Stocks Weaken Ahead of Hurricane IrmaSubmitted by Guidant Planning on September 12th, 2017
September 11, 2017–U.S. stocks finished the holiday-shortened trading week modestly lower, as Wall Street investors remained cautious ahead of a possible North Korean ballistic missile test and the weekend arrival of Hurricane Irma in southern Florida. Energy and technology companies tumbled on Friday. Meanwhile, telecom, banks and insurance firms led losses for the week and bond yields fell to the lowest levels this year on safer-haven asset buying and speculation the Federal Reserve may delay raising interest rates this month. Equities received a mid-week respite when President Trump crossed the aisle to strike a deal with Democrat Congressional leaders to temporarily extend the federal debt ceiling through December 8th.
In key economic data last week, factory orders declined 3.3% in July, but capital goods orders excluding aircraft and military hardware, a proxy for business investment, rose 1%, topping estimates for a 0.4% increase. Overall durable goods orders, goods designed to last at least three years, fell 6.8%, while non-durable goods orders rose 0.4%. The U.S. trade deficit widened less than forecast in July, rising 0.3% to $43.7B, as exports and imports both slowed mainly due to reduced trade in autos. Commerce officials revised the second quarter reading of worker productivity higher, to 1.5%, topping projections; this follows a 0.9% increase the prior quarter. However, unit labor costs rose just 0.2%, shy of forecasts, and trailed a 0.6% first quarter increase.
For the week, the S&P 500 fell 0.58%, the Dow Industrials lost 0.86% and the NASDAQ Composite declined 1.16%. Small caps stocks also lagged, with the Russell 2000 Index down 0.98% last week. Within the S&P 500, 6 of its 11 major sector groups ended negative last week, with Telecom (-4.5%), Financials (-2.82%) and Materials (-1.06%) down the most. Healthcare (+1.56%) and Energy (+1.37%) led among gainers. U.S. crude oil prices nearly erased a 4% rally earlier in the week, finishing the week up just 0.4%. The U.S. Dollar Index weakened by over 1.5% to finish at 91.352. Treasury prices rallied, sending the yield on 10-year Treasury notes down 11.5 basis points to 2.052%.
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The Citigroup U.S. Economic Surprise Index is a weighted historical standard deviation measure of U.S. economic data surprises of actual data releases versus Bloomberg survey median levels. Calculated daily in a rolling three-month window, when the index is positive the reading suggests that economic releases have on balance [been] beating economists' consensus forecasts. The weights of economic indicators are derived from relative high-frequency spot foreign exchange impacts of 1 standard deviation data surprises. The indices also employ a time decay function to replicate the limited memory of markets.
The CRB Index is a pricing index that measures changes in the price of 22 commodities that are believed to be among the first to react to changes in economic conditions.
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West Texas Intermediate (WTI) is a crude oil stream produced in Texas and southern Oklahoma which serves as a reference or "marker" for pricing a number of other crude streams. WTI is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.
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