The following economic awareness entry is based on short-term events and therefore should not be taken as information towards making investment decisions, which are of a long-term nature. It is only meant to provide clarity regarding current economic events, as there is often a large degree of incorrect information dispersed through the media or other sources.
Last week marked a noteworthy milestone in our economy: On Wednesday, August 22, the bull market entered its 3,453rd day, the longest such run in U.S. history. In the past 9 plus years, domestic indexes have come quite a ways since the dark days of the financial crisis. The S&P 500 is now more than 4 times the level that it was when the bull market began on March 9, 2009.
This domestic growth occurred against a backdrop of geopolitical events. Investors considered new tariffs between China and the U.S., as well as legal developments potentially related to President Trump. However, economic updates seemed to hold the most sway over market performance last week.
What did we learn about the economy last week?
Beyond passing a major milestone in the bull market, we also received some key economic updates, including:
- The Fed's interest rate increases should continue at a gradual pace.
In talks last week, Fed Chairman Jerome Powell called the economy "strong" and said inflation isn't overheating. He indicated the central bank intends to maintain its current pace of interest-rate raises. Markets increased after his remarks.
- The labor market remains strong.
New claims for unemployment fell for the 3rd week in a row and were below expectations, continuing on July's trend that included the lowest numbers since 1969. This data indicates that, despite U.S. companies facing ongoing trade tension, the labor market remains on solid ground.
- Business investment may be on the rise.
Data for durable goods orders includes details that can hint at how businesses plan to approach spending. This so-called "non-defense capital goods excluding aircraft" grew far more than anticipated in July. The reports indicate that business investments started the 3rd quarter on solid ground.
These updates may help support economists' perspectives that the bull market still has life left. If you have questions about where your financial life stands today and in the future, we're here to talk.
Tuesday: Consumer Confidence
Thursday: Personal Income and Outlays, Jobless Claims
Friday: Consumer Sentiment
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International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.
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The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
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