The holiday-shortened week can best be described as volatile. Some observers suggest investors may be retreating from stocks over uncertainties surrounding the pace of economic recovery coupled with easing inflation expectations. For much of the week, stock values road a roller-coaster ride of ups and downs, while Treasury prices climbed, pulling yields lower.
The market was closed last Monday in observance of Independence Day. Last Tuesday saw the yield on 10-year Treasuries fall to 1.37%, their lowest level since February. Energy, materials, financials, and industrials fell. The Russell 2000 fell 1.4%, the Dow dropped 0.6%, the Global Dow lost 1.1%, and the S&P 500 dipped 0.2%. Only the Nasdaq was able to eke out a 0.2% gain. Crude oil prices declined, while the dollar advanced.
Stocks were mixed last Wednesday as the Nasdaq and the S&P 500 each closed with fresh record highs; the Dow gained 0.3% but the Russell 2000 and the Global Dow lost value. Rising prices on 10-year Treasury notes pulled yields lower to close at 1.32%. The dollar inched higher. The minutes from the last Federal Reserve meeting showed that policymakers were still cautious about the economic outlook and were willing to remain patient about making changes to current stimulus policies. Among the market sectors, energy fell, with crude oil prices falling to $74.72 per barrel. Industrials and materials continued to show strength.
Equities retreated last Thursday as the Nasdaq, the Dow, and the S&P 500 gave back gains from the previous day. Each of the benchmark indexes listed here lost at least 0.7%, with the Global Dow (-1.1%) and the Russell 2000 (-1.0%) falling the most. Prices on 10-year Treasuries continued to rise, with a corresponding drop in yields. Crude oil prices rose, while the dollar fell. Not unexpectedly, each of the market sectors declined, led by financials (-2.0%), industrials (-1.4%), materials (-1.4%), and communication services (-1.1%).
Stocks closed last Friday on a high note. Each of the benchmark indexes listed here posted solid gains, led by the Russell 2000, which jumped 2.2%, followed by the Global Dow (1.4%) and the Dow (1.3%). The yield on 10-year Treasuries advanced for the first time in eight sessions. Crude oil prices increased 2.4%, while the dollar dipped lower. Financials, energy, and materials were sectors that climbed at least 2.0% last Friday.
Otherwise, stocks closed the week with mixed returns. The Nasdaq, the Dow, and the S&P 500 closed out the week ahead, while the Global Dow and the Russell 2000 lost value. Treasury yields, crude oil prices, and the dollar declined. Gold increased 1.1% for the week.
The national average retail price for regular gasoline was
$3.122 per gallon on July 5, $0.031 per gallon higher than the prior week's price
and $0.945 more than a year ago. Gasoline production increased during the week of July 5, averaging
10.6 million barrels per day, up from the prior week's average of 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 16.1 million barrels per day during
the week ended July 5; this was 184,000 barrels per day less than
the previous week's average. For the week ended July 5, refineries operated at 92.2% of their operable
capacity, down from the prior week's level of 92.9%.
