.1% — the first positive contribution to the GDP since 2017. October, the first month of the new fiscal year for the federal government, saw the budget open with a deficit of $134.5 billion ($100.5 billion in October 2018). The government spent roughly $380 billion in October and had receipts of $245.5 billion. Most of the government outlays were for Social Security ($89 billion), national defense ($71 billion), and Medicare ($56 billion). Individual income taxes accounted for the majority of receipts ($126 billion), followed by social insurance and retirement receipts ($90 billion).

• Inflation/consumer spending: According to the Personal Income and Outlays report, inflationary pressures remain weak, as prices for consumer goods and services rose 0.2% in October, the first increase since July. Prices are up 1.3% over the last 12 months. Consumer prices excluding food and energy rose 0.1% in October (0.0% in September) and are up 1.6% year-over-year. Personal income and disposable (after-tax) personal income receded for the first time in several months in October. Personal income showed no gain after advancing 0.3% in September. Disposable personal income dropped 0.1% after climbing 0.3% the prior month. Despite a dip in income, consumers continued to spend. Personal consumption expenditures increased 0.3% in October after expanding 0.2% in September.
• The Consumer Price Index climbed 0.4% in October following no change in September. Over the 12 months ended in October, the CPI rose 1.8%. Energy prices increased 2.7% on the month with gasoline up 3.7%. Prices less food and energy rose 0.2% in October after increasing 0.1% the previous month. Since last October, core prices (less food and energy) are up 2.3%.
• Prices producers receive for goods and services rose 0.4% in October, after falling 0.3% in September. The index increased 1.1% for the 12 months ended in October, the smallest rise since a 1.1% increase in the 12 months ended October 2016. Prices for goods jumped 0.7% in October while prices for services advanced 0.3%. Pushing goods prices higher in October was a 2.8% spike in energy prices. The index less foods, energy, and trade services inched up 0.1% in October after no change in September.
• Housing: The housing sector has been anything but consistent this year. After plunging 2.2% in September, sales of existing homes rebounded in October, jumping 1.9%. Year-over-year, existing home sales are up 4.6%. Existing home prices continued to drop in October, as the median price for existing homes was $270,900, down from September’s median price of $272,100. Nevertheless, existing home prices were up 6.2% from October 2018. Total housing inventory at the end of October sat at 1.77 million units (representing a 3.9-month supply), down approximately 2.7% from September and 4.3% from one year ago (1.85 million). New single-family home sales also fell in October, dropping 0.7% from their September estimate, although sales are more than 31% ahead of last year’s pace. Unlike prices for existing homes for sale, new home prices rose in October. The median sales price was $316,700 ($310,200 in September) and the average sales price was $383,300 ($366,900 in September). Available inventory, at 5.3-month supply, remained about the same in October as it was in September.
• Manufacturing: Manufacturing and industrial production continued to lag in October. According to the Federal Reserve, industrial production fell 0.8% in October after falling 0.3% (revised) in September. Manufacturing output declined 0.6% following a 0.5% drop the prior month. Much of the decline in manufacturing in October was due to a drop of 7.1% in the output of motor vehicles and parts that resulted from a strike at a major manufacturer of motor vehicles. In October, mining output fell 0.7% (-1.3% in September), while utilities decreased 2.6% after climbing 1.4% in September. Total industrial production was 1.1% lower in October than it was a year earlier. Following a September decrease, new orders for durable goods rose 0.6% in October. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders expanded by 0.1%. Helping drive the increase in durable goods orders were expansions in nondefense aircraft and parts (10.7%), defense aircraft and parts (18.1%), fabricated metal products (1.8%), machinery (1.3%), and computers and related products (2.4%). New orders for capital goods (used by businesses to produce consumer goods) grew 5.4% in October after falling 2.8% in September.

