Stocks endured a losing week for the first time since early July. Each of the benchmark indexes listed here lost value, with the S&P 500 and the Nasdaq suffering the steepest weekly declines since March. Investors dealt with the downgrade of the U.S. government’s credit rating and evidence that job growth may be slowing (see below). Corporate earnings have generally matched or beaten expectations, but a couple of bellwether tech and communications companies proffered disappointing earnings. Bond prices fell, pushing yields higher. The dollar rose higher, while gold prices slid lower.
The stock market took a tumble last Wednesday, with the Nasdaq experiencing its worst day in nearly five months. Investors may have been rattled after the credit rating firm Fitch downgraded the U.S. government’s credit rating, which prompted an angry response from the White House and the Treasury Department. Fitch based its rating decision, in part, on the federal government’s growing levels of debt and political instability, including the January 6, 2021 attack on the Capitol.
Stock Market Indexes
Last Week’s Economic News
In July, job gains occurred in health care, social assistance, financial activities, and wholesale trade. The unemployment rate ticked down 0.1 percentage point to 3.5%. The labor force participation rate and the employment-population ratio, at 62.6% and 60.4% respectively, were virtually unchanged from the previous month.
While the overall economy seems to be holding up despite rising interest rates, one sector that apparently has been impacted is manufacturing. According to the latest survey by S&P Global, U.S. manufacturing declined further in July following a downturn in June. New orders contracted, leading firms to scale back their input buying, which caused a depletion in inventories.
Unlike manufacturing, the services sector continued to expand in July, but at a slower pace than in the previous month. Business activity and new orders increased, although rising interest rates weighed on customer spending. Nevertheless, exports rose at a faster pace.
Eye on the Week Ahead
Inflation data for July is available this week. The most recent Consumer Price Index showed prices rose 0.2% in June, while the 12-month increase was 3.0%. The Producer Price Index revealed prices inched up 0.1% in June and 0.1% over the last 12 months. Inflationary pressures are clearly waning, while the economy has shown resilience.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: 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). 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. 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. Forecasts are based on current conditions, subject to change, and may not come to pass. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities and other bonds fluctuates with market conditions. Bonds are subject to inflation, interest-rate, and credit risks. As interest rates rise, bond prices typically fall. A bond sold or redeemed prior to maturity may be subject to loss. 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 largest, publicly traded 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. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indexes listed are unmanaged and are not available for direct investment.
Advisory Services are offered through MRA Advisory Group, a Registered Investment Adviser. This information was developed by Broadridge, an independent third party. It is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. The investments and strategies mentioned may not be suitable for all investors. Past performance is no guarantee of future results. Nothing herein, nor any attachment, shall be considered to constitute (i) an offer to sell, nor a solicitation of an offer to purchase, any security, or (ii) tax or legal advice.