EQUITIES MOSTLY ADVANCE THIS WEEK AS THE DJIA RECORDS ITS BEST RALLY IN 6 YEARS ON HOPES THAT A SOFT-LANDING IS POSSIBLEWeekly Market Update — July 22, 2023 |
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Weekly Market Performance
*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD. This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results. |
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Equities Mixed This Week as Soft Landing Looks PossibleStocks had a pretty good week, as three of the four major U.S. equity indexes advanced on hopes that a soft landing engineered by the Federal Reserve was becoming more possible. And the signs reinforcing the notion of a soft landing were in jobless claims, housing and industrial production. The tech-heavy NASDAQ declined slightly this week, weighed down by Netflix mid-week. And not surprisingly, Value stocks outperformed the Growth names by a slight margin. Big picture, equities have rebounded nicely off the October bear-market lows, gaining back most of that 25%+ loss between January and October of last year. Further, equities continued to move higher, and now the S&P 500 is within 6% of its all-time high. It’s also interesting to note that small-caps have rallied 7% in less than three weeks. There was a lot of economic data to digest this week, including Retail Sales (up slightly), Industrial Production (down slightly) and Housing Starts (down slightly), plus the following:
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Retail Sales UpThe U.S. Census Bureau reported that total retail sales in June increased 0.2% month-over-month, which was generally weaker than expected. Further:
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Housing Starts Decline in JuneTotal housing starts declined 8.0% month-over-month in June to a seasonally adjusted annual rate of 1.434 million, with single-family starts down in all regions except the West (+4.6%). In addition, building permits decreased 3.7% month-over-month, with permits for single-family units flat to positive in all regions. In addition:
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Industrial Production Drops Slightly in June But is Up Slightly for 2Q2023On Tuesday, the Federal Reserve reported that Industrial Production declined 0.5% in June for a second consecutive month but advanced 0.7% at an annual rate for the second quarter as a whole. Manufacturing output moved down 0.3% in June but rose 1.5% in the second quarter. In June, the indexes for mining and utilities fell 0.2% and 2.6%, respectively. At 102.2% of its 2017 average, total industrial production in June was 0.4% below its year-earlier level. Capacity utilization stepped down to 78.9% in June, a rate that is 0.8% point below its long-run (1972-2022) average. Market GroupsMost major market groups posted declines in June. The index for consumer durables fell 2.7%, led by notable decreases in the output of appliances, furniture, and carpeting (3.8%) and of automotive products (3.6%). The decrease of 0.9% in the index for consumer nondurables reflected declines in clothing (2.1%), energy (1.8%), and food and tobacco (1.3%). Within business equipment, an increase in the index for information processing was offset by decreases in the indexes for transit and for industrial and other. Defense and space equipment posted the only gain of 1.5% or greater among the market groups. Industry GroupsManufacturing output moved down 0.3% in June. For the second quarter, factory output moved up 1.5% at an annual rate, buttressed by a second-quarter jump of 36.7% in the production of motor vehicles and parts during the quarter. In June, the indexes for nondurable manufacturing and durable manufacturing fell 0.6% and 0.1%, respectively; the index for other manufacturing (publishing and logging) edged down 0.2%. Within nondurables, only chemicals recorded an increase, whereas decreases of at least 1% were recorded by most other industries. Notable declines occurred in the indexes for printing and support (2.5%) and petroleum and coal products (1.6%). The index for durable manufacturing, on the other hand, posted more mixed results in June, with declines in the output of motor vehicles and parts (3.0%) and of nonmetallic mineral products (1.2%) being mostly offset by gains elsewhere. Mining output inched down 0.2% in June and declined 1.1% at an annual rate in the second quarter. Within mining, a drop of 2.8% in the index for oil and gas well drilling in June was nearly offset by a gain in oil and gas extraction. The output of utilities fell 2.6% in June and 2.0% in the second quarter. Capacity utilization for manufacturing edged down to 78.0% in June, a rate that is 0.2% point below its long-run (1972-2022) average. The operating rate for mining ticked down 0.1% point to 91.6%, and the operating rate for utilities dropped 2.1% points to 68.5%. The rate for mining was 5.2% points above its long-run average, while the rate for utilities remained well below its long-run average. |
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Sources
federalreserve.gov ; conference-board.org; census.gov ; msci.com; fidelity.com; nasdaq.com; wsj.com; morningstar.com; census.gov ; |
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