Mega Cap Tech won the week again as the Nasdaq rose 3.7%, the S&P 500 gained 1.7%, the Dow lost 0.2%, and the Russell 2000 fell 0.9%. Apple, Amazon, Alphabet, and Facebook all reported earnings beats on Thursday sending shares higher Friday.
Technology jumped 5.0%, real estate gained 4.1%, and consumer discretionary added +2.1%. Underperforming was energy -4.3%, materials -1.8%, and financials -0.9%.
Also reported Thursday was the 1st estimate of 2nd Q GDP – On an annualized basis GDP fell 32.9%, the worst quarter on record. In 2019, GDP was 21.4 Trillion, since the beginning of the year we are annualizing at around 19.41 trillion, down about 2.34t from 2019s actual GDP. That wipes out all of the GDP growth since the first Q of 2017.
The Fed was in the spotlight, too. The FOMC left rates unchanged, Fed Chair Powell made it abundantly clear that the central bank is not going to raise rates anytime soon, and the Fed extended its lending facilities through the end of the year.
Gold closed this week up 4.66% at $1985 per ounce, breaking out above its 2011 high of $1923/oz. More on the gold standard from History.com
The month of July saw the US add 1.96 million new cases of Covid-19 – Last week we averaged 63k new cases per day. John Hopkins Covid Tracker
New jobless claims came in at 1.434 million, rising slightly over the week prior. Currently, we have more than 31 million Americans are receiving some sort of unemployment benefits.
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The Baker Hughes rig count was flat this week. There are 251 oil and gas rigs operating in the US – down 691 over last year.
- Brent Crude Oil down 0.59% this week closing at $43.52/bbl
- WTI Crude Oil lost 2.47% this week to close at $40.27/bbl
- Heating Oil lost 3.15% this week closing at $1.22/gallon
- Natural Gas lost 3.64% this week closing at $1.80 per million BTUs
- Unleaded Gas lost 6.76% this week closing at $1.17/gallon
- Gold gained 4.66% this week closing at $1985.90/oz
- Silver rose 5.98% on the week closing at $24.22/oz
- Palladium lost 6.49% this week closing at $2145.30/oz
- Platinum lost 3.88% this week closing at $918.90/oz
- Copper lost 0.85% this week closing at $2.87/lb
Employment Cost Index – Released 7/31/2020 – Compensation costs for civilian workers increased 0.5% for the 3-month period ending in June 2020. The 12 month period ending in June 2020 saw compensation costs increase by 2.7%, same as the 12 month period ending June 2019. Wages and salaries increased 2.9 percent over the year and increased 2.9 percent for the 12-month period ending in June 2019. Benefit costs increased 2.2 percent for the 12-month period ending in June 2020. In June 2019, the increase was 2.3 percent. This report is published quarterly.
Weekly Unemployment Claims – Released Thursday 7/30/2020 – Initial jobless claims for the week ending July 25th increased by 12k to 1.434 million. The 4-week moving average was 1.3689 million, a decrease of 16.5k.
Job Openings & Labor Turnover Survey JOLTS – Released 7/7/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings increased by 5.4 million or 3.9% on the last business day of May. Over the month, hires increased by 2.4 million to 6.5 million and separations decreased by 5.8 million to 4.1 million. Within separations, the quits rate increased to 1.6%. The layoffs and discharges rates decreased to 1.4%.
June Jobs Report – BLS Summary – Released 7/2/2020 – The US Economy gained 4.8 million nonfarm jobs in June and the Unemployment rate declined to 11.1%. Average hourly earnings fell by 35 cents. Hiring highlights include Leisure and Hospitality +2.088 million, Manufacturing +356k, Education and Health Services +568k, Retail Trade +740k, and Professional and Business Services 306k.
- Average hourly earnings declined by 35 cents in May to $29.37.
- U3 unemployment rate declined to 11.1%. U6 unemployment rate declined to 18.0%.
- The labor force participation rate increased by 0.7% to 61.5%.
- Average work week decreased by 0.2 hours to 34.5 hours.
This Week’s Economic Data
Links take you to the data source
Chicago PMI – Released 7/31/2020 – Chicago PMI increased 15.3 points increasing to 51.9. This marks the highest level since May 2019 and ends eleven consecutive months in contraction. The increase in July comes as Covid-19 related shutdowns have eased resulting in increased business activity. Nevertheless, companies noted continued uncertainty amid the ongoing Covid-19 crisis. Among the main five main indicators, New Orders and Production saw the largest monthly gains, while Supplier Deliveries eased.
Personal Income – Released 7/31/2020 – Personal income decreased $222.8 billion or 1.1 percent in June according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $255.3 billion or 1.4 percent and personal consumption expenditures (PCE) increased $737.7 billion or 5.6 percent.
