Markets “In a Nutshell” for August 22, 2022
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 0.20%, the S&P 500 was down 1.20%, and the NASDAQ fell 2.60%. Foreign stocks (MSCI EAFE) were also down, falling 0.90%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 2.97%. (Data source: Wall Street Journal)
Consumer Continues to be Strong
Although inflation worries continue, the consumer remains strong which is what drives the US economy as personal consumption makes up 70% of GDP. Retail sales excluding gasoline, rose 0.7% month over month with a sharp increase in restaurant sales for the month. This shows the consumer is willing to spend the money in other places instead of saving it when prices begin to come down on gasoline. Consumer sentiment, which hit an all-time low in June, has rebounded slightly off the lows. Looking at the historic trend of consumer sentiment when it falls below 60 which has only happened 3 other times, the stock market has an average increase of over 20% the following 12 months.
Jobless Claims Rise But Remain Low
Jobless claims last week came in at 250,000, and while we have seen a rise in claims compared to earlier in this year, we remain near all-time lows. 250,000 is lower than 91% of all weekly claims in the past 42 years. As the Fed continues to raise rates it is expected we see this uptick in jobless claims as the Fed attempts to fight inflation. We have not however seen this in the unemployment number, and it will be interesting to see how that number is affected in the coming months. If we begin to see substantial job losses expect the Fed to back off from raising rates too much as they don’t want to see unemployment rise to the point of hurting the economy substantially. If the Fed is able to raise rates without employment taking too much of a hit, this would show the resilience of the economy being able to absorb these rate hikes.
What is the current price of oil per barrel? (Scroll Down for Answer)
Have a Great Week!
3) $89, Oil has fallen from its high of nearly $150 as it spiked when Russia invaded Ukraine. The consumer seemed to have adjusted to these higher prices as they now have increased spending in other places showing the consumer remains strong.