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MARKET WATCH: DECEMBER 2, 2019

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.

Market/Index	2018 Close	Prior Week	As of 11/29	Weekly Change	YTD Change
DJIA	23327.46	27875.62	28051.41	0.63%	20.25%
Nasdaq	6635.28	8519.88	8665.47	1.71%	30.60%
S&P 500	2506.85	3110.29	3140.98	0.99%	25.30%
Russell 2000	1348.56	1588.94	1624.50	2.24%	20.46%
Global Dow	2736.74	3141.77	3151.08	0.30%	15.14%
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%	1.77%	0 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.

Last Week’s Economic News

The second estimate for the third-quarter gross domestic product saw the economy expand at an annualized rate of 2.1%. The GDP grew at a 2.0% rate in the second quarter. Gross domestic income (the net of income earned and cost incurred in the production of GDP) increased 2.4% in the third quarter, compared with an increase of 0.9% in the second quarter. Compared to the second quarter, personal consumption expenditures fell from 4.6% to 2.9%, nonresidential fixed investment (company expenditures on business-related items) fell at a rate of 2.7%, exports grew from -5.7% to 0.9%, and imports increased from 0.0% to 1.5%. The personal consumption expenditure price index (a measure of consumer prices for goods and services) remained at 1.5% for the third quarter. PCE price index excluding food and energy increased 2.1%. Interestingly, corporate profits increased $4.6 billion in the third quarter, compared with an increase of $75.8 billion in the second quarter.

Personal income and disposable (after-tax) personal income slowed in October. Personal income was unchanged from September, while disposable personal income fell 0.1%. Consumer spending advanced 0.3% after climbing 0.2% the previous month. Price inflation remains relatively weak as the personal consumption price index rose 0.2% in October following no increases the previous two months. For the year, consumer prices are up 1.3% — well below the Federal Reserve’s target rate of 2.0%.

The international goods trade deficit was $66.5 billion in October, down $4.0 billion from $70.5 billion in September. Exports of goods for October were $135.3 billion, $0.9 billion less than September exports. Imports of goods for October were $201.8 billion, $5.0 billion less than September imports. Exports that notably decreased included industrial supplies (-3.0%), automotive vehicles (-2.4%), and consumer goods (-4.0%). Import items that fell included automotive vehicles (-5.9%), consumer goods (-4.8%), and foods, feeds, and beverages (-2.9%).

New orders for durable goods bounced back in October, increasing 0.6% following September’s 1.4% decrease. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 0.1%. Shipments of manufactured durable goods in October were virtually unchanged following three consecutive monthly decreases. New orders for nondefense capital goods in October increased 3.2% after falling 3.4% the prior month.

According to the latest report from the Census Bureau, sales of new single-family homes dropped 0.7% in October but are 31.6% above the October 2018 estimate. The median sales price of new houses sold in October 2019 was $316,700. The average sales price was $383,300. The estimated inventory of new homes for sale represents a supply of 5.3 months.

For the week ended November 23, there were 213,000 claims for unemployment insurance, a decrease of 15,000 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 dropped 0.1 percentage point to 1.1% for the week ended November 16. The advance number of those receiving unemployment insurance benefits during the week ended November 16 was 1,640,000, a decrease of 57,000 from the prior week’s level, which was revised up by 2,000. This is the lowest level for insured unemployment since August 4, 1973, when it was 1,633,000.

Eye on the Week Ahead

Following the short Thanksgiving week, November reports on manufacturing, trade, and jobs are available this week. Purchasing managers have not been bullish on manufacturing, although November could prove to be a more positive showing. Employment has been solid for quite some time, and November’s results should show more new jobs added.

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 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.

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

Stocks continue to rebound from their August declines, posting gains for the third week in a row. Each of the benchmark indexes listed here increased in value, led by the small caps of the Russell 2000, which climbed close to 5.0%. Trade tensions appeared to wane, at least for now, after China said that it wouldn’t impose tariffs on imports of certain U.S. agricultural goods. The European Central Bank initiated several stimulus measures, including an interest rate cut. Buoyed by these events, investors moved to stocks. Long-term bond yields soared as prices plummeted. The yield on 10-year Treasuries closed the week up 35 basis points. Year-to-date, the benchmark indexes are all well above their 2018 closing values.

