Financial Market Update
Welcome to the StrategicPoint Financial Market Update — a market and economic overview of what occurred last week and what’s up for this week. Please find our market commentary and most recent Blog posts in our StrategicPoint of View®.
Stocks have generally retreated in September on concerns that the Delta variant is slowing the economy’s rebound and that the markets, which had been surging, may be primed for a decline. The benchmark indexes generally lost ground for the second consecutive week, with only the Russell 2000 able to close the week in the black. Ten-year Treasury yields climbed 3 basis points last week, the dollar climbed higher, and crude oil prices increased $2.34 per barrel. Among the market sectors, only consumer discretionary (0.5%) and energy (3.3%) advanced. The remaining sectors lost value, led by materials (3.2%) and utilities (3.1%).
Wall Street opened last week mostly higher, with each of the benchmark indexes listed here advancing, except for the Nasdaq (-0.1%). The large caps of the Dow (0.8%) and the S&P 500 (0.2%) gained ground, as did the small caps of the Russell 2000 (0.6%) and the Global Dow (0.7%). The market sectors were mixed to higher, with energy gaining 2.9% and financials climbing 1.1%, while health care (-0.6%) and utilities (-0.2%) dipped. Crude oil prices eclipsed the $70.00-per-barrel price for the first time since early August. The dollar was little changed, and 10-year Treasury yields slid.
Last Tuesday was another rough day on Wall Street. Each of the benchmark indexes fell, as the spread of a COVID-19 outbreak in a Chinese province raised trade concerns and worries that economic growth would be hindered. The Russell 2000 dropped 1.1%, followed by the Dow (-0.8%), the Global Dow (-0.6%), the S&P 500 (-0.6%), and the Nasdaq (-0.5%). Yields on 10-year Treasuries dipped to 1.27%, while crude oil prices and the dollar advanced. The market sectors hung back, with energy (-1.6%), financials (-1.4%), industrials (-1.2%), and materials (-1.2%) dipping the furthest.
Stocks closed higher last Wednesday as energy shares advanced notably. Aside from utilities, each of the market sectors rose, with energy climbing 3.8%, followed by industrials, materials, and financials. The Dow, the S&P 500, and the Nasdaq finished at least 0.7% in the black for the day. Ten-year Treasury yields and crude oil prices rose, while the dollar dipped.
Wall Street followed a positive Wednesday by retreating on Thursday. Among the indexes listed here, only the Nasdaq inched higher, as the remaining benchmarks ended the day in the red. Treasury yields rose and the dollar strengthened. Crude oil prices slipped lower. The energy sector has been volatile in September. Following a notable gain last Wednesday, energy fell 1.1% on Thursday. Among the remaining market sectors, only real estate and consumer discretionary edged higher.
Equities closed the week generally lower last Friday. Only the Russell 2000 was able to eke out a 0.2% gain. The Nasdaq and the S&P 500 fell 0.9%. The Global Dow dropped 1.0%, and the Dow declined 0.5%. Treasury yields and the dollar advanced. Crude oil prices dropped. Several of the market sectors decreased, with materials (-2.01%), utilities (-1.6%), information technology (-1.5%), communication services (-1.3%), and industrials (-1.1%) tumbling the furthest.
The national average retail price for regular gasoline was $3.165 per gallon on September 13, $0.011 per gallon less than the prior week’s price but $0.982 higher than a year ago. Gasoline production decreased during the week ended September 10, averaging 9.3 million barrels per day. U.S. crude oil refinery inputs averaged 14.4 million barrels per day during the week ended September 10 — 85,000 barrels per day more than the previous week’s average. Refineries operated at 82.1% of their operable capacity, up from the prior week’s level of 81.9%.
S&P 500: 4,432 (down 0.57% for the week and up 18.02% for the year)
NASDAQ: 15,043 (down 0.47% for the week and up 16.73% for the year)
Dow: 34,584 (down 0.07% for the week and up 13% for the year)
US Treasury 10yr: 1.37% (from 1.34% last week)
Crude Oil: $71.96 (from $69.62 last week)
Gold: $1,752.60 (from $1,789.40 last week)
USD/Euro: $1.1727 (from $1.1811 last week)
Last Week’s Headlines
- The August federal government deficit was $170.6 billion, down from July’s $302.1 billion. August expenditures totaled $439.0 billion ($564.1 billion in July), while receipts equaled $268.4 billion ($262.0 billion in July). Of the total receipts in August, $231.0 billion is attributable to corporate and individual income taxes. Social Security ($95.0 billion) and income security ($93.0 billion) accounted for 57% of the total government outlays in August. Year to date, the government deficit sits at $2,710.6 billion, 10.9% lower than the government deficit ($3,007.3 billion) over the same period last fiscal year.
