The interest rate decrease by the Federal Reserve helped drive stocks higher last week. Each of the benchmark indexes listed here closed higher, led by the Russell 2000. Communication services, energy, and utilities were the best performing market sectors, while consumer staples, health care, and real estate lagged. Gold prices surged past $2,600.00 per ounce, hitting a new, record high on Friday. Crude oil prices advanced for the second straight week, while the dollar retreated following the drop in interest rates.
Last Week’s Economic News
- The Federal Open Market Committee, by an 11-1 vote, moved to lower the fed funds target rate range by 0.50% to 4.75%-5.00%. The Committee’s statement indicated that economic activity has continued to expand at a solid pace. Job gains have slowed and, while the unemployment rate has advanced, it remained low. In further support of the rate reduction, the Committee noted that it has gained greater confidence that inflation is moving sustainably toward the 2.0% target and that the risks to achieving its employment and inflation goals are roughly in balance.
- Retail sales inched up 0.1% last month and advanced 2.1% since August 2023. Retail trade sales were up 0.1% in August and up 2.0% over the last 12 months. Online retailer sales were up 1.4% in August and rose 7.8% from last year, while food services and drinking places, which, while unchanged last month, were up 2.7% from August 2023.
- In August, industrial production rose 0.8% after falling 0.9% in July. Manufacturing output increased 0.9% in August after decreasing 0.7% during the previous month. This pattern was due in part to a recovery in the index of motor vehicles and parts, which jumped nearly 10.0% in August after dropping roughly 9.0% in July. Manufacturing, excluding motor vehicles and parts, moved up 0.3% in August. Mining climbed 0.8%, while the utilities index was unchanged from July.
- The number of issued residential building permits rose 4.9% in August. Housing starts in August advanced 9.6% and moved up 3.9% over the last 12 months. Single-family housing stats jumped 15.8% last month. Housing completions rose 9.2% in August and 30.2% above the August 2023 rate.
- August saw sales of existing homes fall 2.5% from July. Year over year, existing-home sales were down 4.2%. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.20% as of September 12, down from 6.35% one week ago and 7.18% one year ago.
- The national average retail price for regular gasoline was $3.180 per gallon on September 16, $0.056 per gallon under the prior week’s price and $0.698 per gallon less than a year ago.
- For the week ended September 14, there were 219,000 new claims for unemployment insurance, a decrease of 12,000 from the previous week’s level, which was revised up by 1,000.
Eye on the Week Ahead
The final estimate for second quarter GDP is out this week. The prior estimate had the economy expanding at an annualized rate of 3.0%. The report on Personal Income and Outlays for August is also available this week. July saw personal income rise 0.3%, while personal consumption expenditures advanced 0.5%. Consumer prices rose 0.2% for July and 2.5% over the last 12 months ended in July.
Have a nice week!
Sincerely,
Robert G. Carpenter