• Imports and exports: Both import and export prices remained soft in October. Import prices fell 0.5%, driven by lower petroleum prices. Import prices excluding petroleum dropped 0.1%. Over the last 12 months ended in October, import prices are down 3.0% — the largest over-the-year decline since the index fell 3.7% during the period ended July 2016. Export prices fell 0.1% in October following a 0.2% decline in September. Overall, export prices dipped 2.2% over the past year, the largest 12-month decrease since a 2.4% decline in August 2016. Agricultural export prices rose 1.9% in October, while nonagricultural prices for items such as consumer goods, automobiles, and industrial supplies and materials receded 0.3%. The latest information on international trade in goods and services, out November 5, is for September and shows that the goods and services deficit was $52.5 billion, $0.9 billion less than August’s $55.0 billion deficit. September exports were $206.0 billion, $1.8 billion less than August exports. September imports were $258.4 billion, $4.4 billion under August imports. Year-to-date, the goods and services deficit increased $24.8 billion, or 5.4%, from the same period in 2018. Exports decreased $7.0 billion, or 0.4%. Imports increased $17.8 billion, or 0.8%. The advance report on international trade in goods (excluding services) revealed the trade deficit fell to $66.5 billion in October, down from $70.5 billion in September. However, both export and import trading slowed in October. Exports of goods were $135.3 billion, $0.9 billion less than September exports. Imports of goods were $201.8 billion, $5.0 billion less than September imports.

• International markets: The third-quarter gross domestic product for Germany inched up 0.1% following a 0.1% drop in the second quarter. While consumer spending advanced 0.4%, the main source of growth in the third quarter was net foreign trade where exports increased 1.0%, far exceeding imports, which grew a scant 0.1%. Global price inflation continues to lag. Consumer prices in Japan showed no growth in October and are up only 0.2% over the last 12 months. Great Britain saw consumer prices fall 0.9% in October. On the other hand, China’s consumer prices rose 0.9% in October and are up 3.8% for the year.

• Consumer confidence: Consumer confidence fell in November following a slight decrease the prior month. The Conference Board Consumer Confidence Index® registered 125.5 in November, down from 126.1 in October. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — decreased from 173.5 to 166.9. The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — increased from 94.5 in October to 97.9.

Eye on the Month Ahead

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

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

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

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

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

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

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

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

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

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

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

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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The Markets (as of market close October 31, 2019)

Investors continued to buy stocks, pushing values higher in October. Each of the benchmark indexes listed here posted solid monthly gains despite signs that the economy is slowing, both domestically and globally. Businesses remain hesitant to invest in nonresidential structures, equipment, and software, exports are lagging in volume, and prices remain subdued. Manufacturing continues to wane, and residential sales have been erratic at best. However, there may be headway in the negotiations between the United States and China, as the two economic giants try to resolve their ongoing trade war (although rhetoric from either side changes almost daily). The labor market continues to add new jobs, although wage inflation was muted last month. Since the beginning of the year, interest rates have been reduced by 75 basis points to their lowest levels since May 2018. The last day of the month saw the House of Representatives pass a resolution establishing a framework for a new phase of the impeachment inquiry.

By the close of trading on the last day of the month, each of the benchmark indexes listed here posted gains, led by the tech stocks of the Nasdaq, which climbed more than 3.50% from its September closing value. The large caps of the S&P 500 and the small caps of the Russell 2000 each gained over 2.0% by the end of October, while the Global Dow was close behind. The Dow advanced on the month, but by less than 0.50%. The yield on long-term bonds fluctuated during the month, ultimately closing October about where it began.

By the close of trading on October 31, the price of crude oil (WTI) was $54.09 per barrel, down from the September 30 price of $54.37 per barrel. The national average retail regular gasoline price was $2.596 per gallon on October 28, down from the September 30 selling price of $2.642 and $0.215 less than a year ago. The price of gold rose by the end of October, climbing to $1,515.10 by close of business on the 31st, up from its $1,479.30 price at the end of September.