Oil prices fell last week, closing at $54.82 per barrel by late Friday afternoon, down from the prior week’s price of $56.60. The price of gold (COMEX) fell for the third consecutive week, closing at $1,495.70 by late Friday afternoon, down from the prior week’s price of $1,514.70. The national average retail regular gasoline price was $2.550 per gallon on September 9, 2019, $0.013 lower than the prior week’s price and $0.283 less than a year ago.

Market/Index	2018 Close	Prior Week	As of 9/13	Weekly Change	YTD Change
DJIA	23327.46	26797.46	27219.52	1.58%	16.68%
Nasdaq	6635.28	8103.07	8176.71	0.91%	23.23%
S&P 500	2506.85	2978.71	3007.39	0.96%	19.97%
Russell 2000	1348.56	1505.17	1578.14	4.85%	17.02%
Global Dow	2736.74	3014.51	3085.67	2.36%	12.75%
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%	1.55%	1.90%	35 bps	-78 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

Inflationary pressures remain muted as the Consumer Price Index inched up 0.1% in August following a 0.3% bump in July. Over the last 12 months ended in August, the CPI has increased 1.7%. Energy prices fell 1.9%, pulled down by gasoline prices, which dropped 3.5%. The index less food and energy rose 0.3% in August, the same increase as in the previous two months. The index less food and energy rose 2.4% over the last 12 months, its largest 12-month increase since July 2018. Two of the biggest movers last month were prices for used cars and trucks, which increased 1.1%, and prices for medical care services, which jumped 0.9%.

Producers of goods and services saw prices creep up 0.1% in August, following a 0.2% increase in July and a 0.1% advance in June. For the 12 months ended in August, producer prices have risen 1.8%. Last month, goods prices actually fell 0.5%, the largest decrease since falling 0.6% in January. Falling energy prices accounted for over 80% of the drop. Prices for services climbed 0.3% last month, due in large part to a broad-based increase in prices for services less trade, transportation, and warehousing, which climbed 0.5%.

The August federal government budget deficit was $200 billion, up from the July deficit of $120 billion. Year-to-date, the deficit sits at $1,067 billion — $170 billion ahead of the deficit over the same period last year. Comparatively, total receipts ($3.088 billion) are ahead of total receipts last year ($2.985 billion). Total outlays ($4.155 billion) are above last year’s outlays ($3.883 billion).

Consumers upped their purchases of goods and services in August, according to the Census Bureau’s report on retail sales. A big increase in auto sales helped drive overall retail sales up 0.4% in August from the previous month, and 4.1% above August 2018. Retail sales excluding motor vehicles and parts showed no gain in August from July. Online retailers’ sales increased by 1.6% in August and are up 16% over a year ago.

A drop in fuel prices (-4.3%) sent import prices down 0.5% in August, according to the latest figures from the Bureau of Labor Statistics. In a sign of global inflationary weakness, import prices declined 2.0% from August 2018. Prices for exports decreased 0.6% last month after increasing 0.2% in July. The August decline was driven by price decreases in both agricultural (foods, feeds, and beverages) and nonagricultural exports (industrial supplies and materials).

According to the Job Openings and Labor Turnover Summary, there were 7.2 million job openings at the end of July, little changed from June’s figures. The number of hires edged up to 6.0 million (5.7 million in June), and separations also increased to 5.8 million (5.5 million in June). The job openings level decreased in wholesale trade (-55,000) and in federal government (-11,000). The job openings level increased in information (+42,000) and in mining and logging (+11,000). Over the 12 months ended in July, hires totaled 69.6 million and separations totaled 67.0 million, yielding a net employment gain of 2.6 million.

For the week ended September 7, there were 204,000 claims for unemployment insurance, a decrease of 15,000 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 August 31. The advance number of those receiving unemployment insurance benefits during the week ended August 31 was 1,670,000, a decrease of 4,000 from the prior week’s level, which was revised up by 12,000.

