Market Indexes: All 4 indexes rose last week, aided by a weaker US $, and rising energy prices. The Russell small caps bounced back in a big way, gaining 5%, while the NASDAQ added 2.8%.
Volatility: The VIX fell 11.7% last week, ending Friday at $16.39.
High Dividend Stocks: These high dividend stocks go ex-dividend this week: AGNC Investment Corp (NASDAQ:AGNC), Compass Diversified Holdings (NYSE:CODI), Ellington Financial LLC (NYSE:EFC), EPR Properties (NYSE:EPR), Stellus Capital Investment (NYSE:SCM), Triplepoint Venture Growth BDC Corp (NYSE:TPVG), and Spark Energy Inc (NASDAQ:SPKE).
Market Breadth: 18 out of 30 DOW stocks rose last week, vs. 11 the week before last. 72% of the S&P 500 rose, vs. 34% the previous week.
FOREX: The US $ fell vs. other major currencies last week, except for the yen.
“The dollar slid on Friday after the market perceived a highly anticipated speech by Federal Reserve Chair Jerome Powell to be dovish, even though he indicated tapering the U.S. central bank’s massive economic support should start by year’s end. Powell said there has been clear progress toward maximum employment and that he was of the view that if the U.S. economy evolved broadly as anticipated, “it could be appropriate to start reducing the pace of asset purchases this year.” (Reuters)
Economic News
“Global equity markets slipped on Thursday, while U.S. Treasury yields dipped after reaching two-week highs after two hawkish Federal Reserve officials called for the U.S. central bank to start ending its bond-buying program.
"Ahead of a speech by Fed Chair Jerome Powell, Dallas Fed President Robert Kaplan said he still believes the Fed in September would announce a plan for tapering to start in October or shortly thereafter. Earlier, St. Louis Fed President James Bullard said the Fed is “coalescing” around a plan to begin reducing its $120 billion in monthly bond purchases. Following Kaplan and Bullard’s comments, benchmark 10-year Treasury note yields reached their highest level since Aug. 12 before retreating to 1.3491%% after U.S. markets closed.” (Reuters)
“U.S. consumer spending slowed in July as a decline in motor vehicle purchases due to shortages offset a rise in outlays on services, supporting views that economic growth will moderate in the third quarter amid a resurgence in COVID-19 infections. But the slowdown in spending will probably not be as sharp as currently anticipated, with the report from the Commerce Department on Friday showing Americans boosting savings. Inflation also appears to have peaked, which could preserve households’ purchasing power.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3% last month. Data for June was revised up to show spending advancing 1.1% instead of 1.0% as previously reported. Demand is rotating back to services like travel and leisure, but spending has not been sufficient to compensate for the drop in goods, whose purchases are also being impacted by shortages.
Goods spending fell 1.1% last month, led by motor vehicles. A global shortage of semiconductors is hampering auto production. There were also decreases in spending on recreational goods as well as clothing and footwear.” (Reuters)
“U.S. existing home sales increased for the second consecutive month in July as inventories improved moderately, while prices eased from the prior month’s record level. Existing home sales increased 2.0% to a seasonally adjusted annual rate of 5.99 million units last month from June’s upwardly revised pace, the National Association of Realtors said on Monday.
"Sales were unchanged in the Northeast, but increased in the Midwest, South and the West. Home resales, which account for the bulk of U.S. home sales, increased 1.5% on a year-on-year basis. The median sales price slipped to $359,900 from June’s record level but was still up 17.8% from a year earlier. The sales rate increase suggests the drop-off in sales this year from last year’s 14-year high may have run its course.” (Reuters)
“The US Food and Drug Administration on Monday granted full approval to the Pfizer/BioNTech Covid-19 vaccine for people age 16 and older. This is the first coronavirus vaccine approved by the FDA, and is expected to open the door to more vaccine mandates.
“The vaccine has been known as the Pfizer-BioNTech COVID-19 Vaccine, and will now be marketed as Comirnaty, for the prevention of COVID-19 disease in individuals 16 years of age and older,” the FDA said Monday. “The vaccine also continues to be available under emergency use authorization (EUA), including for individuals 12 through 15 years of age and for the administration of a third dose in certain immuno-compromised individuals,” according to the FDA. (CNN)
“Business activity in the euro zone grew strongly this month, only dipping from July’s two-decade high monthly pace, as a rapid COVID-19 vaccination drive allowed more firms to reopen and customers to venture out, a survey showed.” (Reuters)
Week Ahead Highlights
The August Non-Farm Payrolls report is due out on Friday.
“A rally in which U.S. stocks have doubled from post-pandemic lows is about to enter the year’s worst month for equities, as investors focus on a nationwide COVID-19 resurgence and how quickly the Federal Reserve plans to pull back on its easy money policies. September has been the worst month of the year for the S&P 500, with the benchmark index falling an average of 0.56% since 1945. The S&P has advanced only 45% of the time in September, the lowest rate of any month.” (Reuters)
This Week’s US Economic Reports
Sectors: Energy led the week, with the Utilities sector lagging.
Futures: WTI Crude rose 10.6%, ending at $68.67.
