7/6/18 – Stocks Break 3-Week Losing Streak

Stocks rebounded this week after a 3-week losing streak that saw the Dow Jones average decline over 4%. A strong June jobs report helped keep the rally going through today pushing the Dow 0.8% higher on the week while the S&P 500 gained 1.5%.

The June jobs report said the US economy added 213K net new jobs in the month. Additionally, the figures for April and May were revised higher by a total of 37k jobs. The unemployment rate actually increased to 4.0% from 3.8%. This highlights some of the flaws in the main unemployment rate that get reported on the news. The unemployment rate is based on the labor force size which does not include individuals who have given up looking for work. As people come back into the labor force, it can push the unemployment rate higher even in a strong job producing month. This ‘shadow’ supply of labor is likely what is keeping wage growth relatively modest in spite of strong job growth over the last 6-8 years. Wages grew at a 2.7% annual rate. Read More

Industry analysts expect another record year for firework sales. Even with 4th of July on the Wednesday this year, consumer spending on fireworks is expected to reach $900 million while commercial firework shows spend $360 million. That $1.2 billion buys over 300 million pounds of fireworks. Firework popularity has increased sharply as more states relax firework laws to enjoy the tax revenue windfall. Massachusetts is now the only state is significant restrictions on consumers buying fireworks. Total consumer firework sales are up 35% since 2013. Read More

Oil down this week, decreasing 0.5% to close at $73.92/barrel. The yield on the 10-yr Treasury moved lower, closing at 2.82% from 2.85% last week. The average rate on a 30-yr fixed rate mortgage moved lower to 4.52%, from 4.55% last week.

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