U.S. stock indices ended higher this busy week for economic data while international indices ended lower.  While the gross domestic product slowed significantly in the 3^rd quarter, many economists believe growth will accelerate in the fourth quarter as the Delta variant wanes and more workers are hired.  Earnings continue to run strong overall with misses by some large tech companies.

Treasury yields fell with the 30-year bond yield closing at 1.94% and the 10-Year note closing at 1.56%.  Crude oil fell to $83.30 a barrel and natural gas rose to $5.62 per MMBTUs.  The U.S. dollar index rose to 94.14 and gold fell to $1784.30 an ounce.

In the economic numbers:

• The S&P CoreLogic Case-Shiller National Home Price Index rose 19.8% in August from a year earlier.  This was unchanged from July.
• The Eurozone gross domestic product grew at a 2.2% for the third quarter.  Year over year growth was 3.7%.
• The Commerce Department reported
  • New home sales rose 18% in September. 
  • Durable goods orders fell 0.4% as supply chain bottlenecks discourage new orders. 
    • This follows a 1.3% increase in August.
    • Excluding defense and aircraft durable orders increased 0.8% in September.
  • The U.S. gross domestic product grew at a 2.0% annual rate in the third quarter, substantially lower than the 6.3% growth in Q1 and 6.7% in Q2.  The reasons for slower growth include the waning effects of government stimulus, hiring and supply chain bottlenecks and the surge in Covid cases due to the Delta variant.
  • Consumer spending rose 0.6% in September down from the 1.0% rate of increase in August.
  • The personal consumption expenditures price index rose 0.3% in September, less than the 1.0% increase in August.
    • From a year earlier, the PCE index rose 4.4% in September up from 4.2% in August and the fastest pace in 30 years.
    • Excluding volatile food and energy prices rose 0.2% in September and 3.6% from a year earlier.
  • Personal incomes fell 1.0% in September due to the expiration of enhanced unemployment benefits.
  • Personal consumption expenditures rose 1.6% in the third quarter.
    • Spending on services, including restaurant meals and movie tickets, rose 7.9%.
    • Spending on goods in Q3 fell 9.2% mainly due to a 26.2% drop in things like automobiles and appliances that are in in short supply due to supply chain issues.
  • The employment-cost index rose 1.3% in Q3, the fastest pace on record.

• The Labor Department reported: 
  • A seasonally adjusted 281,000 workers filed initial claims for unemployment in the week ending October 23^rd down from a revised 291,000 the week before.  This was the lowest since March of 2020. 
  • The 4-week moving average of claims, designed to smooth out volatility, fell to 229,250.
  • Continuing claims fell from 2.5MM to 2.2MM in the week ending October 16th. 
  • A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 3.3MMto 2.8MM in the week ended October 9^th.
  • 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 11.3MM BPD.
  • Natural gas storage rose 87BN cubic feet and is below the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs was 444.  The number of active natural gas rigs rose 1 to 100.
• Factset reported with 82% of S&P 500 companies reporting Q3 earnings, the blended earnings growth rate was 36.6% from a year ago.

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Thank you,

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

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