Advance Estimate of 2nd Quarter 2020 GDP – Released 7/30/2020 – Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the advance estimate released by the Bureau of Economic Analysis. The decline seen in GDP seen in the second quarter marks the worst decline seen in GDP to date. This GDP estimate is based on data that are incomplete or subject to further revision by the source agency. The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Consumer Confidence – Released 7/28/2020 – The Consumer confidence index decreased 6.16% in July following an increase in June. The Index now shows a reading of 92.6, down from 98.3 in June.
Durable Goods – Released 7/27/2020 – New orders for manufactured durable goods in June increased for the second consecutive month up $14.0 billion or 7.3% to $206.9 billion. Transportation equipment led the increase rising $9.2 billion or 20.0% to $55.3 billion.
Recent Economic Data
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New Residential Sales – Released 7/24/2020 – Sales of new single-family homes increased 13.8% to 776k, seasonally adjusted, in June. The median sales price of new homes sold in June was $329,200 with an average sales price of $384,700. At the end of June, the seasonally adjusted estimate of new homes for sale was 307k. This represents a supply of 4.7 months at the current sales rate.
Existing Home Sales – Released 7/22/2020 – Existing home sales strongly rebounded in June following three consecutive months of declines. Sales increased 20.7% to a seasonally adjusted rate of 4.72 million in June. Sales are currently down 11.3% from one year ago. Housing inventory sits at 1.57 million units. Up 1.3% over last month. Down 18.2% over last year. Unsold inventory sits at a 4.0 month supply. The median existing home price for all housing types was $295,300.
Housing Starts – Released 7/17/2020 – New home starts in June were at a seasonally adjusted annual rate of 1.186 million; down 17.3% below May but 4.0% below last June’s rate. Building Permits were at a seasonally adjusted annual rate of 1.241 million, up 2.1% compared to May but down 2.5% over last year.
Retail Sales – Released 7/16/2020 – U.S. retail sales for June increased 7.5% to $524.3 billion. U.S. retail sales are up 1.1% year/y.
Industrial Production and Capacity Utilization – Released 7/15/2020 – In June Industrial production increased 5.4%. Total Industrial production is still 10.9% below its pre-pandemic February level. Manufacturing increased 7.2%. Motor vehicles and parts saw the largest gain at 105.0%. Total industrial production was 97.5% of its 2012 average which is 10.8% lower in June than a year ago. Total capacity utilization increased 3.5% to 68.6% in June which is 11.2% below its long-run average.
Consumer Price Index – Released 7/14/2020 – The Consumer Price Index increased 0.6% in June. Core CPI, which excludes food and energy also increased 0.2%. The monthly changes left total CPI up 0.6% year-over-year and core CPI up 1.2%.
Producer Price Index – Released 7/10/2020 – The Producer Price Index for final demand decreased 0.2% in May.
Consumer Credit – Released 7/8/2020 – In May, consumer credit decreased by $18.2 billion, at a seasonally adjusted rate of 5.25%. Revolving credit decreased at an annual rate of 28-1/2 percent, while nonrevolving credit increased at an annual rate of 2-1/4 percent. Total Outstanding consumer credit is currently at $4.112 trillion.
PMI Non-Manufacturing Index (ISM Services) – Released 7/6/2020 – Economic activity in the non-manufacturing sector grew in June following two consecutive months of contraction. ISM Non-Manufacturing registered 57.1 percent, which is 11.7 percentage points above the adjusted May reading of 45.4 percent.
US Light Vehicle Sales – Released 7/3/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 13.14 million units in June.
U.S. Trade Balance – Released 7/2/2020 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in May by $4.8 billion to $54.6 billion. May exports were $144.5 billion, $6.6 billion less than April exports. May imports were $199.1 billion, $1.8 billion less than April imports. The goods and services deficit decreased $22.3 billion or 9.1% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $148.3 billion or 14.0% and decreased $170.6 billion or 13.1% respectively.
PMI Manufacturing ISM Index – Released 7/1/2020 – June PMI increased 9.5% to 52.6% from May’s reading of 43.1%. The New Orders Index was up 24.6% from May’s reading of 31.8% to 56.4%. The Production Index registered 57.3%, up 24.1%.
U.S. Construction Spending – Released 7/1/2020 – Construction spending declined 2.1% in May measuring at a seasonally adjusted annual rate of $1,356.4 billion. The May figure is 0.3% above the May 2019 estimate. Private construction spending was 3.3% below the revised April estimate at $1,001.2 billion. Public construction spending was 1.2% above the revised April estimate at $355.2 billion.
Next week we get data on U.S. Construction Spending, the PMI Manufacturing ISM Index, ISM Services, Consumer Credit, the U.S. Trade Balance, U.S. Light Vehicle Sales, and the July Jobs Report.