Market/Index	2018 Close	Prior Month	As of October 31	Month Change	YTD Change
DJIA	23327.46	26916.83	27046.23	0.48%	15.94%
NASDAQ	6635.28	7999.34	8292.36	3.66%	24.97%
S&P 500	2506.85	2976.74	3037.56	2.04%	21.17%
Russell 2000	1348.56	1523.37	1562.45	2.57%	15.86%
Global Dow	2736.74	3021.34	3081.07	1.98%	12.58%
Fed. Funds	2.25%-2.50%	1.75%-2.00%	1.50%-1.75%	25 bps	-75 bps
10-year Treasuries	2.68%	1.67%	1.69%	2 bps	-99 bps

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

• Employment: The unemployment rate declined 0.2 percentage point to 3.5% in September. The last time the rate was this low was in December 1969, when it also was 3.5%. Total employment increased by 136,000 in September after adding 168,000 (revised) new jobs in August. The average monthly job gain so far in 2019 is 161,000 per month (223,000 in 2018). Notable employment increases for September occurred in health care (39,000), professional and business services (34,000), government (22,000), and transportation and warehousing (16,000). The number of unemployed persons dropped by 275,000 to 5.8 million. The labor participation rate remained at 63.2%, and the employment-population ratio rose to 61.0% (60.9% in August). The average workweek remained at 34.4 hours for September. Average hourly earnings fell by $0.01 to $28.09. Over the last 12 months ended in September, average hourly earnings have risen 2.9% (3.2% for the 12 months ended in August).
• FOMC/interest rates: By an 8-2 vote, the Federal Open Market Committee dropped the target range for the federal funds rate 25 basis points following July’s 25-basis-point cut and September’s comparable rate slash. The federal funds rate range has been decreased by 75 basis points so far this year. The target range now sits at 1.50%-1.75%. In support of its decision to reduce interest rates again, the Committee noted that inflation continues to run below the Fed’s 2.0% target rate, business fixed investment and exports have weakened, and global economic developments are uncertain.
• GDP/budget: Economic growth slowed again in the third quarter. According to the initial estimate for the third-quarter gross domestic product, the economy accelerated at a rate of 1.9%, down from the second quarter’s 2.0% annual growth rate. The first quarter saw an annualized growth of 3.1%. The personal consumption expenditures price index increased 1.5% in the third quarter compared to an increase of 2.4% in the second quarter. Driving economic growth in the third quarter was consumer spending, which increased at an annualized rate of 2.9% (4.6% in the second quarter). Another positive from the report comes from residential investment, which rose 5.1% — the first positive contribution to the GDP since 2017. Nonresidential (business) fixed investment continues to lag, falling 3.0% in the third quarter after dropping 1.0% in the second quarter. September marked the close of the 2019 fiscal year for the federal government. For the month, the federal budget came in at a smaller-than-expected surplus of $82.2 billion in September, narrowing the fiscal 2019 deficit to $984.4 billion, still 26.4% higher than the fiscal 2018 deficit.
• Inflation/consumer spending: According to the personal income and outlays report, inflationary pressures remain weak, as prices for consumer goods and services rose less than 0.1% in September. Prices are up 1.3% over the last 12 months. Consumer prices excluding food and energy showed no movement in September and are up 1.7% year-over-year. On the other hand, consumers continue spending, as purchases rose 0.2% (0.2% in August). Personal income and disposable (after-tax) personal income each climbed 0.3% in September (0.5% and 0.6%, respectively, in August).
• The Consumer Price Index was unchanged in September following a 0.1% advance in August. Over the 12 months ended in September, the CPI rose 1.7%. Energy prices fell 1.4% on the month with gasoline down 2.4%. Prices less food and energy rose 0.1% in September after increasing 0.3% the previous month. Since last September, core prices (less food and energy) are up 2.4%.
• According to the Producer Price Index, the prices companies received for goods and services fell 0.3% in September after increasing 0.1% in August. The index increased 1.4% for the 12 months ended in September. Prices for goods fell 0.4% in September. Most of the decline is attributable to energy prices, which tumbled 2.5%. Prices for services dropped 0.2% in September, pulled down by declining prices for machinery and vehicle wholesaling, which fell 2.7%. The price index less foods, energy, and trade services was unchanged after jumping ahead 0.4% in August. For the 12 months ended in September, producer prices less foods, energy, and trade services advanced 1.7%.
