Major stock indices finished the week higher amid strong earnings and economic data, with the S&P 500 and the Nasdaq finishing at record highs.  Interest rates came back down with the 10-year treasury yield dropping 3 basis points to 2.83%.  Short-term interest rates were virtually unchanged, resulting in the spread between the 2-year treasury yield and the 10-year treasury yield to also drop by 3 basis points to a very narrow 0.22%.  The price of gold jumped 2.22% to $1,211.50 an ounce after Fed Chair Jerome Powell announced at the Jackson Hole Economic Symposium that he defends gradual rate hikes and sees no sign of an inflation spike.  The price of crude oil jumped 4.10% to $68.59 a barrel amid a big drop in U.S. crude supply.  The U.S. dollar index dropped to 95.13 from 96.11 the week prior.

 

Index Started Week Ended Week Change Change % YTD %
DJIA 25,669.32 25,790.35 121.03 0.47% 4.33%
Nasdaq 7,816.33 7,945.98 129.65 1.66% 15.10%
S&P 500 2,850.13 2,874.69 24.56 0.86% 7.52%
Russell 2000 1,692.95 1,725.67 32.72 1.93% 12.38%

 

THIS WEEK’S HIGHLIGHTS

 

  • Existing home sales dropped 0.7% in July to an annualized rate of 5.34 million, continuing its downward trend as mortgage rates rise. As a result of the downward trend, existing home sales have now fallen 1.5% over the past year.

 

  • New home sales also dropped in July but by 1.7% to an annualized rate of 627,000. However, the good news is supply of new homes rose by 2.0% to 309,000 for its largest reading since 2009.

 

  • The Federal Open Market Committee signaled in the minutes of their July 31st and August 1st meeting that they are likely to raise the Federal Funds Rate next month. They also noted their worries that a trade war poses the biggest threat to a strong growing economy.

 

  • Initial unemployment claims fell by 2,000 for the week ending August 18th to a total of 210,000. The less volatile 4-week moving average of initial unemployment claims fell by 1,750 to a total of 213,750.  Continuing unemployment claims also inched a moderate 2,000 claims lower to 1.72 million with its 4-week moving average dropping 5,000 to 1.74 million.

 

  • New orders of U.S. durable goods fell by 1.7% in July as the volatile commercial aircraft component drags it lower. However, excluding the transportation component (which includes commercial aircrafts), new orders of U.S. durable goods in fact rose by 0.2%.

 

QUOTE OF THE WEEK

“There are only two tragedies in life: one is not getting what you want, the other is getting it.”

– Oscar Wilde

 

 

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