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Weekly Market Update – August 5, 2016

The Dow finished 192 points higher on Friday after the Labor Department reported a stronger-than-expected gain in monthly nonfarm payrolls. For the week the Dow was up 0.6%. Year-to-date the index is up 6.4%.

Domestic economic data came in mixed. Non-farm payrolls increased by 255,000 in July versus 179,000 consensus estimate, increasing the possibility of a September or December interest rate hike. Unemployment rate was unchanged at 4.9% and initial jobless claims rose to 269K this week from 266K last week and above the 265K consensus estimate. July ISM Manufacturing Index drop to 52.6 from prior 53.2 while the ISM non-manufacturing index fell to 55.5 from prior 56.5. Personal income rose 0.2% versus consensus for a 0.3% gain and May’s 0.2% growth. Real disposable personal income was up 0.1%, primarily on increased spending for electricity and gas, healthcare services and other nondurable goods. Private payrolls increased by 179K last month, beating the 170K consensus. New York Federal Reserve President William Dudley stated that an interest rate increase prior to the November Presidential Election was possible but cautioned a stronger dollar might hinder economic growth. For the week, the U.S. Preferred Stock Index was -0.35%.

Crude oil dropped to a three month low earlier this week due to oversupply concerns and softer than expected demand, but later bounced backed on a large gasoline stockpile decrease. OPEC members seek to revive production freeze talks in September while concerns linger about supply resumptions and softening demand. Natural gas prices were firm, supported by continuing hot weather.
Earnings were released for Q2 by several well-known and widely held companies. Following earnings, Priceline share price was +5%, Facebook +2%, and U-Haul -9%. Earnings releases will continue in the next two weeks.
Next week’s economic calendar highlights include Unit Labor Costs (Aug. 9th), Crude Inventory (Aug. 10th), Initial Jobless Claims (Aug. 11th), and Producer Price Index (Aug. 12th). Next week will conclude most of the Q2 earnings reports.

Have a great weekend,
Yansong Pang (庞岩松)

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Ulland Investment Advisors

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