The Markets
Stocks continued to
surge for the third week in a row as each of the indexes listed here
posted significant gains by last week's end. The Dow gained almost 370
points and over 2.0%, and is substantially ahead of its 2015 closing
value. The S&P 500 also pushed nearly 6.0% ahead of last year's
closing value. And the Nasdaq, which had yet to reach its year-end
value, finally passed that mark after gaining almost 1.5%. Clearly
moving past Brexit panic, the Global Dow gained over 3.0% on the week
and is 2.5% past its 2015 closing value. As prices dropped, the 10-year
Treasury yield rose nearly 20 basis points on the week.
Crude oil (WTI) closed
at $46.28 a barrel last week, up from $45.21 per barrel the previous
week. The price of gold (COMEX) fell to $1,337.70 by late Friday
afternoon, down from the prior week's price of $1,367.40. The national
average retail regular gasoline price decreased for the fourth
consecutive week to $2.253 per gallon on July 11, $0.038 under the prior
week's price and $0.581 below a year ago.
Last Week's Headlines
- Businesses are paying more for goods
and services as the Producer Price Index increased 0.5% in June, the
largest increase in a year, according to the Labor Department. Higher
energy costs pushed the increase. Since businesses usually pass on
increases in the cost of goods and services, it's likely consumer prices
will increase as well, driving inflation upward.
- In fact, consumer prices did increase
in June--just not at quite the same rate as producer prices. The
Consumer Price Index rose 0.2%, following the same increase in May and a
0.4% gain in April. Over the last 12 months, the CPI has increased
1.0%. Excluding the volatile food and energy components, consumer prices
still increased 0.2% in June and 2.3% from a year earlier.
- Consumers continue to spend as retail
sales increased in June, jumping 0.6% from the previous month and 2.7%
ahead of last June. This follows a 0.2% (downwardly revised) increase in
May. Excluding autos and gas, household spending climbed 0.7% from May.
Output excluding autos remained the same as the prior month. This
report, coupled with increases in consumer and producer prices, provides
optimism for the economy over the summer months.
- The manufacturing sector experienced a
noticeable uptick in June, as industrial production increased 0.6%
after falling 0.3% in May. Manufacturing output rose 0.4%, largely due
to an increase in motor vehicle assemblies. June's gain is the largest
monthly increase since November 2014.
- The number of job openings decreased
by 345,000 to 5.5 million on the last business day of May, according to
the Job Openings and Labor Turnover Survey (JOLTS) report from the
Bureau of Labor Statistics. April's rate was 5.8 million. May's job
openings rate is the lowest of the year. The quits rate was unchanged at
2.0% as workers continue to remain at their present jobs. It's
important to remember that June's employment situation report showed
significant improvement on the labor front.
- U.S. import prices rose 0.2% in June
from May, largely due to a spike in petroleum prices. Exports also
increased in June, rising 0.8% following increases of 1.2% in May and
0.4% in April. The 2.4% rise in export prices for the second quarter of
2016 was the largest three-month advance in export prices since the
index rose 2.7% between February and May 2011.
- The Treasury Department reported a
$6.3 billion budgetary surplus in June, following May's $52.5 billion
deficit. However, over the first nine months of the fiscal year, the
deficit is up almost 27%, at $400.9 billion, over the same period last
year ($316.4 billion).
- Largely influenced by the immediate
negative impact of the Brexit vote, the Index of Consumer Sentiment fell
from 93.5 in June to 89.5 in July.
- In the week ended July 9, the advance
figure for seasonally adjusted initial unemployment insurance claims
remained level at 254,000, unchanged from the prior week's level. The
advance seasonally adjusted insured unemployment rate remained at 1.6%.
The advance number for seasonally adjusted insured unemployment during
the week ended July 2 was 2,149,000, an increase of 32,000 from the
previous week's revised level.
Eye on the Week Ahead
This week focuses on the housing sector as June's reports on housing
starts and existing homes sales are released. New home building slipped a
bit in May, while existing home sales picked up. Overall, the housing
market has been fairly strong with prices rising and inventory having a
hard time keeping up with demand.
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.
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