Eye on the Week Ahead

All eyes will be on the midweek meeting of the Federal Open Market Committee. Following its last meeting in July, interest rates were lowered 25 basis points. Economic conditions haven’t changed much over the summer. President Trump is demanding that the Committee lower rates again. With the stock market rebounding over the last two weeks, it’s possible the Committee holds course until it meets again at the end of October.

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%	12.69%
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 News

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.

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%	15.41%
Nasdaq	6635.28	8006.24	8161.79	1.94%	23.01%
S&P 500	2506.85	2941.76	2990.41	1.65%	19.29%
Russell 2000	1348.56	1566.57	1575.62	0.58%	16.84%
Global Dow	2736.74	3074.41	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.

The Markets (as of market close June 21, 2019)

Stocks enjoyed another week of strong growth as investors were encouraged by the Fed’s decision to keep interest rates unchanged and hope for a resolution to the ongoing trade war between the United States and China. Each of the benchmark indexes listed here posted solid gains last week, led by the Nasdaq and the Global Dow. During the week, the S&P 500 reached a record high, as did the Dow — this despite growing tensions between the United States and Iran. For the year, the Nasdaq is firmly ahead of its 2018 closing value, while the S&P 500 is approaching a gain of 20% for 2019.

Oil prices rose to $57.60 per barrel by late Friday afternoon, up from the prior week’s price of $52.51. On news that interest rates might be in line for a reduction, the price of gold (COMEX) spiked last week, climbing to $1,402.70 by late Friday afternoon, up from the prior week’s price of $1,344.80. The national average retail regular gasoline price was $2.670 per gallon on June 17, 2019, $0.062 lower than the prior week’s price and $0.209 less than a year ago.

Market/Index	2018 Close	Prior Week	As of 6/21	Weekly Change	YTD Change
DJIA	23327.46	26089.61	26719.13	2.41%	14.54%
Nasdaq	6635.28	7796.66	8031.71	3.01%	21.05%
S&P 500	2506.85	2886.98	2950.46	2.20%	17.70%
Russell 2000	1348.56	1522.50	1549.63	1.78%	14.91%
Global Dow	2736.74	2998.79	3081.62	2.76%	12.60%
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%	2.09%	2.06%	-3 bps	-62 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

Once again, the Federal Open Market Committee decided to maintain the federal funds rate at its current range of 2.25%-2.50%. Interestingly, one member of the voting Committee, St. Louis Fed President James Bullard, dissented in favor of lowering the target range for the federal funds rate by 25 basis points. The Committee noted that job gains have been solid, the unemployment rate has remained low, and household spending has picked up from earlier in the year. However, business fixed investment has been soft and inflation is running below the Committee’s 2% target rate.
New home construction slowed in May, which could impact available inventory over the summer. Housing starts and home completions fell 0.9% and 9.5%, respectively, in May. On the positive side, building permits increased 0.3%, and permits for single-family homes jumped 3.7% in May over April’s totals.
The housing market finally may be picking up steam. Sales of existing homes rose 2.5% in May over April’s revised total, which rose from a decline of 0.4%, to no change over March. Over the last 12 months, sales of existing homes are down 1.1%. The median existing-home price in May was $277,700 ($267,300 in April), up 4.8% from May 2018 ($265,100). Total housing inventory at the end of May increased to 1.92 million, up from 1.83 million existing homes available for sale in April. This represents a 4.3-month supply at the current sales pace, up from the 4.2-month supply in April.
For the week ended June 15, there were 216,000 claims for unemployment insurance, a decrease of 6,000 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 June 8. The advance number of those receiving unemployment insurance benefits during the week ended June 8 was 1,662,000, a decrease of 37,000 from the prior week’s level, which was revised up by 4,000.

Eye on the Week Ahead

The May figures on new home sales are available this week. Prices are rising and sales have been picking up. Also out this week are the final figures on the gross domestic product for the first quarter. The second iteration of the report showed the economy grew at an annualized rate of 3.1%.

