MARKET WATCH: NOVEMBER 23, 2020

Stock Market Indexes

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

• Sales of existing homes grew for the fifth consecutive month in October, climbing 4.3% from September. For the last 12 months ended in October, sales of existing homes are up 26.6%. These increases have occurred despite high unemployment relative to pre-pandemic levels. The median existing home price in October was $313,000, up from the September price of $311,800 and well ahead of the October 2019 median sales price of $271,100. Total housing inventory fell 2.7% in October from September and sits at an all-time low supply of 2.5 months at the current sales pace. Sales of single-family homes also increased by 4.1% last month and 26.7% over the last 12 months. The median existing single-family home price in October was $317,700, higher than the September price of $316,200.

• Sales at the retail level increased 0.3% in October from the previous month and 5.7% above October 2019. Retail trade sales also rose 0.3% in October. Retailers that enjoyed a surge in sales include nonstore (online) retail sellers (+29.1%), building material and garden equipment and supplies dealers (+13.2%), and food and beverage stores (+12.0%). Retail businesses that saw sales curtailed last month include electronics and appliance stores (-14.6%), gasoline stations (-16.1%), clothing and clothing accessories stores (-30.0%), and food services and drinking places (-19.3%).

• Import prices fell 0.1% in October, the first decline since April. Despite the October decline, import prices are up 1.0% for the 12 months ended in October. Fuel imports continued to decrease, dropping 1.9% in October after a 5.2% decline in September. Prices for fuel imports fell 27.4% for the year ended in October. Import prices excluding fuel rose 0.1% last month after a 0.5% increase in September. Export prices increased 0.2% in October, the fourth consecutive month of increases. Higher agricultural export prices drove the increase as nonagricultural exports were unchanged. Even with the increase, export prices declined 1.6% for the year ended in October.

• According to the latest report from the Federal Reserve, industrial production rose 1.1% in October, recovering much of its 16.5% decline from February to April. After edging up 0.1% in September, manufacturing output advanced 1.0% last month, although it remains 5.6% below its February level. Utilities output rose 3.9%, while the output for mines fell 0.6%. Total industrial production was 5.3% lower in October than it was a year earlier.

• The housing sector continued to show strength in October. Housing starts rose 4.9% last month, and single-family housing starts increased 6.4%. Housing completions slowed in October, dropping 4.5% from September’s rate, while the number of building permits issued was virtually unchanged.

• For the week ended November 14, there were 742,000 new claims for unemployment insurance, an increase of 31,000 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 was 4.3% for the week ended November 7, a decrease of 0.3 percentage point from the prior week’s rate. For comparison, during the same period last year, there were 232,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended November 7 was 6,372,000, a decrease of 429,000 from the prior week’s level, which was revised up by 15,000. The highest insured unemployment rates in the week ended October 31 were in Hawaii (8.3%), California (8.3%), New Mexico (8.0%), and Nevada (7.6%). The largest increases in initial claims for the week ended November 7 were in Washington (+7,683), California (+5,293), Massachusetts (+3,383), Alabama (+1,704), and Louisiana (+1,626). States with the largest decreases were in Georgia (-13,426), Illinois (-6,357), Kentucky (-4,830), and Texas (-3,934).

Eye on the Week Ahead

Thanksgiving week is filled with important reports, which will give a final picture of the state of the economy in October. The second iteration of the third-quarter gross domestic product is out this week. The first estimate showed the economy flipped from a second-quarter estimate of -31.4% to a 33.1% growth rate in the third quarter. Orders for durable goods have risen for five consecutive months through September and are expected to advance again in October. Sales of new, single-family homes slowed in September, while existing home sales continued to soar. The October numbers are expected to reverse course for new home sales and come in higher than in September. Finally, an important indicator of inflation, the personal income and outlays report, revealed that inflation at the consumer level has been muted for much of the year, advancing at a rate of 1.4% through September. October’s estimate is expected to remain at that same level.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: 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). 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. 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.

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