Where Did the IPOs Go?

While the larger economy continued to gain traction, this past year was a surprisingly slow one in the IPO market. Initial public offerings in 2016 were at their lowest level since 2009, and proceeds from those IPOs were at their lowest total since 2003, according to data from research firm Renaissance Capital.

Only 105 companies went public in 2016, down from 170 in 2015, and 275 in 2014. The proceeds from these deals fell to only $18.8 billion; that's the lowest for this figure since IPOs raised $15.2 billion in 2003.

One bright spot: The median deal size this year was $95 million, up slightly from $94 million last year. But that's still down from $100 million in 2014.

Thoughts for Christmas

“Christmas is the season for kindling the fire of hospitality in the hall, the genial flame of charity in the heart.” ― Washington Irving

“I truly believe that if we keep telling the Christmas story, singing the Christmas songs, and living the Christmas spirit, we can bring joy and happiness and peace to this world.” ― Norman Vincent Peale

“My idea of Christmas, whether old-fashioned or modern, is very simple: loving others. Come to think of it, why do we have to wait for Christmas to do that?” ― Bob Hope

An Even Stronger Third Quarter

The Commerce Department now thinks that U.S. economy grew faster than previously thought in the third quarter. Buoyed by stronger consumer spending, the economy posted its best performance in two years between July and September.

The revised 3.5 percent rate of GDP growth in the third quarter was higher than the prior estimate of 3.2 percent. What changed?

• Consumer spending rose at a 3 percent annual rate, up from the prior estimate of 2.8 percent.
• Business investments rose at a revised 1.4 percent rate, much stronger than the previous estimate of  0.1 percent.
• Exports rose by 10 percent, helped by a temporary boom in U.S. soybean shipments.

The Sleepy Dow

The Dow Jones industrial average is closing in on the hallowed 20,000 milestone, but it's sleepwalking on its way there. Yesterday, the Dow marked its narrowest daily trading range in more than two years, moving less than 45 points between its highest and lowest levels of the day.

These things tend to happen around the holidays, when trading volume is low. Yesterday's move was the smallest fluctuation since November 26, 2014, the day before Thanksgiving that year.

Individual stocks showed almost no movement on the day. Nike was the Dow’s best performer but it climbed less than 1 percent. Merck & Co., the biggest laggard, fell 1.8 percent.

Buybacks on the Decline

S&P 500 firms repurchased $115.6 billion worth of their own stock in the third quarter of this year, down 28 percent from the same quarter a year earlier, according to FactSet. That’s the largest year-over-year decline since 2009, and follows on the heels of a sharp drop-off in the second quarter as well.

Buybacks fell across the S&P sectors that typically buy back the most shares, such as information technology and financials. Tech firms did remain the biggest buyers, accounting for $27 billion worth of buybacks, but that represents a drop of more than 40 percent. Financials came in second, purchasing $25 billion.

Why has this been happening? One theory is that companies are too nervous about the economic outlook to spend heavily on buyback programs, especially at a time when their valuations were climbing and buybacks were getting more costly.

The Falling Correlations

S&P 500 stock-correlation readings last week fell to their lowest levels in nearly a decade. The rolling 65-day correlation for S&P 500 stocks ended last week at 40 percent, the lowest absolute reading since 2007.

Correlation between individual stocks is a measure of their tendency to move up and down in unison regardless of their underlying fundamentals. Correlation is measured on a scale of 0 to 100 percent, where 0 means there is no relationship and 100 percent means they move together perfectly. The average correlation since 2009 is 60 percent.

When stocks are not highly correlated, that opens up opportunities for individual stock pickers to thrive. For example, just since the election, financial stocks on the S&P 500 have climbed 17 percent, while utilities are down by more than 1 percent.

The Force Is Strong

How much can the rollout of a single product affect a company's stock price? If the company in question is Disney, and the product in question is the new Star Wars movie Rogue One, the answer is "a lot."

Rogue One opened at theaters on Friday, and pulled in $155 million at the box office over the weekend in the United States - a mark that's second only to that recorded by The Force Awakens, last year's Star Wars movie. Globally, the new movie earned an astonishing $290 million.

When the markets opened this morning, Disney stock jumped by 2 percent at the opening bell. That means Disney's market capitalization expanded by more than a billion and a half dollars in a single weekend.

