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September 10, 2018

In this week’s recap: wage growth picks up, the factory and service sectors hum with activity, oil retreats, and new tariffs could be imposed on China.

Weekly Economic Update

 September 10, 2018

LATEST JOBS REPORT CONFIRMS WAGE GROWTH IS ACCELERATING

According to the Department of Labor’s newest employment report, average pay for U.S. private sector workers improved 2.9% in the 12 months ending in August. That is the best annualized wage boost since the end of the Great Recession in 2009 and an improvement from 2.7% in July. The economy added 201,000 net new jobs last month. The headline jobless rate remained at 3.9%; the U-6 rate, which includes both unemployed and underemployed Americans, declined 0.1% to 7.4%, a 17-year low.1

STRONG AUGUST SHOWINGS FOR THE ISM INDICES

Both purchasing manager indices maintained by the Arizona-based Institute for Supply Management rebounded last month. ISM’s PMI tracking the U.S. service sector rose 2.8 points to 58.5, and its factory sector PMI climbed to an impressive 61.3 from the previous mark of 58.1.2

OIL TAKES A WEEKLY LOSS

Retreating 2.9% in four trading days, West Texas Intermediate crude ended the week at $67.75 on the NYMEX. Light sweet crude had its first down week since August, and its Friday closing value was its lowest since August 21. The big concern: the potential impact of tariffs on global oil demand.3

STOCKS DECLINE; POSSIBLE NEW TARIFFS ON CHINA ANNOUNCED

Friday, President Trump told reporters that he was willing to authorize import taxes on another $267 billion of Chinese goods entering the U.S.; this would effectively put an across-the-board tax on Chinese imports in place. This development and a broad tech selloff impacted Wall Street during a shortened trading week. In trading Tuesday through Friday, the S&P 500 fell 1.02%, to 2,871.68; the Dow Jones Industrial Average 0.27%, to 25,916.54; the Nasdaq Composite 2.30%, to 7,902.54.4,5,6

THIS WEEK

Hovnanian Enterprises and Sonos present earnings on Monday. | Tuesday, nothing major is scheduled. | On Wednesday, Apple holds its iPhone XS launch event, and the August Producer Price Index and a new Federal Reserve Beige Book appear. | Thursday, investors pay attention to the August Consumer Price Index and quarterly results from Kroger. | On Friday, Wall Street considers August retail sales figures and the preliminary September consumer sentiment index from the University of Michigan.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

4.84

18.97

14.73

12.52

NASDAQ

14.47

23.52

23.18

24.82

S&P 500

7.41

16.49

14.70

12.65

REAL YIELD

9/7 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.84

0.26

0.87

1.68

Sources: wsj.com, bigcharts.com, treasury.gov - 9/7/186,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - bloomberg.com/news/articles/2018-09-07/u-s-payrolls-rise-201-000-while-wage-gains-accelerate-to-2-9 [9/7/18]

2 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [9/6/18]

3 - marketwatch.com/story/oil-price-stabilizes-after-retreat-on-rising-product-inventories-2018-09-07 [9/7/18]

4 - nytimes.com/2018/09/07/business/trump-china-trade-war-tariffs.html [9/7/18]

5 - forexlive.com/technical-analysis/!/us-stocks-end-lower-nasdaq-worst-week-since-march-23rd-20180907 [9/7/18] 

6-markets.wsj.com/us [9/7/18]< br>7-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F7%2F17&x=0&y=0[9/7/18]<br>7-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F7%2F17&x=0&y=0 [9/7/18]

7-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F7%2F17&x=0&y=0 [9/7/18]< br>7-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F6%2F13&x=0&y=0[9/7/18]<br>7-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F6%2F13&x=0&y=0 [9/7/18]

7-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F6%2F13&x=0&y=0 [9/7/18]

7-bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F8%2F08&x=0&y=0[9/7/18]<br>7-bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F8%2F08&x=0&y=0 [9/7/18]

7-bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F8%2F08&x=0&y=0 [9/7/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/7/18]
9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/7/18]

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