Despite the continued strength shown in corporate earnings reports, investors tempered their enthusiasm last week, sending the large caps of both the S&P 500 and the Dow downward. Ongoing tensions between China, Russia, and now Turkey seem to have dampened investors’ confidence. Following new sanctions levied against Russia by the United States, Russian Prime Minister Medvedev alleged that Russia will consider U.S. sanctions a declaration of economic war. Meanwhile, U.S. threats against Turkey for refusing to release an American pastor added to Turkey’s economic crisis as the lira fell 14% against the dollar. And China has warned of a protracted trade war if the United States continues to add tariffs on Chinese goods.
All of which has affected the major benchmark indexes and in addition to the faltering Dow and S&P 500, the Global Dow fell almost 1.0% for the week and is down 1.28% compared to its year-end value. The tech-heavy Nasdaq held its own, while the small caps of the Russell 2000 climbed 0.80% and are ahead of last year’s closing value by almost 10%.
LAST WEEK’S ECONOMIC HEADLINES
- Driven by rising housing and vehicle prices, the Consumer Price Index rose in July following an increase in June.
- Prices at the producer level were unchanged in July after advancing 0.3% in June. Over the 12 months ended in July, producer prices have increased 3.3%.
- The 2018 federal budget deficit continues to expand, outpacing last year’s deficit.
- According to the Job Openings and Labor Turnover Summary, the total number of job openings ticked up to 6.7 million at the end of June — little changed from May’s total.
- In the week ended August 4, there was a decrease in the initial claims for unemployment insurance.
EYE ON THE WEEK AHEAD