Weekly Economic Update - John Rothe | Portfolio Manager, Quant, Tech Geek, And Sometime Superhero To My Kids

Weekly Economic Update

MODEST JOB GROWTH IN AUGUST

Payrolls expanded with 151,000 net new jobs last month, according to the Department of Labor’s latest report. The jobless rate was unchanged at 4.9%, and the U-6 rate tracking underemployment remained at 9.7%. After the release of the data, Wall Street traders saw only a 21% chance of a September interest rate hike by the Federal Reserve and a 55% chance of a rate increase by the end of 2016.1

    

FACTORY SECTOR CONTRACTS

Taking a surprisingly steep drop, the Institute for Supply Management’s manufacturing purchasing manager index fell down to 49.4 in August, indicating a slowdown in U.S. factory activity. In July, the PMI had a reading of 52.6.2

 

SOLID Consumer Confidence

The Bureau of Economic Analysis noted a 0.3% rise in personal spending and a 0.4% gain for personal income in July. The Conference Board’s consumer confidence index rose 4.4 points in August to an impressive 101.1 mark.2

 

PENDING HOME SALES IMPROVE

Housing contract activity increased 1.3% in July, according to the National Association of Realtors, more than offsetting the 0.8% June fall. The May edition of the 20-city S&P/Case-Shiller home price index showed a 5.1% year-over-year gain in home values.2

 

S&P 500 LOGS WEEKLY GAIN

Across five trading days, the broad benchmark rose 0.50% to 2,179.98. The Nasdaq and Dow posted similar gains in the same interval – the Nasdaq rose 0.59% to 5,249.90; the Dow, 0.52% to 18,491.96. The CBOE VIX – the “fear index” measuring market volatility – closed at just 11.97 Friday, down 12.31% for the week.3

 

THIS WEEK:

Monday is Labor Day, so U.S. financial markets will be closed. ISM’s August service sector PMI arrives Tuesday, plus earnings from Casey’s General Stores, Dave & Buster’s, and TiVo. Wednesday, Apple may unveil the iPhone 7 (and other new products) at its annual fall media event, the Federal Reserve issues a new Beige Book, and Hewlett Packard Enterprise and Valspar announce quarterly results. Thursday, the Department of Labor presents the latest initial claims figures and Barnes & Noble announces quarterly earnings. Friday, Hovnanian and Kroger report earnings.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +6.12 +13.09 +12.90 +6.13
NASDAQ +4.84 +10.52 +22.33 +13.94
S&P 500 +6.66 +11.86 +17.14 +6.63
REAL YIELD 9/2 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.13% 0.64% 0.00% 2.25%

 

Sources: wsj.com, bigcharts.com, treasury.gov – 9/2/163,4,5,6
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
1 – foxbusiness.com/markets/2016/09/02/tepid-august-jobs-report-lack-wage-growth-muddies-rate-hike-picture.html [9/2/16]
2 – investing.com/economic-calendar/ [9/2/16]
3 – markets.wsj.com/us [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F2%2F15&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F2%2F15&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F2%2F15&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F2%2F11&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F2%2F11&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F2%2F11&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F1%2F06&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F1%2F06&x=0&y=0 [9/2/16]
4 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F1%2F06&x=0&y=0 [9/2/16]
5 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/2/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/2/16]
This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.  All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Comments are closed.