Stock Market Indexes
Market/Index | 2020
Close | Prior Week | As of 7/9 | Weekly Change | YTD
Change |
DJIA | 30,606.48 | 34,786.35 | 34,870.16 | 0.24%
| 13.93%
|
Nasdaq | 12,888.28 | 14,639.33 | 14,701.92 | 0.43%
| 14.07%
|
S&P
500 | 3,756.07 | 4,352.34 | 4,369.55 | 0.40%
| 16.33%
|
Russell
2000 | 1,974.86 | 2,305.76 | 2,280.00 | -1.12%
| 15.45%
|
Global
Dow | 3,487.52 | 4,032.89 | 3,998.02 | -0.86%
| 14.64%
|
Fed. Funds target
rate | 0.00%-0.25% | 0.00%-0.25% | 0.00%-0.25% | 0
bps | 0 bps |
10-year
Treasuries | 0.91% | 1.43% | 1.35% | -8 bps | 44 bps |
US
Dollar-DXY | 89.84 | 92.24 | 92.10 | -0.15%
| 2.52%
|
Crude
Oil-CL=F | $48.52 | $75.20 | $74.69 | -0.68%
| 53.94%
|
Gold-GC=F | $1,893.10 | 1,789.00 | $1,808.60 | 1.10%
| -4.46%
|
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
- In June, the services sector noted a marked upturn in business activity, according to the IHS Markit U.S. Services PMI™. The Business Activity Index registered 64.6 in June, down from 70.4
in May. However, the latest expansion in output was the third-fastest since
data collection began in October 2009, only slower than recent
upturns in May and April, respectively. Rates of output
and new order growth eased from May's record highs, however,
while capacity constraints meant backlogs of work grew at the
quickest rate for 10 months. Meanwhile, input prices increased at the second-fastest rate on
record as supplier price hikes and greater wage bills pushed up
cost burdens.
- According to the latest Job Openings and Labor Turnover report, the number of job openings in May was little changed at 9.2 million. Job openings increased in other services (+109,000), state and local
government education (+46,000), and educational services (+35,000). The number of job openings
decreased in arts, entertainment, and recreation (-80,000); state and local government, excluding
education (-56,000); and federal government (-17,000). The number of hires dipped slightly in May to 5.9 million from April's 6.0 million. In May, total separations dropped by nearly 500,000 to 5.3 million. The number of layoffs and discharges fell marginally to 1.4 million in May. Over the 12 months ended in May, hires totaled 73.0 million and separations totaled 64.8 million,
yielding a net employment gain of 8.2 million.
- For the week ended July 3, there were 373,000 new
claims for unemployment insurance, an increase of 2,000 from the previous
week's level, which was revised up by 7,000. According to the Department of
Labor, the advance rate for insured unemployment claims for the week
ended June 26 was 2.4%, a decrease of 0.1 percentage point from the previous week's revised rate. The advance number of those receiving unemployment
insurance benefits during the week ended June 26 was 3,339,000, a decrease of 145,000 from the prior week's level, which was revised up by 15,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. For comparison, during the same period last year, there were
1,398,000 initial claims for unemployment insurance, and the insured unemployment
claims rate was 11.5%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States
and territories with the highest insured unemployment rates in the week ended
June 19 were in Rhode Island (4.6%), Puerto Rico (4.5%), Nevada (4.4%), California (4.0%), Connecticut (3.8%), Illinois (3.6%), Georgia (3.4%), New Jersey (3.4%), New York (3.4%), Alaska (3.2%), and the District of Columbia (3.2%). The largest increases in initial claims for the week ended June 26 were in Puerto Rico (+4,098), New Jersey (+3,381), Massachusetts (+2,845), New York (+1,857), and Connecticut (+1,516), while the largest decreases were in Pennsylvania (-17,664), Kentucky (-7,878), California (-7,643), Texas (-3,998), and Michigan (-2,880).
Eye on the Week Ahead
Inflationary indicators are front and center this week, with the latest reports on the Consumer Price Index and the Producer Price Index. The CPI increased 0.5% in May and is up 5.0% over the past 12 months. The PPI rose 0.8% in May and has climbed 6.6% since May 2020. If inflationary pressures are indeed transitory, as suggested by the Federal Reserve, then prices should begin to weaken somewhat over the next few months.
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. Forecasts are based on current conditions, subject to change, and may not come to pass. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities and other bonds fluctuates with market conditions. Bonds are subject to inflation, interest-rate, and credit risks. As interest rates rise, bond prices typically fall. A bond sold or redeemed prior to maturity may be subject to loss. 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 largest, publicly traded 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. The U.S. Dollar Index is a geometrically weighted index of
the value of the U.S. dollar relative to six foreign currencies. Market indices
listed are unmanaged and are not available for direct investment.
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