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Weekly Market Insights

The Markets (as of market close ​​August ​​​​9, 2019)

Fearful that the ongoing trade war between the United States and China could slow economic growth at home and abroad, investors have pulled money from stocks and adopted a "wait-and-see" approach. Not only has the trade war impacted the market, but further interest rate cuts by the Federal Reserve that were anticipated earlier this summer, now may not be in the offing. While the benchmark indexes are still well ahead of their 2018 year-end values, they're only marginally up from where they were this time last year. Compared to a year earlier, the Dow is 3.3% ahead, the S&P 500 is up 3.5%, the Nasdaq is up 2.9%, while the Russell 2000 (-9.0%) and the Global Dow (-3.8%) are behind last year's pace. Money has poured into long-term bonds driving prices higher and yields lower.

Oil prices fell again last week, closing at $54.27 per barrel by late Friday afternoon, down from the prior week's price of $55.23. The price of gold (COMEX) continued to climb last week, closing at $1,509.10 by late Friday afternoon, up from the prior week's price of $1,452.70. The national average retail regular gasoline price was $2.688 per gallon on August 5, 2019, $0.027 lower than the prior week's price and $0.164 less than a year ago.

Market/Index

2018 Close

Prior Week

As of ​8/​9

Weekly Change

YTD Change

DJIA

23327.46

26485.01

26287.44

-0.75%

1​​2.69%

Nasdaq

6635.28

8004.07

7959.14

-​0.56​%

19.95%

S&P 500

2506.85

​2932.05

2918.65

-0.46%

16.43%

Russell 2000

1348.56

1533.66

1513.04

-1.34%

12.20%

Global Dow

2736.74

3005.80

2967.60

-1.27%

8.44%

Fed. Funds target rate

2.25%-2.50%

2.​00%-2.25%

2.​00%-2.25%

0 bps

-25 bps

10-year Treasuries

2.68%

1.85%

1.73%

-12 bps

-​95 bps

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

Last Week's Economic Headlines

  • Prices at the producer level were generally soft in July. The Producer Price Index advanced 0.2% in July after inching up 0.1% in both June and May. Producer prices, less foods, energy, and trade services, fell 0.1% in July — the first such decline since October 2015. Over the 12 months ended in July, the PPI rose 1.7%. Prices for goods increased 0.4%, while prices for services fell 0.1% last month. Driving goods prices higher was a 2.3% increase in energy prices, particularly gasoline prices, which spiked 5.2% in July.
  • The services (non-manufacturing) sector slowed in July, according to the latest report from the Institute for Supply Management®. The non-manufacturing index fell 1.4 percentage points to its lowest reading since August 2016. Within the services sector, business activity, new orders, and prices fell in July from the prior month. Only employment increased last month.
  • According to the Job Openings and Labor Turnover report, on the last business day of June, the job openings level was little changed at 7.3 million. The job openings rate was 4.6% (4.7% in May). Job openings increased in real estate and rental and leasing (38,000), as well as state and local government education (20,000). Total hires (5.7 million) and separations (5.5 million) were little changed in June from the prior month. Over the 12 months ended in June, hires totaled 69.4 million and separations totaled 66.9 million, yielding a net employment gain of 2.5 million.
  • For the week ended August 3, there were 209,000 claims for unemployment insurance, a decrease of 8,000 from the previous week's level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended July 27. The advance number of those receiving unemployment insurance benefits during the week ended July 27 was 1,684,000, a decrease of 15,000 from the prior week's level.

Eye on the Week Ahead

Important economic reports that are out this week include the Treasury budget, the Consumer Price Index, and industrial production. Compared to last year, the government deficit has been running about 23% higher as we near the end of the fiscal year. Inflation has been stagnant for much of the year as evidenced by the CPI, which is up only 1.6% since June 2018. While manufacturing picked up a bit last month, overall, industrial production has been weak, up only 1.3% from June 2018.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. 

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.


The Markets (as of market close ​​August ​​​2, 2019)

Not even a strong labor report could save stocks from tumbling last week, likely in response to President Trump's tweet that he intended to raise tariffs on an additional $300 billion worth of Chinese imports beginning next month. Trading volume spiked last week as did volatility, with the Cboe Volatility Index® hitting its highest level since May. Rising trade tensions between the economic giants sent global stocks reeling while bond prices soared, sending yields plummeting. Each of the benchmark indexes listed here lost at least 2.60% last week, with the Nasdaq falling almost 4.00%.

Oil prices fell last week, closing at $55.23 per barrel by late Friday afternoon, down from the prior week's price of $56.17. The price of gold (COMEX) spiked last week, closing at $1,452.70 by late Friday afternoon, up from the prior week's price of $1,418.40. The national average retail regular gasoline price was $2.715 per gallon on July 29, 2019, $0.035 lower than the prior week's price and $0.131 less than a year ago.

