Hello, this is Claire Ellerhorst, Senior Portfolio Manager at Fifth Third Bank with this week’s Economic Beat.
Major U.S. equity indices fell last week, capping a rocky third quarter for financial markets. The S&P 500 Index fell 2.9% in total return last week, bringing its year-to-date decline to nearly 24%. The blue-chip Dow Jones Industrial Average also fell 2.9% last week, while the tech-heavy Nasdaq Composite fell 2.7%. All three of the major benchmarks have fallen in six of the past seven weeks. Treasuries were volatile and the yield on the 10-year U.S. Treasury touched 4% at one point mid-week. Gold and oil were both higher for the week.
Equities were sharply lower in September and in the third quarter overall. Investors are grappling with surging inflation and the subsequent response from the Federal Reserve Bank. Central bankers are rapidly increasing the Fed funds rate in an effort to slow growth and tame inflation, raising the risk of recession.
Among the releases on the economic calendar, U.S. durable goods orders fell slightly less than anticipated in August, while core capital goods orders, a proxy for business investment, rose more than expected. New home sales unexpectedly increased in pace from the prior month, though pending home sales fell in August. Weekly initial jobless claims came in low than anticipated, indicating continued resilience in the labor market. Core personal consumption expenditures, a preferred measure of inflation for the U.S. Fed, rose 4.9% year-over-year in August, faster than the 4.7% pace in July.
In the week ahead, the economic calendar includes the Institute for Supply Management’s September Manufacturing Purchasing Managers’ Index and August job openings from the Job Openings and Labor Turnover Survey, or JOLTS report. On Friday, the Bureau of Labor Statistics will release the September employment situation report. Economists expect job gains to have slowed last month, while remaining at a healthy pace. The report also includes wage gains, labor force participation and unemployment.
As always, we’ll be watching and reporting back to you. Thank you.