The Markets (as of market close June 7, 2019)

Markets rebounded nicely last week on hopes that the Federal Reserve Board will cut interest rates in the near future. Early in the week, chairman Jerome Powell said the Fed was closely watching trade developments and signaled rate cuts may be an option if the economic outlook worsens. And on Friday, a weak jobs report supported the possibility of future rate cuts, further encouraging investors. All the indexes tracked here climbed more than 3%, with the large caps of the Dow and S&P 500 surpassing 4% for the week. With the exception of global stocks, all year-to-date returns topped 10%.

Oil prices rose to $54.04 per barrel by late Friday, up from the prior week’s price of $53.33. The price of gold (COMEX) also rose last week, reaching $1,345.00 by Friday evening, up from the prior week’s price of $1,310.30. The national average retail regular gasoline price was $2.807 per gallon on June 3, 2019, $0.015 lower than the prior week’s price and $0.133 less than a year ago.

Market/Index	2018 Close	Prior Week	As of 6/7	Weekly Change	YTD Change
DJIA	23327.46	24815.04	25983.94	4.71%	11.39%
Nasdaq	6635.28	7453.15	7742.10	3.88%	16.68%
S&P 500	2506.85	2752.06	2873.34	4.41%	14.62%
Russell 2000	1348.56	1465.49	1514.39	3.34%	12.30%
Global Dow	2736.74	2888.03	2990.88	3.56%	9.29%
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%	2.13%	2.09%	-4 bps	-59 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

The employment report revealed an increase of just 75,000 jobs in May, compared to a monthly average of 164,000 in 2019. Gains were reported in professional and business services and health care. Little change was noted in construction, mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government. Hourly wages increased by $0.06 to $27.83, bringing the average increase in hourly earnings over the past year to 3.1%. The March and April figures were revised downward by a total of 75,000 jobs.
At 50.5, the IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) reached its lowest level in May since September 2009, as output slowed and new orders dropped for the first time since August 2009. Weak demand and concerns surrounding ongoing trade negotiations caused manufacturers to express their joint-lowest level of confidence since the outlook was first measured in July 2012. The May reading was 2.1 points lower than April. “The data for the second quarter so far have indicated a distinct slowdown in the manufacturing sector compared to the first three months of 2019,” the report said.
Although the Institute for Supply Management (ISM) Purchasing Managers Index dropped 0.7 percentage point from its April reading, to 52.1% in May, the reading indicates that economic activity in the sector continued to expand (a reading above 42.9% over a period of time indicates expansion). New orders, employment, and prices rose, while production, supplier deliveries, and inventories decreased.
The ISM’s Non-Manufacturing Index came in at 56.9% in May, 1.4% higher than April. Business activity, new orders, and employment all posted gains, while prices decreased. According to the report, survey respondents “…are optimistic about overall business conditions, but concerns remain about tariffs and employment resources.”
According to the U.S. Census Bureau “Monthly U.S. International Trade in Goods and Services” report, the deficit fell $1.1 billion from March to April, to $50.8 billion. Exports were $206.8 billion, while imports were $257.6 billion. The April deficit reflected a decrease in the goods deficit of $1 billion, and an increase in the services deficit of $0.1 billion. Year-to-date, the goods and services deficit rose $4.1 billion, or 2%, from the same period in April 2018.
For the week ended June 1, there were 218,000 claims for unemployment insurance, unchanged from the previous week’s revised level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended May 25. The advance number of those receiving unemployment insurance benefits during the week ended May 25 was 1,682,000, an increase of 20,000 from the prior week’s level, which was revised up by 5,000.

Eye on the Week Ahead

Next week, investors and the Federal Reserve Board will get another perspective on how the economy is faring, as inflation numbers are on tap. Other key reports include the federal budget, retail sales, industrial production, and consumer sentiment.