Regrets, We've Had a Few

Regrets are widespread: According to a new study from Transamerica, 76 percent of retirees wish that they would have saved more on a consistent basis. One factor behind this is that 53 percent say that they would have liked more information and advice from their employers on how to achieve retirement goals.

In fact, nearly all retirees indicate their employer offered little in the way of retirement transition assistance. Fewer than 10 percent say their most recent employer offered flexible work arrangements, retirement seminars, or financial counseling.

The study also found that among the 60 percent who retired sooner than planned, two-thirds retired for employment-related reasons. The key factors: organizational changes at their place of work, job loss, being unhappy with their job or career, or receiving a retirement incentive or buyout.

The Fed and Inflation

As expected, the Federal Reserve raised its benchmark interest rate 25 basis points yesterday – only the second hike in a decade – and indicated it might put in three more 25-basis-point hikes in 2017. The Fed signaled confidence in the economy’s growth prospects, although its long-term outlook is still for GDP growth around 1.8 percent over the next several years.

The Fed also said it does not expect inflation to reach its 2 percent target until 2018. Numbers released this morning supported that; the Labor Department said its Consumer Price Index rose 0.2 percent last month, after rising 0.4 percent in October.

In the 12 months through November, the CPI increased 1.7 percent. The so-called core CPI, which strips out food and energy costs, rose 0.2 percent last month after edging up 0.1 percent in October.

New Highs Ahead of the Fed

U.S. stocks set fresh records on Tuesday with the Dow Jones Industrial Average closing at a high for the seventh session in a row, as it moved within 100 points of the 20,000 milestone. Both the S&P 500 index and the Nasdaq also ended at record levels.

All this has happened before the Federal Reserve delivers its rate announcement today. The bank is widely expected to raise its benchmark interest rate by 25 basis points.

Will that have much of an effect on the markets? Most observers think it won't. The Fed's decision is considered almost a foregone conclusion, so it has already been baked in to stock prices.

What Small Business Owners Like

In the wake of one of the most surprising elections in history, small business optimism surged in November, posting its largest month-over-month gain in more than three years.  The overall index of small business optimism as measured by the NFIB rose from 94.9 up to 98.4, which was the highest monthly reading since December 2014. 

Even after this month’s increase in optimism, though, sentiment among small businesses is still below its cycle peak of 100.3. But it has made up a lot of the ground it lost during 2015 and early 2016.

While taxes and government red tape are still the issues that pose the biggest problems for small businesses, both were cited by less than 20 percent of owners.  The last time both of these issues were below 20 percent was five years ago, in November 2011.

Where's Inflation Headed?

Are inflation expectations running high, or running low? It depends on how you look at it. Preliminary responses to the University of Michigan’s monthly survey showed that people expect inflation of 2.3 percent over the next year. That is higher than the Labor Department’s most recent annual reading of 1.6 percent.

If you adjust for the fact that people always overestimate expected inflation, though, it is historically low. Indeed, the last time year-ahead inflation expectations were so cool was in September 2010.

To judge from their online habits, however, people’s confidence in low inflation might be starting to melt.  Google Trends shows that searches on inflation have picked up steadily this fall and are now at their highest monthly level since October 2008, when inflation was running 3.7 percent.

Investors Not Feeling This Market

The stock market has been pretty strong over the past month. Since the election, the S&P 500 index is up 3.8 percent, while the Dow is up 5.5 percent and the Nasdaq up 3.2 percent. But individual investors don't seem to quite believe in it. 

While sentiment on the part of individual investors definitely has seen an uptick since the election, in the last two weeks, that positive momentum has stalled. In AAII's sentiment survey, optimism is  down over six percentage points from where it was two weeks ago even as equities have been rallying to record highs. In this week’s sentiment survey, individual investor bullish sentiment slipped to 43.1 percent. 

That means despite the strong showing, less than half of all investors feel optimistic about this market. In fact, the last time more than half of individual investors were bullish was 101 weeks ago at the start of 2015.

Time to Eat at Home

Here's an interesting snapshot of our current economy: Traffic at U.S. fast-food restaurant fell 1 percent in the third quarter, the sector’s first traffic decline in five years, according to the industry tracker NPD Group. Total restaurant visits were also down 1 percent.

One reason for this is that eating out has become more expensive even as the cost of at-home dining has fallen. The average restaurant bill has climbed 21 percent in the past decade.

