Stocks ended the week mixed with nice gains in the Nasdaq 100 Index on strong large tech earnings and modest declines in the Dow Industrials and emerging markets indices. The 2nd quarter GPD number showed a record decline but June data for durable goods and consumer spending came in positive.
The Federal Reserve met and extended seven emergency lending programs from the end of September to the end of the year. The FED also vowed to use all its tools to support the recovery.
New Covid cases slowed slightly in the past week as some states have reimposed restrictions.
Little progress has been made on a fifth coronavirus relief bill with Republicans and Democrats far apart on amounts and programs. The $600 supplemental unemployment benefit expired as has the moratorium on evictions. However, any legislation will likely be retroactive to August 1st. Negotiations will be continuing with likely no break for Congress until a bill passes both chambers.
Treasury yields fell with the 30-year bond yield at 1.197% and the 10-Year note at 0.531%. Crude oil fell to $40.39 a barrel and natural gas rose to $1.804 per MMBTUs. The U.S. dollar index ended the week lower at 93.45 and gold prices rose to $1990.10 an ounce.
In the economic numbers this week:
- Mexico reported it’s biggest-ever trade surplus in June of $5.55BN. This follows a trade deficit of $3.52BN in May. Still exports were down nearly 13% from a year ago and imports were down 22% from a year ago. Agricultural exports rose 32%, automotive exports rose 534% and oil exports fell 36%.
- Germany reported its gross domestic product fell 10.1% in the second quarter. On an annualized basis this was a 34.7% decline.
- The S&P CoreLogic Case-Shiller National Home Price Index was up 4.5% from a year ago, down from 4.6% year over year in May.
- The Commerce Department reported
- Durable goods orders rose 7.3% in June, the second monthly increase. New orders for motor vehicles and parts soared 85.7%. Non-defense capital goods excluding aircraft rose 3.3%. Still, durable goods orders are about 15% below February levels.
- U.S. gross domestic product fell 32.9% in the second quarter, the largest quarterly drop in records going back to 1947.
- Consumer spending rose 5.6% in June, however is still 7% below February.
- Personal Income fell 1.1% in June.
- The personal savings rate fell to 19% but is still at historically high levels. The personal savings rate was only 8.3% in February.
- The Labor Department reported:
- 1.43MM workers filed initial unemployment claims last week, up from the previous week as some states reverse course on reopening.
- Continuing unemployment claims rose 867,000 to 17MM.
- Factset reported with 63% of the S&P500 companies reporting 2nd quarter earnings, the blended earnings decline is 35.7%.
- The EIA weekly oil report is here wpsrsummary. Also, the EIA reported in the past week:
- Field production of crude oil was unchanged at 11.0MM barrels per day. The peak production at the end of February was 13.1MM barrels per day.
- Natural gas storage rose by 26BN cubic feet and is above the five year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 1 to 180 and the number of active natural gas rigs rose 1 to 69.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.