Despite a selloff on Monday, stocks gained for the week. Major market moving news each day.
Tuesday, stocks declined on fear of tariffs following the imposition of tariffs on consumer goods on Sunday. Also, U.S. Manufacturing posted contraction in August, the first month of contraction in three years.
Wednesday, stocks rose on optimism following Hong Kong executive Carrie Lam formally withdrew the extradition bill that sparked the protests. Also, several steps were taken by the U.K. parliament to prevent a hard Brexit.
Thursday, stocks rose again following the announcement of a high level meeting between the U.S. and China in early October.
Friday the U.S. posted a positive but weaker jobs number. This goldilocks number (not too hot, not too cold) increased the chances of another FED rate cut later this month.
We think it is important to take these developments with a grain of salt. While the October trade meeting will be the first since May, it is premature to assume any resolution to the trade war in the next few months. There still are other issues the Hong Kong protestors are striving for so it is unlikely that the protests will end. Federal Reserve research suggests trade uncertainty will reduce U.S. growth by 1%.
For the week, the U.S. dollar rose to a two year high against a basket of currencies. The 10-year treasury yield rose to 1.564%. Crude oil rose to $56.73 a barrel and gold fell to $1515 an ounce.
In economic numbers this week:
- The Institute for Supply Management reported that its U.S. purchasing managers Index fell from 51.2 in July to 49.1 in August. Anything less than 50 represents contraction. Also, the ISM report saw a drop in new export orders in August to the lowest level in a decade.
- China reported total exports fell 1% in August from a year earlier while exports to the U.S. fell 16%. China’s total imports fell 5.6% from a year earlier.
- Europe composite PMI (manufacturing and services) rose from 51.5 in July to 51.9 in August. Manufacturing rose from 46.5 to 47 (still contraction) and services rose from 53.2 to 53.5.
- The Federal Reserve reported that industrial production fell 0.2% in July. The biggest decline at 1.8% was in mining (which includes oil and gas drilling) while the biggest increase was in utility production up 3.1%
- The Commerce Department reported the trade gap in goods and services fell 2.7% in July. Imports fell 0.1% in July and were down 1% for the first seven months of 2019. Exports rose 0.6% in July including a rise of 9.6% in consumer goods and 4.6% in automobiles.
- The Labor Department reported:
- First time claims for unemployment rose 1,000 to a seasonally adjusted 217,000 last week. The four week moving average of claims, designed to smooth out weekly fluctuations, rose to 216,250.
- The U.S. created 130,000 jobs in the month of August. However, about 34,000 were due to census hiring.
- The unemployment rate was unchanged at 3.7%.
- The Labor Force participation rate increased from 63.0% in July to 63.2% in August.
- Over the past 12 months, wages have grown 3.2%.
- June and July payrolls were revised down a combined 20,000.
- Average weekly hours worked increased to 34.4.
- The Energy Information Administration weekly report is here wpsrsummary. Also, the EIA reported in the prior week:
- U.S. Crude oil production was decreased from 12.5M barrels per day to 12.4M barrels per day.
- Storage of natural gas rose 87BN cubic feet and is still below the past five year average for this time of year.
- Baker Hughes reported in the past week that the number of active oil rigs fell 4 to 738 and the number of active gas rigs fell 2 to 160.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith
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.