05 July 2023 Market Close & Major Financial Headlines: No Fireworks On Wall Street Today As Markets Opened Lower, Traded Sideways, And Closed Fractionally In The Red
Summary Of the Markets Today:
- The Dow closed down 130 points or 0.38%,
- Nasdaq closed down 0.18%,
- S&P 500 closed down 0.20%,
- Gold $1,924 down $5.30,
- WTI crude oil settled at $72 up $2.19,
- 10-year U.S. Treasury 3.930% up 0.074 points,
- USD Index $103.35 up $0.31,
- Bitcoin $30,473 down $246,
*Stock data, cryptocurrency, and commodity prices at the market closing.
Click here to read our Economic Forecast for July 2023
Today’s Economic Releases Compiled by Steven Hansen, Publisher:
New orders for manufactured goods in May 2023 were down 0.1% year-over-year (blue line on the graph below) according to US Census. Inflation according to the producer price index for manufacturing is currently -4.0% year-over-year which means inflation-adjusted new orders are up 3.8% year-over-year (red line on the graph below). As a comparison, the Federal Reserve’s industrial production manufacturing is down 0.3% year-over-year (green line on the graph below). Pick the number you want to believe but most of the data points show manufacturing is in a recession.
The Federal Reserves FOMC meeting minutes for June 13–14, 2023 were released today. Their summarization of the current situation was on the mark:
Participants generally judged that growth would be subdued over the remainder of this year. They assessed that the cumulative tightening of monetary policy over the past year had contributed significantly to more restrictive financial conditions and lower demand in the most interest rate sensitive sectors of the economy, especially housing and business investment. Participants also acknowledged uncertainty about the lags with which monetary policy affects the economy and discussed the extent to which the full effects of monetary tightening on the economy had been realized. While total inflation had moderated over the past year, core inflation had not shown a sustained easing since the beginning of the year. With inflation well above the Committee’s longer-run 2 percent objective, participants expected that a period of below-trend growth in real GDP and some softening in labor market conditions would be needed to bring aggregate supply and aggregate demand into better balance and reduce inflationary pressures sufficiently to return inflation to 2 percent over time.
And their explanation of why they did not raise the federal funds rate at this meeting:
… participants concurred that while inflation had moderated since the middle of 2022, it remained well above the Committee’s longer-run goal of 2 percent. Economic activity had continued to expand at a modest pace. The labor market remained very tight, with robust job gains in recent months and the unemployment rate still low, but there were some signs that supply and demand in the labor market were coming into better balance. The economy was facing headwinds from tighter credit conditions, including higher interest rates, for households and businesses, which would likely weigh on economic activity, hiring, and inflation, although the extent of these effect remained uncertain. Against this backdrop, and in consideration of the significant cumulative tightening in the stance of monetary policy and the lags with which policy affects economic activity and inflation, almost all participants judged it appropriate or acceptable to maintain the target range for the federal funds rate at 5 to 5-1/4 percent at this meeting. Most of these participants observed that leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability. Some participants indicated that they favored raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal. The participants favoring a 25 basis point increase noted that the labor market remained very tight, momentum in economic activity had been stronger than earlier anticipated, and there were few clear signs that inflation was on a path to return to the Committee’s 2 percent objective over time. All participants agreed that it was appropriate to continue the process of reducing the Federal Reserve’s securities holdings, as described in its previously announced Plans for Reducing the Size of the Federal Reserve’s Balance Sheet.
But concluding the discussion “all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate“.
Here is a summary of headlines we are reading today:
- America’s Oil And Gas Capital Is Leading The Transition To Renewables
- Metal Prices Face Bearish Headwinds
- China’s Export Controls On Rare Earth Metals “Is Just The Beginning”
- Tesla Production Jumps 20% In China
- U.S. Navy Stopped Iran From Seizing Oil Tankers Near Strait Of Hormuz
- Fed sees more rate hikes ahead, but at a slower pace, meeting minutes show
- GM second-quarter sales increase 18.8% as supply chain stabilizes
- Futures Movers: Oil prices end at a 2-week high on reports Saudi Arabia said OPEC+ will do ‘whatever necessary’ to support oil
- ‘What does that mean for me?’: Biden’s new stab at student-loan forgiveness has borrowers frustrated and confused
Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.
