Stocks gained again last week boosted by the FED’s rate cut on Wednesday.  Also, economic data released last week was mostly positive.  All major indices ended higher with the biggest gain in the Russell 2000 small cap index.

The FED cut short term interest rates by 0.5% to a range of 4.75% to 5.00%.  This happened despite a push by three senators for the FED to cut 0.75%.  One FED official dissented, for the first time since 2005.  Federal Reserve Governor Michelle Bowman believed the FED should only cut 0.25%.  A narrow majority of FED officials predicted additional 0.25% cuts in November and December and further cuts in 2025 down to 3.5%.

Treasury bond yields rose with the 30-year bond yield at 4.064% and the 10-Year note at 3.722%.  Freddie Mac reported that the average 30-year mortgage rate fell to 6.09%.  Crude oil rose to $72.35 a barrel and natural gas rose to $2.409 per MMBTUs.  The U.S. dollar index fell to 100.67 and gold set a new record closing at $2650.00 an ounce.

In economic reports this week:

• The Federal Reserve reported that seasonally adjusted industrial production rose 0.8% in August but is unchanged from last August.
  • Manufacturing rose 0.9% and is up 0.2% year over year.
  • Mining, including oil and gas production was up 0.8% and 0.1% year over year.
  • Utilities were unchanged and have fallen 0.9% from a year ago.
• The National Association of Realtors reported that existing home sales fell 2.5% in July and are down 4.2% from last August.
• The Commerce Department reported:
  • The Advanced Estimate of Retail Sales rose a seasonally adjusted 0.1% in August after rising 1.0% in July.
    • Retail sales were up 2.1% from August of 2023.
    • Non-store retail sales were up 7.8% from a year ago.

• • Housing starts jumped a seasonally adjusted 9.6% in August from the revised July rate and were up 3.9% from August 2023.
    • Single family housing starts rose 15.8%.
    • Starts for multi-family units (5 units or more) fell 6.7% and are down 6.2% from a year ago.
    • Permits, a sign of future housing starts, rose 4.9% in August but are down 6.5% from August 2023.
    • Completions rose 9.2% in the month of August and are up 30.2% from a year ago.

• The Labor department reported:
  • Seasonally adjusted first-time claims for unemployment were 219,000, a decrease of 12,000 from the previous week’s revised level.
    • The 4-week moving average of claims, designed to smooth out volatility, was 227,500, a decrease of 3500 from the previous week’s revised level. 
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• 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 fell from 13.3MM BPD to 13.2MM BPD.
  • Natural gas storage rose 52BN 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 488 and the number of natural gas rigs fell 1 to 96.

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.federalreserve.gov/releases/g19/current/g19.pdf

https://www.bls.gov/news.release/cpi.nr0.htm

https://www.bls.gov/news.release/ppi.nr0.htm

https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html