- The Consumer Price Index rose 0.3% in August after rising 0.5% in July. Over the last 12 months ended in August, consumer prices have advanced 5.3%. The index less food and energy rose 0.1% in August, its smallest increase since February 2021. Price increases in gasoline (2.8%), household furnishings and operations (1.3%), food (0.4%), and shelter (0.2%) contributed to the overall CPI increase in August. Several indexes declined in August, including airline fares (-9.1%), used cars and trucks (-1.5%), transportation services (-2.3%), and motor vehicle insurance (-2.8%).
- Import prices fell 0.3% in August, the first decrease since October 2020. The August downturn was mostly driven by a 2.4% decline in petroleum prices. Despite the declines in August, prices for import fuel rose 56.5% over the past year. Export prices rose 0.4% last month, the smallest one-month advance since October 2020. Agricultural export prices increased 1.1%, while nonagricultural export prices inched up 0.2%, the smallest monthly increase since last October.
- Industrial production rose 0.4% in August after climbing 0.8% the previous month. Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point. Despite interruptions caused by the hurricane, manufacturing output increased 0.2%. Hurricane Ida impacted mining production, which fell 0.6%. Utilities increased 3.3%, as unseasonably warm temperatures boosted demand for air conditioning.
- Retail sales rose 0.7% in August over July. Retail sales have risen 15.1% since August 2020. Retail trade sales were up 0.8% last month and up 13.1% from a year ago. Clothing and clothing accessories stores sales were up 38.8% from August 2020, while gasoline station sales were up 35.7% from last year. Online sales jumped 5.3% in August after falling 4.6% the previous month.
- For the week ended September 11, there were 332,000 new claims for unemployment insurance, an increase of 20,000 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 for the week ended September 4 was 1.9%, a decrease of 0.2 percentage point from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended September 4 was 2,665,000, a decrease of 187,000 from the prior week’s level, which was revised up by 69,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, during the same period last year, there were 860,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 8.7%. 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 for the week ended August 28 were Puerto Rico (4.5%), California (3.7%), New Jersey (3.4%), the District of Columbia (3.3%), Illinois (3.1%), New York (3.0%), Rhode Island (2.9%), Connecticut (2.8%), Georgia (2.8%), and Hawaii (2.6%). States and territories with the largest increases in initial claims for the week ended September 4 were Louisiana (+7,664), Michigan (+5,318), California (+1,209), Kansas (+528), and Nevada (+420), while the largest decreases were in Missouri (-6,949), New York (-3,020), Florida (-2,482), Tennessee (-1,923), and Georgia (-1,814).
August data for the housing sector is available this week. The pace of sales for both new and existing homes has slowed from its torrid pace earlier in the year. The big news this week focuses on the meeting of the Federal Open Market Committee. It is possible that the Committee will present a firmer timeline for scaling back its current bond purchasing program.
The Novice and The Nerd Podcast: Is Social Security about to run out of money?
A new report released recently included some disappointing news about the state of Social Security. On this episode we discuss when it could happen, how it can affect your retirement projections and how the government could step in.
The Novice and The Nerd Podcast: Is it STILL time to refinance?
Haven’t refinanced yet? The Nerd discusses why he’s refinancing for 2nd time in 18 months and why you might want to hurry up!
*Past performance is not indicative of future results. Indices are unmanaged and you cannot directly invest in them. The Nasdaq Composite Index measures all NASDAQ U.S. and non-U.S. based common stocks listed on the Nasdaq Stock Market. The S&P 500 index is based on the average performance of 500 industrial stocks monitored by Standard and Poor’s. The data referred to above was taken from sources believed to be reliable. StrategicPoint Investment Advisors has not verified such data and no representation or warranty, expressed or implied, is made by StrategicPoint Investment Advisors.
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 information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Third party content does not reflect the view of the firm or of our parent company, Focus Financial Partners. LLC and is not reviewed for completeness or accuracy. It is provided for ease of reference.
Parts of this report were prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021. Part of this content contributed by Forefield, Inc.