The Markets (as of market close May 24, 2019)

With last week’s loss, the Dow suffered its longest weekly losing streak since 2011. Trade tensions between the United States and China seem to be taking a toll on investors’ patience. Each of the benchmark indexes listed here also posted weekly losses. Money moved to bonds, pushing prices higher and yields lower. Tech stocks were particularly hard-hit last week, as were energy stocks. Year-to-date, each of the benchmarks are still comfortably ahead of their 2018 closing values, but the gap is narrowing for some indexes, particularly the Global Dow and the Dow, which are now less than 10% ahead of their respective year-end closing marks.

Oil prices fell last week, closing at $59.04 per barrel by late Friday, down from the prior week’s closing price of $62.71 per barrel. The price of gold (COMEX) jumped last week, closing at $1,284.20 by Friday evening, up from the prior week’s price of $1,277.40. The national average retail regular gasoline price was $2.852 per gallon on May 20, 2019, $0.014 lower than the prior week’s price and $0.071 less than a year ago.

Market/Index	2018 Close	Prior Week	As of 5/24	Weekly Change	YTD Change
DJIA	23327.46	25764.00	25585.69	-0.69%	9.68%
Nasdaq	6635.28	7816.28	7637.01	-2.29%	15.10%
S&P 500	2506.85	2859.53	2826.06	-1.17%	12.73%
Russell 2000	1348.56	1535.76	1514.11	-1.41%	12.28%
Global Dow	2736.74	2977.45	2951.46	-0.87%	7.85%
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%	2.46%	2.37%	-9 bps	-31 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

Sales of existing homes continued to lag in April. According to the National Association of Realtors®, existing home sales fell 0.4% from their March total and are down 4.4% from a year ago. The median existing-home price for all housing types in April was $267,300, up from the prior month’s price ($259,400) and ahead of the median price from a year ago ($257,900). Total housing inventory increased from 1.67 million in March to 1.83 million in April. First-time buyers were responsible for 32% of sales in April, down from the 33% reported last month and one year ago. Sales for single-family existing homes fell about 1.1% in April and are down 4.0% from April 2018. The median existing single-family home price was $269,300 in April, up 3.7% from April 2018.
Sales of new single-family homes had been fairly strong through the first quarter of the year. However, April’s totals are definitely lagging. New home sales dipped 6.9% below March’s totals, although they’re 7.0% above sales from a year ago. The median sales price of new houses sold in April was $342,200 ($305,800 in March). The average sales price was $393,700 ($372,300 in March). There were about 332,000 new homes for sale in April, representing a supply of 5.9 months (5.6-month supply in March).
New orders for long-lasting goods fell 2.1% in April, after climbing 1.7% in March. Transportation equipment (primarily commercial aircraft and cars), down two of the last three months, drove the decrease, falling 5.9%. Shipments of manufactured durable goods in April, down three of the last four months, decreased 1.6%. Not surprisingly, inventories increased 0.4% in April.
According to the Department of Labor, there were 211,000 claims for unemployment insurance for the week ended May 18, a decrease of 1,000 from the previous week’s level. The advance rate for insured unemployment claims remained at 1.2% for the week ended May 11. The advance number of those receiving unemployment insurance benefits during the week ended May 11 was 1,676,000, an increase of 12,000 from the prior week’s level, which was revised up by 4,000.

Eye on the Week Ahead

The second estimate of the first-quarter gross domestic product is available this week. The advance estimate, released last month, showed the economy grew at an annualized rate of 3.2%. It is expected that the latest estimate will closely mirror the initial report.

The Markets (as of market close May 17, 2019)

Investors were heading for the hills early last week as stocks suffered their worst day on Monday following China’s announcement that it would impose an additional $60 billion in retaliatory tariffs on U.S. imports. Stocks for several companies with direct ties to China were hit particularly hard. The markets rebounded, but not enough to overcome the poor start early in the week. Helping to ease investors’ concerns over trade tensions, the Trump administration indicated that it would delay a decision on whether to impose tariffs on auto and parts imports. Then, last Friday afternoon, the administration announced that it had reached an agreement with Canada and Mexico that would end U.S. tariffs on steel and aluminum imports. Nevertheless, each of the benchmark indexes listed here lost value by last week’s end, led by the Russell 2000 and the Nasdaq. Year-to-date, the Nasdaq continues to lead the pack, ahead of its 2018 closing value by almost 18%.