Market/Index

2018 Close

Prior Week

As of ​8/​5

Weekly Change

YTD Change

DJIA

23327.46

27192.45

26485.01

-2.60%

1​​3.54%

Nasdaq

6635.28

8330.21

8004.07

-​3.92​%

20.63%

S&P 500

2506.85

​​3025.86

2932.05

-3.10%

16.96%

Russell 2000

1348.56

1578.97

1533.66

-2.87%

13.73%

Global Dow

2736.74

3​104.51

3005.80

-3.18%

9.83%

Fed. Funds target rate

2.25%-2.50%

2.25%-2.50%

2.​00%-2.25%

-25 bps

-25 bps

10-year Treasuries

2.68%

2.0​0%

1.85%

-15 bps

-83 bps

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

Last Week's Economic Headlines

  • For the first time since 2008, the Federal Open Market Committee voted to lower interest rates. Following its July 31 meeting, the FOMC decided to lower the target range for the federal funds rate 25 basis points to 2.00%-2.25%. The Committee vote was not unanimous as 2 of the 10 members voted against a rate reduction. In any case, after noting that economic activity has been rising at a moderate rate, job gains have been solid, household spending has picked up, and the unemployment rate has remained low, the Committee noted that growth of business fixed investment has been soft and inflation is running below the Committee's 2.00% target. Also of note, the Committee specifically referenced for the first time "global developments for the economic outlook" as a reason for lowering the target range for the federal funds rate.
  • Employment rose by 164,000 jobs in July, and the unemployment rate remained at 3.7%. In 2018, employment gains had averaged 223,000 per month. In July, notable job gains occurred in professional and technical services (31,000), health care (30,000), social assistance (20,000), and financial activities (18,000). There were approximately 6.1 million unemployed in July, 88,000 more than in June. In July, the labor force participation rate was 63.0%, and the employment-population ratio was 60.7%. The average workweek decreased by 0.1 hour to 34.3 hours in July. Average hourly earnings rose by $0.08 to $27.98 last month — the same hourly increase as occurred in June. Over the past 12 months ended in July, average hourly earnings have increased by 3.2%.

  • The trade deficit was $55.2 billion in June, down $0.2 billion from May's revised deficit. Both imports (-$4.6 billion) and exports (-$4.4 billion) fell from their May respective totals. Year-to-date, the goods and services deficit increased $23.2 billion, or 7.9%, from the same period in 2018. In June, goods trade deficits were noted with China ($30.2 billion), the European Union ($15.9 billion), Mexico ($9.2 billion), and Japan ($6.2 billion). Trade surpluses were with South and Central America ($4.8 billion), Hong Kong ($2.3 billion), Brazil ($1.3 billion), and the United Kingdom ($0.1 billion).

  • Not unexpectedly, June saw prices for consumer products and services remain stable while consumer spending remained solid. According to the latest report from the Bureau of Economic Analysis, the personal consumption expenditures (PCE) price index, which measures changes in prices of consumer goods and services, inched up 0.1% in June over May. Excluding food and energy, consumer prices rose 0.2% in June. Personal income jumped 0.4% as did after-tax, or disposable, personal income. With a boost in income and low prices for goods and services, consumers spent more. PCE increased 0.3% in June. Much of the increase in consumer spending was attributable to nondurable goods and services. Consumers actually spent less on durable goods (expected to last at least three years).

  • According to Markit's survey, manufacturing firms continued to see a slowdown in July. The purchasing managers' index last month fell to its lowest level since September 2009 with exports contracting for the second time in the last three months. Survey respondents noted softer demand for goods and muted business growth.

  • The ISM® purchasing managers' index also fell in July from a month earlier, dropping from 51.7% to 51.2%. Production, employment, and prices fell last month, but new orders, supplier deliveries, and inventories increased, which is a good start for August.

  • For the week ended July 27, there were 215,000 claims for unemployment insurance, an increase of 8,000 from the previous week's level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended July 20. The advance number of those receiving unemployment insurance benefits during the week ended July 20 was 1,699,000, an increase of 22,000 from the prior week's level, which was revised up by 1,000.

Eye on the Week Ahead

Following last week's busy schedule of economic reports, this week does not include a lot of market-moving information. The Job Openings and Labor Turnover Survey (JOLTS) is expected to reveal similar job openings in June as existed in May. Another report of note, the Producer Price Index, saw producer prices increase slightly in June. It would not be surprising if prices showed no change in July.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.


Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

2998.45

26485.01

26485.01

26485.01

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