Meanwhile, the cost of food purchased for home use — that is, groceries — has fallen 2.4 percent in the past year, according to the October consumer price index. That’s the biggest decline over a 12-month period since the end of the Great Recession in 2009. The NPD has estimated than 82 percent of all meals are now consumed at home.

The End of the Oil Glut?

Is the oil glut over? Oil future prices ended the day on Monday at a more than one-year high. West Texas Intermediate crude oil for January delivery rose 11 cents to $51.79 a barrel, marking the highest finish for oil since July 2015.

The primary cause: OPEC's agreement to curb member production to no more than 32.5 million barrels a day is set to begin January 1. Key oil producers who aren’t members of OPEC also agreed to cut back their output by 600,000 barrels a day, with Russia taking on half that reduction.

OPEC's output set another record high in November, rising to 34.19 million barrels per day from 33.82 million in October. Russia reported average oil production in November of 11.21 million barrels per day, its highest in nearly 30 years.

Holiday Shopping by State

The holiday shopping season is off to a pretty good start here in the Garden State. According to Adobe Digital Insights, shoppers spent $539 million in New Jersey over the long weekend between Thanksgiving and Cyber Monday.

That ranks seventh in the nation. The top ten states for holiday spending in that time frame:

1. California, $1.7 billion
2. New York, $1.1 billion
3. Texas, $788 million
4. Florida, $680 million
5. Illinois, $645 million
6. Pennsylvania, $599 million
7. New Jersey, $539 million
8. Ohio, $440 million
9. Georgia, $387 million
10. North Carolina, $383 million

November Jobs Report

The economy added 178,000 jobs in November, and the headline unemployment rate declined by three ticks to 4.6 percent, the U.S. Bureau of Labor Statistics reported this morning. That's right in line with recent trends: Over the past three months, job gains have averaged 176,000 per month.

The strongest sector continues to be employment in professional and business services, which rose by 63,000 in November and has risen by 571,000 over the year. Over the month, accounting and bookkeeping services added 18,000 jobs.

Health care employment rose by 28,000 in November; over the past 12 months, health care has added 407,000 jobs. Employment in construction continued on its recent upward trend in November,  adding 19,000 jobs. Over the past three months, construction has added 59,000 jobs, largely in residential construction.

A Strong November

November turned out to be a very solid month all across the markets. For the month, the Dow gained 5.4 percent, which was its best monthly performance since March. The S&P 500 Index rose 3.4 percent and the Nasdaq rose 2.6 percent, representing the best month for both those indexes since July.

Both the Dow and the S&P 500 also hit new intraday records in yesterday's trading session. But they both fell back from those levels before the day was over.

The biggest winner for the month was the Russell 2000. The small-cap index rose by a whopping 11 percent in November, marking its best month since October 2011.

Third Quarter GDP Bumps Up

Some strong economic news: Gross domestic product expanded at a 3.2 percent annual rate in the Commerce Department’s second reading for the third quarter, released yesterday. That's up from an initial estimate of 2.9 percent, and is the strongest pace since the second quarter of 2014.

Consumer spending rose 2.8 percent in the quarter, higher than the original estimate of 2.1 percent and the strongest rate since 2002. The consumer sector accounts for two-thirds of the economy, and has been a strong factor in economic growth for several quarters.

Also helping out: Corporate profits soared 6.6 percent in the third quarter, following on the heels of a 0.6 percent decline in the second quarter. After-tax profits rose 7.6 percent from the second quarter.

Who's Giving to Charity?

Here's a fascinating trend in charitable giving: Wealthy Americans are giving more to charity than ever before, while donations from low- and middle-income givers are falling. A new study from the Program on Inequality and the Public Good said data is pointing to a small group of wealthy donors giving more money and cutting bigger checks than ever before.  But less-wealthy donors are giving less.

The Giving USA Foundation annual report found a 4 percent increase, to $373.25 billion, in 2015 in charitable donations from the year-earlier period, a record high. At the same time, the makeup for charitable donors has shifted.

The Institute for Policy Studies, using Internal Revenue Service data to track charitable deductions, found that inflation-adjusted itemized contributions from people making over $10 million increased by a whopping 104 percent from 2003 to 2013. Over the same period, itemized charitable deductions from people making less than $100,000 went down 34 percent.