Oil prices inched higher last week, closing at $62.71 per barrel by late Friday, up from the prior week’s closing price of $61.73 per barrel. The price of gold (COMEX) dropped again last week, closing at $1,277.40 by Friday evening, down from the prior week’s price of $1,286.50. The national average retail regular gasoline price was $2.866 per gallon on May 13, 2019, $0.031 lower than the prior week’s price and $0.007 less than a year ago.

Market/Index	2018 Close	Prior Week	As of 5/17	Weekly Change	YTD Change
DJIA	23327.46	25942.37	25764.00	-0.69%	10.44%
Nasdaq	6635.28	7916.94	7816.28	-1.27%	17.80%
S&P 500	2506.85	2881.40	2859.53	-0.76%	14.07%
Russell 2000	1348.56	1572.99	1535.76	-2.37%	13.88%
Global Dow	2736.74	2998.45	2977.45	-0.70%	8.80%
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%	2.46%	2.39%	-7 bps	-29 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

U.S. import prices advanced 0.2% in April, after increasing 0.6% in March. The April advance was driven by higher fuel prices, which more than offset decreasing prices for nonfuel imports. Despite the recent monthly advances, import prices declined 0.2% for the 12-month period ended in April, driven by lower nonfuel prices. Prices for U.S. exports rose 0.2% in April after a 0.6% rise in March, as nonagricultural exports outpaced declining agricultural exports. U.S. export prices rose 0.3% over the 12-month period ended in April. Of particular note, prices for imports from China declined 0.2% in April, and have decreased 1.1% since April 2018 — the largest over-the-year drop since May 2017. On the other hand, prices for exports to China rose 0.6% in April, but have otherwise declined 2.7% over the past 12 months. Increased U.S. tariffs on Chinese imports this month will likely change this scenario in May.
Retail sales fell 0.2% in April, but are still 3.1% above April 2018. Food and beverage store sales rose 0.2% in April, and gas station sales jumped 1.8%. However, building material and garden equipment and supplies dealers saw sales drop 1.9% last month, electronics and appliance store sales fell 1.3%, and sales for motor vehicle and parts dealers decreased 1.1%. Nonstore (online) retail sales lost 0.2% in April, but are up 9.0% from April 2018.
According to the Federal Reserve, the manufacturing sector slowed considerably in April. Overall, industrial production fell 0.5% last month, as did manufacturing. Not surprisingly, capacity utilization, which estimates sustainable potential output, dropped 0.6 percentage point from its March rate.
New home sales should continue to gain traction in May if April’s report on housing starts is any indication. According to the Census Bureau, issued building permits increased by 0.6% in April, while housing starts jumped 5.7% over March’s total. Home completions lagged (down 1.4%), but that could be attributable to April’s inclement weather across much of the country.
According to the Department of Labor, there were 212,000 claims for unemployment insurance for the week ended May 11, a decrease of 16,000 from the previous week’s level. The advance rate for insured unemployment claims remained at 1.2% for the week ended May 4. The advance number of those receiving unemployment insurance benefits during the week ended May 4 was 1,660,000, a decrease of 28,000 from the prior week’s level, which was revised up by 4,000.

Eye on the Week Ahead

The housing sector is in the news this week with the April figures for sales of both new and existing homes on tap. New home sales have picked up the past few months, but sales of existing properties have dragged, primarily due to scant inventory and rising prices.

The Markets (as of market close May 3, 2019)

Stocks “labored” for much of last week only to rally following a strong employment report. That report, coupled with the Fed holding interest rates steady, gave investors the confidence to stay in the “game” a little longer. Other than the Dow, each of the benchmark indexes listed here posted moderate gains by week’s end, led by the Russell 2000. While the Nasdaq bumped up a little less than a quarter of a point last week, it was enough to push that index to another record high. Equally impressive is the year-to-date performance of the stock market. The Nasdaq is more than 23.0% above its 2018 closing value, while the Russell 2000 is close to 20.0% higher.

