2023 | August 28

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The Market

Stocks Mixed

The S&P 500 and the NASDAQ posted overall gains for the first time in four weeks but the Dow finished in negative territory again, if only slightly. The NASDAQ outperformed its peers by a wide margin, despite sustaining a nearly 2% decline on Thursday.

U.S. Federal Reserve Chair Jerome Powell said on Friday that the Fed is prepared to approve further interest-rate increases at some point but will “proceed carefully.” Speaking in Jackson Hole, Wyoming, Powell cautioned that past increases haven’t yet fully cycled through the economy, and he indicated the Fed will await further economic data as it decides on the timing of any further hikes. 

The potential for further rate hikes sent short-term U.S. Treasury bond yields higher, as the 2-year yield jumped on Friday to around 5.06%, roughly equal to a year-to-date high reached on March 8. The last time the 2-year yield remained above 5.00% for an extended period was in mid-2000.

Amid a recent spike in mortgage rates, U.S. sales of existing homes in July fell to the lowest level for that month since 2010. Sales fell 2.2% versus June 2023 and slid 16.6% relative to July 2022, according to the National Association of Realtors. 

A pair of reports indicated a slowdown in U.S. economic activity. Stocks fell on Thursday after data showed that new orders for durable goods fell 5.2% in July to post the biggest monthly decline in more than three years. On Wednesday, a separate report showed business activity fell to a six-month low.

European currencies and yields of European government bonds both fell on Wednesday after a report showed that business activity across Europe declined to the lowest level in nearly three years, as measured by a survey of purchasing managers. A separate business activity report in Germany showed the steepest monthly decline in more than three years.  

The price of U.S. crude oil fell for the second week in a row, losing some of the ground from a seven-week string of gains that preceded the latest downturn. Oil was trading on Friday for about $80 per barrel, down from around $84 as recently as August 9, when oil climbed to a year-to-date high.

A monthly U.S. labor market update due out on Friday will show whether the modest jobs growth slowdown in recent months extended into August. In July, the economy generated 187,000 new jobs, short of most economists’ expectations and roughly in line with June’s gain. July’s unemployment rate slipped to 3.5%.

Source: John Hancock Investment Management

Schwab Transition

Pop Economics

Taylor Swift’s Eras Tour, Beyoncé’s Renaissance World Tour, and movie blockbusters Oppenheimer and Barbie have created an economic juggernaut. Together, they’re expected to pump $8.5 billion into the U.S. economy. One consequence is that economists have increased forecasts for U.S. gross domestic product (GDP) growth this quarter.

See what you know about pop culture trends that are boosting economic growth by taking this brief quiz.

1. Queen Bey tour kickoff had an unexpected impact on the Swedish economy. What was the “Beyoncé effect”?

a. A record number of workers called in sick, exacerbating labor shortages.

b. A Beyoncé-inspired tourism boom boosted inflation in May.

c. Consumer sentiment rose and everyone was humming “Single Ladies (Put A Ring On It)”.

d. All of the above

2. When Taylor Swift’s tour arrived in Glendale, Arizona, the town temporarily changed its name. What was it called?

a. Never-ever-ville

b. Taylorville

c. Swift City

d. Tay Tay Town

3. A recently released movie earned an odd accolade. It became the top-grossing film of all time to never have been number one at the domestic box office. Which movie was it?

a. Barbie

b. Mission Impossible: Dead Reckoning

c. The Super Mario Brothers Movie

d. Oppenheimer

4. Barbie is the highest grossing film of 2023. It has earned more than $575 million in North America. How much has it made worldwide?

a. $750 million

b. $1.1 billion

c. $1.3 billion

d. $1.7 billion

Answers: 1) B. An $1,800 difference in U.S. and Swedish ticket prices inspired fans to travel. The rise in tourism may have resulted in higher-than-expected inflation in May, according to Dansk Bank’s chief economist. 2) C 3) D 4) C

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