A Quieter Black Friday

Is Black Friday losing its relevance? Foot traffic in stores this year is expected to fall by about 3.5 percent on Black Friday compared to last year, according to data from the location tracking service Foursquare. Last year, about 102 million shoppers hit stores over the Thanksgiving holiday weekend, down from 147 million in 2012, according to the National Retail Federation.

That doesn't mean people aren't shopping during the holidays anymore. They just aren't saving their purchases for Black Friday, and many are choosing to shop online, rather than in stores. And they're shopping and spending more than ever.

Combining foot traffic in stores and shopping online, about 137.4 million people are expected to shop over the Thanksgiving weekend. That's up from 135.8 million who shopped over the long weekend last year. Overall spending during the holiday period is expected to increase 3.6 percent over last year, to $655.8 billion.

Thoughts for Thanksgiving

"We can only be said to be alive in those moments when our hearts are conscious of our treasures." ~Thornton Wilder

"Give thanks for unknown blessings already on their way." ~ Native American Saying

"Stand up, on this Thanksgiving Day, stand upon your feet. Believe in man. Soberly and with clear eyes, believe in your own time and place. There is not, and there never has been a better time, or a better place to live in." ~ Phillips Brooks

Dow 19K

Yesterday, the Dow Jones Industrial Average closed above 19000 for the first time. But it took almost 500 trading days to get there from 18000, the seventh-longest stretch of time between such round-number marks. The 16000, 17000 and 18000 Dow records were all broken in fewer than 160 trading sessions since the previous 1,000-point level.

Simple math shows that each 1,000-point rise is less impressive than the last: The march from 17000 to 18000 was good for a 5.9 percent gain, for example, while the climb from 10000 to 11000 was a 10 percent rise. The Dow made it to 19000 by rising just 5.6 percent over nearly two years, since after it reached 18000 in December 2014.

Put the two measures together, and the latest 1,000-point climb was the result of average gains of just 0.01 percent each trading day. The last three round-number records were set after average moves of more than 0.04 percent each day.

A Slightly Cheaper Feast

Americans' Thanksgiving feast this year will be less costly than last year's. A Thanksgiving dinner for 10 people will cost an average of $49.87 this year, according to a survey from the American Farm Bureau Federation. That is down 24 cents from a year ago. Adjusted for inflation, the cost of a Thanksgiving dinner fell to its lowest since 2010, the Farm Bureau said.

The Farm Bureau, which surveyed 148 volunteer shoppers across 40 states, followed prices for a range of typical Thanksgiving items including sweet potatoes, bread stuffing and cranberries. A 16-pound turkey cost roughly $22.74 this year, down 1.3 percent from a year ago. Prices of milk, pumpkin pie, and a veggie tray of celery and carrots also fell.

Food-price deflation has financially crimped farmers and ranchers, but has benefited consumers this year. In last week’s report on consumer prices, the Labor Department found food costs at supermarkets fell 2.3 percent in October, the sixth straight monthly decline and the biggest drop since 2009.

Choppy Waters Ahead?

The VIX, the stock market's so-called Fear Index, looks tame for now, indicating that there shouldn't be a whole lot of short-term movement in the market. But are there more turbulent times further into the future?

The CBOE Volatility Index closed below 13 on Friday for the first time in more than a month, but futures contracts tell a different story. The VIX future that expires next month was at 14.95 Friday, while the one expiring in June was at 19.35.

That rising level reflects expectations that volatility will rise, despite low current levels. The differential between one-month and six-month VIX futures is approaching its largest in the past two years, after an initial increase following the U.S. presidential elections last week.

A Four-Decade Low

Sometimes we take note of economic statistics that have returned to where they were before the recession. But this one goes back much further than that: Last week, the fewest Americans filed for unemployment benefits since 1973.

Jobless claims dropped by 19,000 to 235,000 in the week ended last Saturday, a Labor Department report showed yesterday. Continuing claims fell below 2 million, reaching a 16-year low.

The biggest drop in initial claims since June suggests employers are hesitant to fire workers, as the number of experienced applicants available for hiring remains limited. Filings for unemployment benefits have stayed below 300,000 for 89 straight weeks, which is the longest such streak since 1970.

Tech Left Behind

The S&P 500 has done fine since election day, rising by 1.5 percent. But one sector that has lagged has been the tech stocks. Tech stocks are the only growth sector in the red on the S&P 500, off 1.7 percent over the past week. Industrials, meanwhile, are up 5 percent and financial stocks have climbed 10 percent. 