Oil prices fell slightly last week, closing at $61.87 per barrel by late Friday, down from the prior week’s closing price of $62.80 per barrel. The price of gold (COMEX) fell last week, closing at $1,280.10 by Friday evening, down from the prior week’s price of $1,288.40. The national average retail regular gasoline price was $2.887 per gallon on April 29, 2019, $0.046 higher than the prior week’s price and $0.041 more than a year ago.

Market/Index	2018 Close	Prior Week	As of 5/3	Weekly Change	YTD Change
DJIA	23327.46	26543.33	26504.95	-0.14%	13.62%
Nasdaq	6635.28	8146.40	8164.00	0.22%	23.04%
S&P 500	2506.85	2939.88	2945.64	0.20%	17.50%
Russell 2000	1348.56	1591.82	1614.02	1.39%	19.68%
Global Dow	2736.74	3084.44	3097.28	0.42%	13.17%
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%	2.49%	2.52%	3 bps	-16 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

As expected, the Federal Open Market Committee maintained interest rates at their present level. The Committee noted that the labor market remains strong and that economic activity rose at a solid rate. However, growth of household spending and business fixed investment slowed in the first quarter. As to the prospect of future rate increases, the FOMC determined that it would be patient in light of global economic and financial developments and inflation running below its 2% objective.
April saw a whopping 263,000 new jobs added, and the unemployment rate dropped 0.2 percentage point to 3.6% — the lowest rate since December 1969. The April tally far exceeded the average monthly gain over the prior 12 months of 213,000. Notable job gains occurred in professional and business services (76,000), construction (33,000), health care (27,000), and social assistance (26,000). Employment in manufacturing changed little for the third month in a row, evidencing a stagnant manufacturing sector. The number of unemployed persons decreased by 387,000 to 5.8 million. The labor force participation rate declined by 0.2 percentage point to 62.8% in April but was unchanged from a year earlier. The employment-population ratio was unchanged at 60.6% in April and has been either 60.6% or 60.7% since October 2018. In April, average hourly earnings rose by $0.06 to $27.77. Over the year, average hourly earnings have increased by 3.2%. The average workweek decreased by 0.1 hour to 34.4 hours in April.
Personal income grew marginally in March, increasing 0.1% over February, according to the latest figures from the Bureau of Economic Analysis. Disposable (after-tax) income was effectively unchanged in March. On the income side of the report, wages and salaries grew 0.4%, and rental income increased 1.0%. Consumer costs for goods and services rose 0.2% in March. However, excluding food and energy, prices increased less than 0.1%. Consumer spending, as measured by personal consumption expenditures, increased 0.9% in March following a 0.1% bump in February. Of all the household expenditures for March, consumer spending on goods rose 1.7%, while spending on services increased 0.5%.
The international trade in goods (not including services) deficit for March was $71.3 billion, up $0.5 billion from February. Exports of goods in March were $1.4 billion more than February exports. Imports of goods were $2.0 billion more than February imports.
The IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 52.6, up slightly from March’s recent low of 52.4. Manufacturing increased moderately in April as new orders increased from March’s dreary totals. Although new business grew at a faster pace, the rate of job creation eased in April.
The Institute for Supply Management® also conducts a survey of purchasing managers. According to the report, survey respondents were not bullish on their assessment of the manufacturing sector in April. The PMI® fell 2.5 percentage points from its March reading. New orders, production expansion, prices, and employment all fell behind their March ratings. Only supplier deliveries and inventories advanced in April.
In the services sector, purchasing and supply executives indicated that business activity increased in April. However, new orders, employment, and prices fell off from the prior month.
For the week ended April 27, there were 230,000 claims for unemployment insurance, unchanged 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 April 20. The advance number of those receiving unemployment insurance benefits during the week ended April 20 was 1,671,000, an increase of 17,000 from the prior week’s level, which was revised down by 1,000.

Eye on the Week Ahead

The trade deficit has been shrinking through February. Out this week is the international trade report for March. A further narrowing of the trade deficit would be good news for investors.