Stocks had their worst week since March of 2023. Major stock indices ended significantly lower with the biggest drop in the Russell 2000 small cap and the tech heavy Nasdaq 100. North American manufacturing PMIs fell more rapidly in August while services PMIs improved in the U.S. and Canada.
OPEC+ decided to delay a reduction in cuts from October to December due to low oil prices. That would have increased production by 180,000 barrels per day. OPEC+ has cut a total of 2.2MM BPD due to low prices and high inventories. It should also be noted that Libya recently went offline due to a standoff between the competing governments in the eastern and western parts of the country. It is not known if this will be a long-term problem.
Treasury bond yields fell with the 30-year bond yield at 3.97% and the 10-Year note at 3.67%. Freddie Mac reported that the average 30-year mortgage rate was unchanged at 6.35%. Crude oil fell to $68.23 a barrel and natural gas rose to $2.273 per MMBTUs. The U.S. dollar index fell to 101.08 and gold fell to $2537.80 an ounce.
In economic reports this week:
- S&P Global released its purchasing manager’s indices for August. Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction.
- U.S. manufacturing PMI fell from 49.6 to 47.9.
- U.S. services PMI rose from 55.0 to 55.7.
- Canada manufacturing PMI fell from 47.8 to 49.5.
- Canada services PMI rose from 47.3 to 47.8.
- Mexico manufacturing PMI fell from 49.6 to 48.5.
- China manufacturing PMI rose from 49.8 to 50.4.
- China services PMI fell from 52.1 to 51.6.
- Eurozone manufacturing PMI was unchanged at 45.8.
- Eurozone services PMI rose from 51.9 to 52.9.
- Japan manufacturing PMI rose from 49.1 to 49.8.
- Japan services PMI was unchanged at 53.7.
- Cox Automotive reported that new car sales rose 8% in August and used car sales were up 4%.
- The Commerce Department reported:
- Construction spending fell 0.3% in July and June was revised up to no change.
- Construction spending fell 0.3% in July and June was revised up to no change.
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- The U.S. trade deficit rose 7.9% in July to the highest level in two years.
- The U.S. trade deficit rose 7.9% in July to the highest level in two years.
- The Labor department reported:
- Job openings were little changed at 7.7MM in July, but are down 1.1MM for the year.
- Hires were 5.5MM, little changed.
- Total separations were 5.4MM.
- The U.S. added 142,000 jobs in August.
- The gains were mostly in construction and healthcare.
- The unemployment rate was little changed at 4.2%.
- The labor force participation rate was unchanged at 62.7%.
- Average hourly wages rose $0.08 to $35.21 and have risen 3.8% over the past 12 months.
- July’s jobs number was revised down to 89,000, the lowest since December, 2020.
- Seasonally adjusted first-time claims for unemployment were 227,000, a decrease of 5,000 from the previous week’s revised level.
- The 4-week moving average of claims, designed to smooth out volatility, was 230,000, a decrease of 1750 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- Job openings were little changed at 7.7MM in July, but are down 1.1MM for the year.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil was unchanged at 13.3MM BPD.
- Natural gas storage rose 13BN cubic feet and is above the average level during the past five years at this time of year.
- Baker Hughes reported the number of oil rigs was unchanged at 483 and the number of natural gas rigs fell 1 to 94.
- Factset reported with 99% of S&P 500 companies reporting, the blended earnings increase was 11.3%
Please call us if you have any questions.
Loren Rex – Emeritus
Erik A Smith, AIF® – President & C.E.O.
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. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
https://bakerhughesrigcount.gcs-web.com/na-rig-count
https://www.census.gov/economic-indicators
https://www.bls.gov/news.release/jolts.nr0.htm
https://www.coxautoinc.com/market-insights/cox-automotive-auto-market-report-sept-4-2024/