It's the biggest tech stocks that have suffered the most. Amazon.com and Facebook are each down 5.5 percent over the past week.


Why has this happened? One theory is that investors are booking profits in tech – by far the third quarter’s best-performing group  – and moving into sectors perceived to be the biggest beneficiaries of the Trump administration. In addition, tech companies stand to benefit relatively less than other industry groups from tax cuts, since tech firms already tend to pay lower effective tax rates.

Why the Holidays Are So Expensive

Americans put far more on their credit cards in December than they do in any other month. But it's not just because of holiday gift-giving.  And this year, a number of studies show, they’ll probably be spending even more.

A survey released this year by Deloitte found that Americans plan to spend on average $426 on gifts for others this year. That’s  a lot, but it's less than half of their total holiday spending. We spend hundreds on non-gift items like holiday decor, entertaining and gifts for ourselves. 

Survey results from The National Retail Foundation this year also found high levels of self-gifting: Nearly six in 10 Americans plan to buy gifts for themselves, spending an average $139.61, up 4 percent from last year. That marks the second-highest level of personal spending in the survey’s 13-year history.

Millennials Know What College Costs

The latest “How America Saves for College” survey has found, surprisingly enough, that millennial parents are saving more for their kids' college than boomer parents,  by an average of $20,155  to $18,323 for the boomers. They're also well ahead of Generation X parents, who reported setting aside an average of $12,428.

The survey defined millennials as 35 years old and younger, Gen Xers as 36 to 51, and baby boomers as ages 52 to 70. Millennial parents’ attitudes on several college savings questions reflected greater optimism than either of the older generations, including having a plan to pay for college, and showing a greater willingness to ask family members and others outside of the family to contribute money to the college kitty.

The survey also found that the number of parents using 529 state-sponsored college investment accounts reached its highest level since the study began. For the first time since Sallie Mae began the study in 2009, the percentage of parents creating a college savings plan exceeded 50 percent.

Gold on the Decline

Among all the other news of the week, there was bad news for gold investors. Gold futures marked their lowest finish since June, as strength in the U.S. dollar and growing expectations for a Federal Reserve interest-rate increase next month fueled the largest weekly decline in more than three years.

Gold futures for December delivery fell 3.3 percent to settle at $1,224.30 an ounce—the lowest close since early June. For the week, prices lost roughly 6.2 percent, the largest drop since the week ended June 21, 2013.

But there was good news for other metals, especially industrial ones. Copper futures saw a weekly climb of nearly 11 percent, which was the largest weekly gain in over five years.

The Quick Turnaround in the Economy

Americans' confidence in the U.S. economy increased sharply after the election, moving from a slightly negative evaluation (minus 10) to a slightly positive one (plus 3). Throughout the year leading up to the election, Gallup's U.S. Economic Confidence Index had been consistently negative.

Of course, that's too quick for anything to have really changed in the economy. The increase in economic confidence mostly stems from Republicans' more positive views after Republican Donald Trump won the election.

In the week before the election, just 16 percent of Republicans said the economy was getting better, while 81 percent said it was getting worse. Since the election, 49 percent say it is getting better and 44 percent worse.

The Drop in Entrepreneurial Jobs

Job gains from new firms are at the lowest share of employment in over 20 years, another sign of the declining role entrepreneurship plays in the U.S. economy. Job gains from these establishments as a percentage of overall private-sector employment dropped to 1 percent in the first quarter of 2016, the lowest level recorded since the Labor Department began collecting this data in 1992.

That's just half what it was at its peak. Throughout the 1990s, that figure hovered between 1.6 percent and 2 percent, before edging lower throughout the subsequent decade. Since 2009, when the economic recovery began, it has held between 1.1 percent and 1.3 percent.

The number of “establishment births,” or new businesses, fell by 26,000 to 220,000 in the first quarter of 2016. The number of jobs those establishments created also dropped by 161,000 from the previous quarter to 734,000, the lowest level since 2011.

Reading the Election

No matter what you think of the election results, some caution is advised when watching the markets' reaction. Some historical post-election anomalies:

• In 1932, when Franklin D. Roosevelt was first elected, the Dow Jones Industrial Average dropped 4.5 percent the following day. But the market roared higher in the year that followed.
• The Dow fell 3.8 percent after Harry Truman’s surprise victory, in 1948, but the market finished the year up.
• In 2004, George W. Bush’s re-election prompted a 1 percent rally, but the market did poorly during that term. 
• Barack Obama has presided over one of the best bull markets in history, but his victories in 2008 and 2012 sparked drops of 5.3 percent and 2.4 percent.

