US stocks rose modestly this week. Geopolitical risk may have edged down a notch with the Ukraine cease fire agreement. Most economic news was positive this week. Although a weak jobs number on Friday (given the bad news is good news mentality) seemed to boost stock prices as the anticipation of FED interest rate hikes waned. With the Advance & Protect Strategy we purchased the Fidelity Utilities ETF. Of particular note this week:
- The Institute for Supply Management Purchasing Manager’s Index increased substantially to 59.0 in August from 5.1 in July. Output, new orders and employment all gained.
- US car sales hit an eight year high in August.
- The FED’s Beige Book an analysis of the us economy was published this week. It was the third report in a row that reported modest, moderate or improving economic growth in all of the FED’s districts.
- The European Central bank reduced interest rates further with Banks being charged 0.2% to deposit funds with the central bank. The ECB’s lending rate was cut from 0.15% to .05%. The ECB also announced a bond buying program. These steps were taken to prevent Europe from slipping into deflation.
- First time claims for unemployment in the previous week rose by 4,000 to 302,000, slightly higher than expectations. The four week moving average also rose by 3,000 to 302,750.
- The Commerce Department reported that the US Trade Deficit fell in July by 0.6%. Exports rose faster than imports and reached a new record.
- The Labor Department revised it’s estimate of nonfarm productivity gain to a 2.3% rate in the second quarter down from the 2.5% originally reported. Year over year productivity gained 1.1%.
- According to the Labor Department Nonfarm employment expanded only 142,000, seasonally adjusted in August, much lower than expectations. July’s gain was revised up to 212,000 and June’s gain was revised down to 267,000. Year to date hiring has averaged 215,000 per month. The unemployment rate fell to 6.1%.