Major stock indices stages a reversal and ended with substantial gains following three down weeks.  While the U.S. and global purchasing manager’s indices point to a slowdown, layoffs declined again this week.  Federal Reserve officials statements pointed to another 0.75% rate hike later this month.

European energy ministers met and agreed to cap revenue from non-gas electricity generation to limit the increase in electricity prices.  The European Central Bank met and raised its short term interest rate from zero to 0.75%.  In July, the ECB raised rates from negative 0.5% to zero.

Treasury bond yields rose with the 30-year bond at 3.449% and the 10-Year note at 3.314%.  30 year mortgage rates rose to 6.18%.  Crude oil fell to $86.10 a barrel and natural gas fell to $8.038 per MMBTUs.  The U.S. dollar index fell to 108.97.  Gold fell to $1727.60 an ounce.

In the economic numbers:

• S&P Global released the following purchasing managers indices for the month of August.  Keep in mind that anything over 50 represent expansion and under 50 represent contraction.
  • U.S. manufacturing PMI fell from 52.2 to 51.5.
  • U.S. services PMI fell from 47.3 to 43.7.
  • China manufacturing PMI fell from 50.4 to 49.5.
  • China services PMI fell from 55.5 to 50.5.
  • Eurozone manufacturing PMI fell from 49.8 to 49.6.
  • Eurozone composite PMI fell from 49.9 to 48.9.
  • Japan manufacturing PMI fell from 52.1 to 51.5.
  • Japan services PMI fell from 50.3 to 49.5.
  • Canada manufacturing PMI fell from 52.5 to 48.7.
• China reported:
  • Consumer inflation was 2.5% year over year in August, down from 2.7% in July.
  • Producer inflation was 2.3%, down from 4.3% in July.
  • The Commerce Department reported the U.S. Trade Deficit Fell 12.6% in the month of July.  Exports rose slightly but imports fell significantly. 
• The Labor Department reported:
  • Seasonally adjusted first time claims for unemployment fell to 222,000, down from a revised 228,000 in the prior week. 
    • The 4-week moving average of claims, designed to smooth out volatility, fell to 233,000 from a revised 241,500.
    • 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 unchanged at 12.1MM BPD.
  • Natural gas storage rose 54BN cubic feet and is below the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs fell 5 to 591.  The number of active natural gas rigs rose 4 to 166.

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  Loren C. Rex, CFP^®, MA                                                                     Erik A Smith, AIF®

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  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.