Watching the Ballot Box

Election Day is finally here, and it's having an effect not only on the myriad TV commercials we've had to suffer through by the stock market as well. The Wall Street Journal identified three stocks whose investors are watching the ballot box:

• Western Union rose 3.5 percent on Hillary Clinton's rise in the polls: Remittance fees from immigrant workers in the U.S. sending money home are a major source of income for the company — a business that would be at risk if Donald Trump wins.
• Gun-maker Smith & Wesson Holding, which gained 2.4 percent. History suggests a win by Clinton will spur a pickup in gun sales to people worrying that firearm sales might later be restricted.
• Corrections Corp. of America fell 0.7 percent on worries that the for-profit prison industry would find itself in a President Clinton’s crosshairs.

A Long but Shallow Decline

The S&P 500 index staged a late-session collapse on Friday to fall for its ninth session in a row, That's the longest streak of declines since 1980. The last time the S&P 500 fell for 10 days? All the way back in 1975. The record is 12 days, hit back in 1966.

But it's easy to make too much of that. The declines have been persistent but very shallow: The S&P 500 is down just 3.1 percent during the slide. Back in 1980, that nine-day streak amounted to losses of 9.4 percent, according to S&P Dow Jones Indices.

Or you can look at it this way: The S&P is down 3.1 percent over the past nine days. But there have been 298 single days where the index suffered bigger declines than the last nine days combined.

October's Jobs Report

The economy added 161,000 jobs in October, according to figures released this morning from the Bureau of Labor Statistics. Over the past three months, the economy added 176,000 jobs per month, on average. The jobless rate fell a tenth of a percentage point to 4.9 percent.

Wages continue to rise: Americans in private-sector nonfarm jobs earned an average $25.92 an hour in October, up 10 cents from the prior month. Wages have climbed 2.8 percent over the past year, the strongest 12-month gain since mid-2009.

Revisions added a total of 44,000 jobs to earlier payroll estimates for August and September. The overall pace of job creation has slowed in 2016, averaging 181,000 a month through October versus 229,000 for all of 2015.

The Fed's Pronouncements

The Federal Reserve's statement released yesterday was less straightforward in calling for a December rate hike than expected, but that rate hike looks to be still very much on the table. The Fed warned that “the case for tightening continued to strengthen.”

The Fed also released its economic assessment, which was a mixed bag:

• Consumer spending, which is finally perking up after a disappointing summer, was downgraded from “growing strongly” to “rising moderately.”
• The Fed says “market-based measures of inflation expectations have moved up” but “survey-based measures of longer-run expectations are little changed."
• Job gains continue to characterized as “solid,” despite a recent slowdown. The October jobs report will be out on Friday.

The Shrinking Down Payment

Here's one way in which homebuying has changed dramatically over the years. Data published yesterday by the National Association of Realtors shows the median percent down payment among both first-timers and repeat buyers is essentially half what it was just 30 years ago.

In 1989, the median down payment among all buyers was 20 percent, according to NAR. In 2016 it’s down to 10 percent. Among first-time buyers it’s all the way down to 6 percent.

About half of first-time buyers - 49 percent - said that student loan debt made saving for a down payment difficult. Student loans weren’t the only impediment, though: 40 percent of all buyers said credit-card debt had delayed saving for a down payment or a home purchase.

Scary Levels of Spending

Did you spend a lot of money getting ready for today? According to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics, total spending for Halloween is expected to reach $8.4 billion, an all-time high in the survey’s 11-year history.

More than 171 million Americans planning to partake in Halloween festivities this year in one way or another. U.S. consumers are expected to spend an average of $82.93 apiece, up from last year’s $74.34.

According to the survey, consumers plan to spend $3.1 billion on costumes, which will be purchased by 67 percent of Halloween shoppers. They'll also spend $2.5 billion on candy, $2.4 billion on decorations and $390 million on greeting cards.

Inside the Third Quarter GDP Growth

The U.S. economy expanded at a seasonally adjusted annual rate of 2.9 percent in the third quarter of 2016, the Commerce Department said this morning. That's not just an increase from the second quarter’s 1.4 percent pace but the strongest quarter of growth in two years.

Exports jumped in the third quarter at a 10.0 percent annual pace, boosted by a summer surge in soybean exports. Imports rose at a more modest 2.3 percent rate; overall, net exports contributed 0.83 percentage point to last quarter’s GDP growth rate.

Consumer spending slowed to a 2.1 percent annual growth rate from the second quarter’s robust 4.3 percent reading, but spending on durable goods remained strong. In all, personal-consumption expenditures added 1.47 percentage points, or almost exactly half, to the quarter’s 2.9 percent growth rate for total GDP.

Americans Are Almost the Most Generous

The U.S. is the second most generous country in the world, according to the U.K.-based CAF America, an international nonprofit organization. But the country in first place may surprise you - it's Myanmar, where 70 percent of people (up from 66 percent last year) say they have helped a stranger, volunteered their time or given money to a charity in the past year.

The U.S. came in second place with a score of 61 percent, unchanged from 2015. In the U.S., 63 percent of Americans said they donated money to a good cause while 43 percent said they volunteered time and 73 percent said they helped a stranger.

Myanmar’s ranking is largely driven by high levels of participation by donating money (91 percent) and volunteering (55 percent). The World Giving Index surveyed 148,000 people in 140 countries.

Consumer Confidence Slipping

The confidence of Americans in the U.S. economy fell in October to a three-month low, just ahead of the presidential election. The primary driver of the decline was that more consumers are saying that jobs are a bit harder to find.

Consumers' perceptions of both current conditions and the six-month outlook dimmed. The future expectations index also fell significantly, to the.the lowest level it's been at since July.

In addition, the September confidence number, which was initially thought to be a nine-year high, has now been revised lower. It still hit a one-and-a-half year high, but is no longer thought to have reached pre-recessionary levels.

Let's Make a Deal - A Big One

For reasons, no one has really been able to explain, deal making just had its biggest week since the dot-com boom. More than five multi-billion dollar deals were announced this past week, totaling $207 billion in deal volume globally. That’s the biggest week since 1999, according to data provider Dealogic.

The biggest one is AT&T’s blockbuster $85.4 billion deal to buy Time Warner, the largest acquisition announced this year. The trend also includes British American Tobacco PLC’s proposed deal to buy the rest of Reynolds American for about $47 billion.

And the deals aren't over yet. Chip maker Qualcomm is expected to announce as early as this week its purchase of NXP Semiconductors, worth roughly $40 billion.

New Record for Income

Here's another statistic showing the economy on the right path: The inflation-adjusted weekly income of the typical full-time American worker hit an all-time high in the third quarter of 2016, according to data released last week by the Bureau of Labor Statistics.

Median weekly earnings of the nation's 112.8 million full-time wage and salary workers were $827 in the third quarter of 2016. That was 3.0 percent higher than a year earlier.

Median weekly earnings had been approximately stagnant for the first 15 years of the 21st century,  but earnings have rebounded sharply over the past 18 months. That’s the result of a mix of an improving labor market, giving workers additional bargaining power, and cheap energy prices keeping inflation low.

The Business Banking Slowdown

Banks are beginning to feel the impact of a slowdown in commercial lending, with regional lenders taking the hardest hit but growth slowing across the board. Commercial lending slipped 0.1 percent by  in the July-to-September period. That's not much, but it's  the first drop in six years. Some specific examples: 

• Fifth Third Bancorp said Thursday that its commercial and industrial loans fell 2 percent since the prior quarter. 
•  Comerica's average loans fell by $331 million at the business bank in the third quarter.  
• BB&T  said that average balances on its commercial and industrial loans fell by 1.1 percent in the third quarter. 
• Regions Financial's business-lending balances fell by $979 million to $50.2 billion, leading a drop of 1 percent in average loans and leases across the bank.

Charging It, Still

The humble old credit card isn't just holding its own with new forms of payment - its use is actually growing. That's what consultants at Accenture PLC found when they surveyed over 4,000 American and Canadian consumers in July. Credit cards were the only form of consumer payments used to pay in person becoming more commonly used, versus cash, debit cards, and—surprisingly—mobile phones.

The percentage of people using credit cards weekly jumped from 50 percent in a survey last year to 53 percent this year. That contrasts to a flat 19 percent usage rate for mobile devices, and slight drop from 59 percent to 58 percent for debit cards.