• Housing: The housing sector has been anything but steady for much of the year, and September was no exception. Existing home sales plunged 2.2% in September following two consecutive monthly increases. Year-over-year, existing-home sales are up 3.9%. Existing home prices fell in September, as the median price for existing homes was $272,100, down from August’s median price of $278,200. Nevertheless, existing home prices were up 5.9% from September 2018. Total housing inventory for existing homes for sale in September decreased to 1.83 million (1.86 million in August), representing a 4.1-month supply at the current sales pace. After rising 6.1% in August, sales of new single-family houses tumbled 0.7% in September. However, new home sales are up 15.5% over their September 2018 estimate. The median sales price of new houses sold in September was $299,400 ($328,400 in August). The average sales price was $362,700 ($404,200 in August). Inventory at the end of September remained at a supply of 5.5 months.
• Manufacturing: According to the Federal Reserve, industrial production fell 0.4% in September after advancing 0.8% in August. Manufacturing output declined 0.5% following a 0.5% rise the prior month. In September, mining output fell 1.3%, while utilities climbed 1.4%. Total industrial production was 0.1% lower in September than it was a year earlier. Following three consecutive monthly increases, new orders for durable goods dropped 1.1% in September. Excluding transportation, new orders decreased 0.3%. Excluding defense, new orders decreased 1.2%. Transportation equipment, also down following three consecutive monthly increases, led the decrease, dropping 2.7%. New orders for capital goods (used by businesses to produce consumer goods) fell 2.8% in September as business investment continues to be weak.
• Imports and exports: Both import and export prices remained soft in September. Import prices rose 0.2%, pushed higher by a boost from petroleum-based products. Nonfuel goods edged down 0.1%. For the year, import prices are also down 1.6%. Export prices fell 0.2% and are down 1.6% over the past 12 months. Agricultural export prices declined 1.8% in September, while nonagricultural prices for items such as consumer goods, automobiles, and industrial supplies and materials dropped 0.1%. The latest information on international trade in goods and services, out October 4, is for August and shows that the goods and services deficit was $59.4 billion, $0.9 billion over July’s revised figure. August exports were $207.9 billion, $0.5 billion more than July exports. August imports were $262.8 billion, $1.3 billion more than July imports. Year-to-date, the goods, and services deficit increased $28.3 billion, or 7.1%. Exports decreased $3.2 billion, or 0.2%. Imports increased $24.1 billion, or 1.2%. The advance report on international trade in goods (excluding services) revealed the trade deficit fell to $70.4 billion in September, down from $73.1 billion in August. However, both export and import trading slowed in September, with exports of goods dropping $2.2 billion from August and imports falling $4.9 billion below August’s total.
• International markets: Still unable to reach an accord on a Brexit plan, the United Kingdom requested, and was granted, another extension by the European Union, this time to January 31. However, the UK could leave before that date if Parliament passes a withdrawal bill. UK stocks sank following news that the country was headed to yet another general election before the end of the year. In China, consumer prices rose 0.9% in September and are up 3.0% over the past 12 months — the highest level since 2013. Nevertheless, the Chinese economy continued to slow as its third-quarter gross domestic product expanded at a 6.0% year-over-year pace, down from the 6.2% rate of expansion in the second quarter.
• Consumer confidence: Consumer confidence remained tepid in October. The Conference Board Consumer Confidence Index® registered 125.9, down from 126.3 in September. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — increased from 170.6 to 172.3. The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — declined from 96.8 last month to 94.9 this month.

Eye on the Month Ahead

While stocks rebounded nicely last month, will that trend continue in November? Stock market growth seemingly rides on the progress made in the trade negotiations between the United States and China. With the impeachment process moving on to another phase and the government on target to shut down by the middle of November, it should be an interesting fourth quarter.