Weekly Economic Update 08/06/2018

ECONOMY ADDS 157,000 NET NEW JOBS

Employers expanded their payrolls in July, but new Department of Labor data showed the hiring pace slowing down. May and June gains, however, were revised up by a combined 59,000, bringing average monthly job growth over the past three months to 224,000. Even with fewer hires, the headline unemployment rate ticked down to 3.9%, and the U-6 rate (factoring in underemployed workers) dropped 0.3% to 7.5%, underneath where it was in July 2017. Last month, wages had improved 2.7%, year-over-year.1

GOOD NEWS FOR CONSUMER SPENDING AND CONSUMER CONFIDENCE

Personal spending, according to the Department of Commerce, rose 0.4% during June on the heels of a 0.5% May climb. Personal incomes improved by 0.4% in June, duplicating the number from May. Beating the 127.0 forecast of analysts surveyed by MarketWatch, the Conference Board’s July consumer confidence index rose 0.3 points to 127.4.2

ISM PURCHASING MANAGER INDICES DECLINE

While still in fine shape, the Institute for Supply Management’s twin gauges measuring economic activity in the factory and service sectors fell last month. The Institute’s manufacturing PMI went from a 60.2 June reading to a 58.1 July mark. ISM’s non-manufacturing PMI lost 3.4 points on the month, heading down to 55.7.3

STOCKS ADVANCE FOR A FIFTH STRAIGHT WEEK

Up 0.76% over five trading sessions, the S&P 500 settled at 2,840.35, Friday. The Nasdaq Composite added 0.96% for the week, reaching 7,812.01 at Friday’s closing bell. Blue chips were flat for the week: the Dow Industrials gained but 0.05% to 25,462.58. All three indices were positive for Friday, even with news that China planned to levy import taxes on $60 billion more of American exports.4,5

THIS WEEK

  • Monday’s earnings parade includes announcements from Andeavor, Boise Cascade, Hertz Global Holdings, Marriott International, Mosaic, Sempra Energy, Tyson Foods, and Weight Watchers.
  • Tuesday, Wall Street considers earnings from Aramark, Avis Budget Group, Camping World, Dean Foods, Discovery Channel, Hostess Brands, Invacare, Office Depot, Papa John’s, Snap, Walt Disney Co., and Wendy’s.
  • Earnings from CVS Health, Green Dot, Horizon Pharma, Keurig Dr. Pepper, Manulife, Michael Kors, Monster Beverage, Roku, Sinclair Broadcasting, Starwood Hotels & Resorts, Sunoco, TiVo, Twenty-First Century Fox, U.S. Auto Parts, Weibo, Wyndham Destinations, and Yelp appear Wednesday.
  • Thursday, the July Producer Price Index arrives, along with a new initial jobless claims report and earnings from Gannett, Lions Gate, News Corp., Norwegian Cruise Line, Planet Fitness, Tronc, Viacom, and Vista Outdoor.
  • Friday marks the appearance of the July Consumer Price Index.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA 3.01 15.60 12.52 12.56
NASDAQ 13.16 23.21 22.35 24.18
S&P 500 6.24 14.89 13.23 12.74
REAL YIELD 8/3 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.83 0.46 0.42 1.64

Sources: wsj.com, bigcharts.com, treasury.gov – 8/3/18 5,6,7,8
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.


WEEKLY TIP

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CITATIONS:
1 – nbcnews.com/business/economy/price-rising-employment-slow-wage-growth-trade-risks-n897461
2 – marketwatch.com/economy-politics/calendars/economic
3 – instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm
4 – foxbusiness.com/markets/stock-futures-cautiously-lower-ahead-of-july-jobs-report [8/3/18]
5 – markets.wsj.com/us
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F3%2F17&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F3%2F17&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F3%2F17&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F2%2F13&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F2%2F13&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F2%2F13&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F4%2F08&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F4%2F08&x=0&y=0
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F4%2F08&x=0&y=0
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll