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Weekly Market Insights

The Markets (as of market close ​July ​​12, 2019)

Both the Dow and the S&P 500 reached new record highs last week. The Dow surged past 27000 for the first time, while the S&P 500 surpassed the 3000 threshold. Anticipated testimony from Fed Chairman Jerome Powell lent credence to the expected interest rate cut at the end of the month. Powell indicated that "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook." In addition to news that interest rates may decrease, the anticipated trade talks between the United States and China, coupled with last week's strong jobs report, provided a boost to stocks. Along with a strong performance from the large-cap indexes, the tech-heavy Nasdaq enjoyed a good week and leads the way year-to-date, up almost 25.0%. The small caps didn't fare quite as well, recording modest losses last week.

Oil prices surged ahead last week, climbing to $60.32 per barrel by late Friday afternoon, up from the prior week's price of $57.69. The price of gold (COMEX) rebounded last week, jumping to $1,416.30 by late Friday afternoon, ahead of the prior week's price of $1,402.10. The national average retail regular gasoline price was $2.743 per gallon on July 8, 2019, $0.030 higher than the prior week's price but $0.114 less than a year ago.

Market/Index

2018 Close

Prior Week

As of ​7/12

Weekly Change

YTD Change

DJIA

23327.46

26922.12

26922.12

1.51%

1​​7.17%

Nasdaq

6635.28

8161.79

8161.79

1.01%

2​​4.25%

S&P 500

2506.85

2990.41

2990.41

0.​78%

20.​22%

Russell 2000

1348.56

1575.62

1575.62

-0.36%

16.42%

Global Dow

2736.74

3102.14

3102.14

0.21%

13.59%

Fed. Funds target rate

2.25%-2.50%

2.25%-2.50%

2.25%-2.50%

0 bps

0 bps

10-year Treasuries

2.68%

2.04%

2.04%

10 bps

-58 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

  • Inflationary pressures at the consumer level remained tame in June, according to the latest Consumer Price Index. Consumer prices for goods and services inched up 0.1% last month, the same increase as in May. Over the last 12 months, the CPI has increased 1.6%. Keeping the CPI in check was a 2.3% drop in energy prices. Otherwise, the index for all items less food and energy rose 0.3% in June, its largest monthly increase since January 2018. Prices for apparel, used cars and trucks, and household furnishings all boasted strong increases in June. The strength of this report could make some members of the Federal Reserve think twice about cutting interest rates when the Committee meets at the end of the month.
  • The Producer Price Index, which measures goods and services prices before reaching the consumer, advanced 0.1% in June, the same increase as in May, and comparable to the increases the CPI has experienced over the same 2 months. Over the last 12 months, the PPI has risen 1.7%. Within the index, services rose 0.4% in June, the largest increase since climbing 0.8% in October 2018. Conversely, goods moved down 0.4% in June, the largest decrease since falling 0.6% in January. Most of the drop in goods prices is attributable to a 5.0% fall in gasoline prices. Excluding food and energy, producer prices rose 0.3% in June and 2.3% over the last 12 months.
  • The government deficit for June was $8.5 billion, significantly lower than the May deficit of $207.8 billion. Individual income taxes provided the largest source of revenue for the government in June, totaling $141.1 billion. The government's largest monthly expenditure in June was for Social Security, which exceeded $780 billion. For the fiscal year, which began last October, the government deficit sits at $747.1 billion. Over the same period last fiscal year, the deficit was $607.1 billion.
  • According to the latest figures from the U.S. Bureau of Labor Statistics, there were far more job openings than hires in May. The number of job openings was little changed at 7.3 million on the last business day of May compared to April. The number of hires decreased by 266,000 to 5.7 million in May. The number of separations fell 192,000 in May from the prior month. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers' willingness or ability to leave jobs. The number of quits was little changed in May at 3.4 million. The quits rate was 2.3%. Net employment change results from the relationship between hires and separations. Over the 12 months ended in May, hires totaled 69.5 million and separations totaled 66.9 million, yielding a net employment gain of 2.6 million.
  • For the week ended July 6, there were 209,000 claims for unemployment insurance, a decrease of 13,000 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 June 29. The advance number of those receiving unemployment insurance benefits during the week ended June 29 was 1,723,000, an increase of 27,000 from the prior week's level, which was revised up by 10,000.

Eye on the Week Ahead

Industrial production has been lagging, perhaps due, in part, to the ongoing trade impasse between the United States and China. This week's report on industrial production for June from the Federal Reserve will provide the latest information on the manufacturing sector.

