This was another consequential week for market participants as several important events took place. The major news this week revolved around the Fed’s July rate decision as well as advance GDP data and the release of the Core PCE Price Index. There was also drama regarding the Bank of Japan (BOJ) and its alleged intervention in the price of the Yen late in the week. The United States Treasury warned that it could take action to intervene and stabilize the price of the Yen compared to the dollar.
On Wednesday afternoon, the Fed decided to keep interest rates where they are until at least September. However, three voting members disagreed with that decision saying that rates should be increased. Of course, as monetary policy is often data dependent, those who decided to hold steady were likely vindicated.
This is because on Thursday, the advance GDP data showed that the economy only grew 1.5 percent compared to an expected 2.1 percent in the second quarter. Furthermore, the Core PCE Price Index grew 0.1 percent compared to an expected increase of 0.2 percent.
Unemployment claims data for the last week was also made public on Thursday. Over the past seven days, there were 197,000 claims for benefits compared to an expected 201,000 claims. Last week, 188,000 claims were made.
On Friday, the University of Michigan released its inflation expectation and consumer sentiment reports. Inflation is expected to be at 4.2 percent in 12 months while consumer sentiment came in at 55.2 compared to an expected 53.9.
The S&P 500 gained 0.46 percent this week to finish at 7,489. This was an increase of 34.51 points over the past five trading days, and the index has gained roughly 1.3 percent over the past 30 days. For the week, it made a low of 7,320 on Wednesday and closed near its weekly high on Friday.
The Dow was almost flat this week closing up 0.02 percent to finish at 52,485. This was a gain of about 10 points for the index that has gained about .6 percent over the past month. Over the last five trading days, the index made a high of 52,386 on Tuesday and a low of 51,633 on Thursday.
Finally, the Nasdaq was up 0.70 percent this week to close at 25,373. This was a gain of 183 points for the index that has underperformed the other two major American exchanges. Over the past month, it has lost about 0.66 percent. This week, the index made a low of 24,456 on Wednesday and closed near its weekly high on Friday.
Intervention in the yen likely occurred on Thursday as the currency dropped to a spot price of 158 against the dollar. More large moves took place on Friday but within a smaller trading range. On Friday morning, the BOJ announced it would keep its key interest rate at 1 percent.
The ADP and BLS versions of their job reports come out on Wednesday and Friday. The ISM Services and Manufacturing reports also come out next week in addition to the JOLTS jobs report.