Market News – August 6, 2018

157,000 NEW JOBS: The U.S. economy added 157,000 new jobs to its economy in July, and the unemployment rate decreased to 3.9%. This monthly result was a bit lower than expected. However, the May and June reports were revised upward fairly substantially which gave the overall report a more positive view. For the first seven months of 2018, the U.S. has been averaging 215,000 new jobs per month. Wages in July came in at 2.7% higher than a year ago. The Labor Force Participation Rate did not change in July from the month before (62.9%)

PUSHING TOWARD RECORD TERRITORY AGAIN?: The S&P 500 ended the week up nearly 0.8%, just 1.1% lower than the record high set on January 26. This coming week, inflation reports will be announced by the U.S. government, and several large corporations will report earnings. These are potential market movers. Of course, the issue with the biggest market moving potential is trade. Investors will be watching for trade-related headlines this week, especially after China announced tariffs on another $60 billion in U.S. goods on Friday. U.S. sanctions on Iran begin to take effect this week as a result of the U.S. pulling out of the Iran nuclear deal. If all these foreign trade issues heat up in a negative way, they may crowd out any other good news. If these issues stay quiet during this August week, we may approach record territory in the S&P 500 again.

PREDICTING THE END: Later this month, if the bull market continues for just a few more weeks, it will become the longest bull market on record in the U.S. There are always shoals along the way in any positive market, but watch for an increase in those predicting the end, especially if this market reaches that milestone.

U.S. AUTO SALES SLOW: July’s auto sales were 3.7% less than July of a year ago. Most were expecting things to cool after a very strong first six months of the year. Rising interest rates are not helping. The impact of tariffs on aluminum and steel have not yet had an impact, but are expected to.

ANOTHER STRONG YEAR FOR HOTELS: 2017 was a record year for hotels, and 2018 is tracking at the same level. However, 2017 received a huge boost toward the end of the year as a result of some devastating hurricanes, so 2018 will likely come in a little lower than last year.

THIS ISN’T THE SEVENTIES: For those in the 25-34-year-old age group, life has changed since the 1970s. Here are a few comparisons between 1977 and 2016.

• In 1977, 24% attended four or more years of college. Now it is 37%.
• In 1977, 20% were never married, and now that is 53%.
• 48% were homeowners in 1977, and now only 39% are.
• In 2016 inflation-adjusted dollars, the median debt load was $10,000, and now it is $33,000.
• Median income of $34,000 has not changed, the same in both years (inflation adjusted).
• In 1970, 90% of 30-year-olds made more than their parents. That figure is now 50%.

References:

157,000 NEW JOBS: https://www.calculatedriskblog.com/2018/08/july-employment-report-157000-jobs.html
THIS ISN’T THE SEVENTIES: https://horsesmouth.com/how-life-has-changed-for-americans-aged-25-to-34
PUSHING TOWARD RECORD TERRITORY AGAIN?: https://www.cnbc.com/2018/08/03/stocks-could-set-new-highs-in-week-ahead-if-market-shrugs-off-trade-w.html
U.S. AUTO SALES SLOW: https://www.wsj.com/articles/auto-sales-lost-speed-in-july-1533151129
ANOTHER STRONG YEAR FOR HOTELS: https://www.calculatedriskblog.com/2018/08/hotels-occupancy-rate-increased-year.html