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 ​July ​​5, 2019)

Last week, June's labor report was strong enough to likely prompt the Fed to hold interest rates at their current level (and forestall a rate cut). Feeding off the latest labor figures, stocks pushed ahead during the holiday-shortened week as each of the benchmark indexes listed here posted gains. The Nasdaq led the way, gaining close to 2.0%, followed by the large caps of the S&P 500 and the Dow, each of which enjoyed a solid week. The Global Dow gained close to 1.0%, despite evidence of a slowing global economy. Pulling up the rear was the Russell 2000, which added over 0.5% in value by last week's end. Despite the performance of stocks, long-term bond yields held steady as prices inched down marginally.

Oil prices fell to $57.69 per barrel by late Friday afternoon, down from the prior week's price of $58.16. The price of gold (COMEX) fell last week, dropping to $1,402.10 by late Friday afternoon, down from the prior week's price of $1,413.30. The national average retail regular gasoline price was $2.713 per gallon on July 1, 2019, $0.059 higher than the prior week's price but $0.131 less than a year ago.

Market/Index

2018 Close

Prior Week

As of ​7/5

Weekly Change

YTD Change

DJIA

23327.46

26599.96

26922.12

1.21%

1​5.41%

Nasdaq

6635.28

8006.24

8161.79

1.94%

2​3.01%

S&P 500

2506.85

2941.76

2990.41

1.65%

1​9.29%

Russell 2000

1348.56

1566.57

1575.62

0.58%

16.84%

Global Dow

2736.74

30​74.41

3102.14

0.90%

13.35%

Fed. Funds target rate

2.25%-2.50%

2.25%-2.50%

2.25%-2.50%

0 bps

0 bps

10-year Treasuries

2.68%

2.00%

2.04%

4 bps

-64 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

  • There were 224,000 new jobs added in June, according to the Bureau of Labor Statistics. Employment growth has averaged 172,000 per month thus far this year, compared with an average monthly gain of 223,000 in 2018. In June, notable job gains occurred in professional and business services, health care, and transportation and warehousing. Both the unemployment rate and the number of unemployed inched up in June compared to May. The unemployment rate rose 0.1 percentage point to 3.7%, and the number of unemployed increased from 5.9 million in May to 6.0 million in June. The number of those unemployed for 27 weeks or longer increased 116,000 to 1.4 million in June from the prior month. The labor force participation rate inched up 0.1 percentage point to 62.9%. In June, the employment-population ratio was 60.6% for the fourth month in a row. The average workweek for all employees was unchanged at 34.4 hours in June. Average hourly earnings rose by $0.06 to $27.90 in June, following a $0.09 gain in May. Over the past 12 months, average hourly earnings have increased by 3.1%.
  • The two main sources for predicting manufacturing activity according to purchasing managers, the Institute for Supply Management® and IHS Markit, each reported that operating conditions in the manufacturing sector were relatively stagnant in June. The Markit report saw its manufacturing index inch up 0.1 percentage point to 50.6 in June compared to May. New order growth was the slowest it has been in almost three years. As output waned, manufacturers reined in hiring at its slowest pace in several years. Inflationary pressures remained muted despite slight accelerations in rates of output charge and input price inflation.
  • The report from the Institute for Supply Management® saw its purchasing manufacturing index fall 0.4 percentage point in June from May. Survey respondents reported that new orders fell, while production and new hires increased.
  • In the non-manufacturing or services sector, business slowed in June to its lowest rate in almost two years, according to the latest Non-Manufacturing ISM® Report On Business®. New orders, employment, and business activity (production) each dropped off in June, while costs edged up. This report, coupled with the reports on business activity in the manufacturing sector, may reinforce the expectation that the Federal Reserve will reduce interest rates later this summer.
  • The Census Bureau reported last week that the goods and services international trade deficit was $55.5 billion in May, up $4.3 billion from the April deficit. May exports were $210.6 billion, $4.2 billion more than April exports. May imports were $266.2 billion, $8.5 billion more than April imports. Year-to-date, the goods and services deficit increased $15.7 billion, or 6.4%, from the same period in 2018. Exports increased $5.1 billion, or 0.5%. Imports increased $20.8 billion, or 1.6%. May figures show monthly surpluses with South and Central America ($4.1 billion and Hong Kong ($2.6 billion). Notable monthly trade deficits in May existed with China ($30.1 billion), the European Union ($16.9 billion), Mexico ($9.1 billion), and Japan ($6.0 billion).
  • For the week ended June 29, there were 221,000 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 June 22. The advance number of those receiving unemployment insurance benefits during the week ended June 22 was 1,686,000, a decrease of 8,000 from the prior week's level, which was revised up by 6,000.

Eye on the Week Ahead

Inflationary pressures have been weak for much of the year. This week, both the Consumer Price Index and the Producer Price Index for June are out and will provide a good indication of the direction of consumer prices for the rest of the summer.

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

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