Last week proved to be a rough one for the market as investors fled from equities following Federal Reserve Chair’s indication that interest rates would remain higher for longer. The escalation of the Israel-Hamas war also weighed on Wall Street and global markets. All the major benchmark stock indexes declined by at least 1.6%, with the Nasdaq skidding over 3.0%. The S&P 500 dropped about 2.4%, suffering through its worst week in a month. Bond prices fell, pushing yields on 10-year Treasuries close to 5.00%. Crude oil prices advanced for the second straight week. The dollar declined, while gold prices gained for the second consecutive week.
Last Week’s Economic News
- Sales at the retail level rose in September and 3.8% from September 2022. Retail trade sales also advanced last month and 3.0% over the past 12 months.
- Industrial production increased in September and advanced at an annual rate of 2.5% in the third quarter. Manufacturing output rose in September but was 0.8% below its year-earlier level. Mining moved up for the fourth consecutive monthly gain, while utilities decreased 0.3%. Total industrial production in September was slightly above its year-earlier level.
- The number of residential building permits issued in September was below the estimate from the previous month and 7.2% below the September 2022 rate. However, permits for single-family home construction increased 1.8%. Housing starts in September were 7.0% above the August estimate but 7.2% below the September 2022 rate. Single-family housing starts in September were 3.2% above the August estimate. Housing completions in September were 6.6% above the August estimate and 1.0% above the September 2022 total. Single-family housing completions in September were 5.3% above the August rate.
- Sales of existing homes fell 2.0% in September and 15.4% from September 2022. Limited inventory and rising prices have hampered home sales. The median existing-homes sales price in September was $394,300, down 2.5% from the August price ($404,100) but 2.8% above the September 2022 price of $383,500. Inventory sat at a 3.4-month supply, up slightly from the August pace of 3.3 months. Single-family home sales fell 1.9% in September and 15.8% from a year earlier. Inventory of single-family home sales sat at a 3.4-month supply, up from 3.2 months in August. The median single-family home price was $399,200 in September, 2.8% below the August median price but 2.5% above the September 2022 price.
- The national average retail price for regular gasoline was $3.576 per gallon on October 16, $0.108 per gallon lower than the prior week’s price and $0.295 less than a year ago.
- For the week ended October 14, there were 198,000 new claims for unemployment insurance, a decrease of 13,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 7 was 1.2%, unchanged from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended October 7 was 1,734,000, an increase of 29,000 from the previous week’s level, which was revised up by 3,000.
Eye on the Week Ahead
This is a very busy week for important economic data. From the perspective of the economy, the initial estimate of third-quarter gross domestic product is out this week. The second quarter showed the economy expanded at an annualized rate of 2.1%. The September data on personal income, expenditures, and consumer prices is out at the end of this week. The personal consumption expenditures price index, the preferred inflation indicator of the Federal Reserve, showed prices increased 0.4% in August and 3.5% for the year.
Have a nice week!
Sincerely,
Robert G. Carpenter