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Weekly Economic Update - 7.17.17

INFLATION PRESSURE WEAKENS

The Consumer Price Index was unchanged in June, according to the Bureau of Labor Statistics. That left its yearly advance at only 1.6%, nearly half a point below the Federal Reserve’s target (the core CPI was up 1.7%). After the announcement, some economists and market strategists wondered whether the Fed would rethink its plans for a third interest rate hike in 2017. The Producer Price Index rose 0.1% in June, leaving its yearly increase at 2.0%.1,2

   

RETAIL SALES, CONSUMER SENTIMENT INDEX DECLINE

For the second month in a row, households scaled back their retail purchases – retail sales were down 0.2% in June following a 0.1% May decline. Core sales fell 0.2% after a May retreat of 0.3%. The University of Michigan’s preliminary July consumer sentiment index lost 2.0 points off its final June mark to a reading of 93.1.1,2

 

OIL RALLIES

A projection of rising demand and news of a pipeline shutdown in Nigeria sent the price of light sweet crude 5.2% higher in a week. WTI crude settled at $46.54 on the NYMEX Friday, its best close since July 3.3

  

DOW ENTERS RECORD TERRITORY AGAIN

Friday, the Dow 30 notched its third straight record close: 21,637.74. At the same time, the S&P 500 also settled at a new record of 2,459.27. The Nasdaq Composite finished Friday’s market day at 6,312.47, a half-percent away from its all-time peak. For the week, the Dow rose 1.04%; the S&P, 1.41%; the Nasdaq, 2.59%.4,5

   

THIS WEEK: Monday’s earnings parade includes announcements from BlackRock, Charles Schwab, J.B. Hunt, and Netflix. On Tuesday, Wall Street examines earnings from Bank of America, CSX, Comerica, Goldman Sachs, Harley-Davidson, IBM, Johnson & Johnson, Lockheed Martin, TD Ameritrade, and UnitedHealth Group. Wednesday sees data on June housing starts and building permits, plus earnings from American Express, Fidelity National Financial, Morgan Stanley, Northern Trust, Qualcomm, T-Mobile, U.S. Bancorp, United Rentals, and W.W. Grainger. A new weekly initial claims report arrives Thursday, plus earnings news from Abbott Labs, Alliance Data Systems, American Airlines Group, BB&T, BoNY Mellon, Capital One, Cintas, eBay, E*TRADE, GATX, KeyCorp, Microsoft, NCR, Nucor, Philip Morris, Sherwin-Williams, Skechers, Snap-On, Travelers Companies, Union Pacific, Visa, and Whirlpool. On Friday, Colgate-Palmolive, Fifth Third Bancorp, General Electric, Honeywell International, Regions Financial, Schlumberger, and SunTrust Banks present earnings.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+9.49

+16.92

+13.87

+5.56

NASDAQ

+17.26

+25.40

+23.41

+13.32

S&P 500

+9.85

+13.66

+16.25

+5.84

REAL YIELD

7/14 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.57%

0.08%

-0.59%

2.73%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 7/14/175,6,7,8

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.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a 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 a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. 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. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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.

 

Citations.

1 - cnbc.com/2017/07/14/lack-of-inflation-raises-new-doubts-about-fed-ability-to-hike-interest-rates-this-year.html [7/14/17]

2 - investing.com/economic-calendar/ [7/14/17]

3 - marketwatch.com/story/oil-gains-pause-but-optimism-remains-after-iea-report-2017-07-14 [7/14/17]

4 - money.cnn.com/2017/07/14/investing/dow-record-trump-rally-wall-street/index.html [7/14/17]

5 - markets.wsj.com/us [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F14%2F16&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F14%2F16&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F14%2F16&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F13%2F12&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F13%2F12&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F13%2F12&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F13%2F07&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F13%2F07&x=0&y=0 [7/14/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F13%2F07&x=0&y=0 [7/14/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/14/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/14/17]

Weekly Economic Update - 7.10.17

HIRING PICKS UP AGAIN

The Department of Labor announced some good news Friday: the creation of 222,000 net new jobs in June, the largest hiring gain in four months. Approximately 4.7 million people reentered the labor force and found work in June, a peak unmatched in 27 years of monthly data. Wages rose 0.2% for an annualized gain of 2.5%. The main unemployment rate ticked north to 4.4% as more Americans joined the job hunt; the U-6 rate, including the underemployed, increased 0.2% to 8.6%, its first rise since January.1

   

ISM FACTORY PMI HITS 3-YEAR PEAK

In June, the Institute for Supply Management’s globally watched manufacturing purchasing manager index improved 2.9 points to 57.8, its highest reading since August 2014. ISM’s non-manufacturing PMI rose to 57.4 after a half-point gain; its June reading signaled the 90th straight month of expansion for the country’s service sector.2,3

 

GOLD SETTLES AT ITS LOWEST PRICE SINCE MARCH

The yellow metal fell to a COMEX close of $1,209.70 Friday. It is now on a 5-week losing streak. The price of gold sank 2.6% last week, while the price of silver dropped 6.9%; silver ended the week down at $15.43.4

  

MAJOR INDICES MAKE SMALL WEEKLY GAINS

Across a stretch of choppy trading days, the S&P 500 added just 0.07% to close at 2,425.18 Friday. The Nasdaq Composite and Dow Jones Industrial Average posted respective, 5-day advances of 0.21% and 0.30%. The Nasdaq wrapped up Friday’s market day at 6,153.08; the Dow, at 21,414.34.5

   

THIS WEEK: Monday, Barracuda Networks and WD-40 present earnings. On Tuesday, earnings appear from PepsiCo and Yum! Brands. Wednesday, Federal Reserve chair Janet Yellen visits Capitol Hill to begin two days of testimony on monetary policy in Congress; in addition, the Fed releases a new Beige Book, and Fastenal reports Q2 results. Thursday, Wall Street considers a new initial jobless claims report, plus the June Producer Price Index. On Friday, a river of data arrives: a new earnings season begins with announcements from Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo, complementing the initial July University of Michigan consumer sentiment index, the June Consumer Price Index, and June retail sales and industrial production reports.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+8.36

+19.66

+13.53

+5.73

NASDAQ

+14.30

+26.17

+21.90

+13.08

S&P 500

+8.32

+15.60

+15.80

+5.85

REAL YIELD

7/7 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.66%

-0.03%

-0.53%

2.79%

 

  


Sources: wsj.com, bigcharts.com, treasury.gov - 7/7/175,6,7,8

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.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a 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 a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. 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. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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.

 

Citations.

1 - bloomberg.com/news/articles/2017-07-07/wage-weakness-amid-solid-hiring-adds-to-u-s-economic-puzzle [7/7/17]

2 - cnbc.com/2017/07/03/june-ism-manufacturing-index.html [7/3/17]

3 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [7/6/17]

4 - marketwatch.com/story/gold-slips-set-for-weekly-decline-ahead-of-jobs-report-2017-07-07 [7/7/17]

5 - markets.wsj.com/us [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F7%2F16&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F7%2F16&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F7%2F16&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F6%2F12&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F6%2F12&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F6%2F12&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F6%2F07&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F6%2F07&x=0&y=0 [7/7/17]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F6%2F07&x=0&y=0 [7/7/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/7/17]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/7/17]

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