The biggest loser in all of this has been cash. The percentage of people who use cash at least once weekly has dropped from 67 percent last year to 60 percent now.

What's Driving Inflation

U.S. consumer prices recorded their biggest gain in five months in September. The biggest drivers of the increase? The cost of both gasoline and rents surged.

The Consumer Price Index increased 0.3 percent last month after rising 0.2 percent in August. For the 12 months through September, the CPI has risen by 1.5 percent, the biggest year-on-year increase since October 2014. The CPI rose 1.1 percent in the year to August.

The so-called core CPI, which strips out food and energy costs, gained 0.1 percent last month after climbing 0.3 percent in August. Rents, which account for a larger share of the core CPI, recorded their biggest monthly increase in nearly 10 years.

Bouncing Off the Bottom

It's hard to recall now, but eight months ago, the markets bottomed out and it looked like 2016 was going to be a rough year. Since the S&P 500 reached its low point on February 11, several stocks have shown incredible gains.  Amazon tops the list with a 63 percent rally in the stock and a whopping $153 billion increase in its market cap.

The other leading S&P stocks since that market bottom:

• Qualcomm, up 52.8 percent
• Charter Communications, up 46.0 percent
• Bank of America, up 43.4 percent
• Intel, up 32.7 percent
• IBM, up 31.1 percent

Mutual Funds in the Third Quarter

The mutual fund leaderboard for the third quarter is now out, and it was a good quarter for investors. There was money to be made in every category.

Here are the median return for funds in each category:

• Small-cap growth: 7.6 percent
• Small-cap value: 7.2 percent
• Small-cap blend: 6.8 percent
• Large-cap growth: 5.7 percent
• Mid-cap value: 4.7 percent
• Mid-cap blend: 4.6 percent
• Mid-cap growth: 4.5 percent
• Large-cap blend: 3.8 percent
• Large-cap value: 3.5 percent

Earnings Season Looking Grim

Earnings season started this week, and it's off to a very uninspiring start. And things could get worse before they get better. Alcoa, the traditional kickoff stock for each earnings quarter, delivered weak third-quarter results, and its stock dropped 11 percent on the day - its biggest one-day loss in five years.

S&P Global Market Intelligence warned that earnings season is likely to suffer as a result of tepid growth, which was down 1.2 perecnt for the third quarter. S&P expects the consumer-discretionary sector to report its lowest quarterly results since 2012

Overall, S&P 500 companies are expected to post their sixth straight quarter of declining earnings, according to FactSet.  Alcoa could be just the beginning.

Quitting Is Good!

Here's another economic indicator that is back to where it was before the recession: people quitting their jobs. The share of employees voluntarily leaving their jobs compared to total separations is back at post-recession highs.

The Bureau of Labor Statistics on Wednesday announced that in August, the share of total quits in relation to separations — voluntary or not — jumped to 60.2 percent, matching the post-recession high reached in December. In other words, nearly two-thirds of job separations were people voluntarily quitting rather than getting laid off or fired.

Why does that matter? A higher quits rate sends a positive message about the labor market because people are more likely to quit their jobs if they feel confident about finding a new one quickly, or if they already have another offer. It could also suggest that workers are leaving their jobs for better-paying ones, making it a predictor of wage growth and inflation.

Investor Optimism Keeps Growing

Optimism among U.S. investors in the third quarter of 2016 has reached heights not seen since before the recession. The Wells Fargo/Gallup Investor and Retirement Optimism Index has now climbed to +79, an increase of 17 points from the second quarter after a 22-point gain from the previous quarter. The index is now at its highest point since July 2007.

The third quarter marks the first time the index has risen above +70 since the recession. The index went from +48 in the fourth quarter of 2014 up to +70 in the second quarter of 2015, but then dropped back down to +40 in the first quarter of this year.

The largest gains were seen in optimism among retired investors. Significant gains in retirees' outlook for both their personal finances and the national economy pushed their overall index from +45 in the second quarter to +81 in the third.

Why Utilities Stumbled

Utilities is generally the sleepiest of the S&P 500's sectors, but it caused a bit of a commotion yesterday when it rose by just 0.8 percent on Monday. That broke an 11-session losing streak that went down as the longest in records going back to 1990.

There's a reason that utilities had been suffering recently. The sector is known mostly for paying out above-average dividend income and has thus fallen when bond yields rise. The problem in the past couple of weeks is that bond investors are beginning to expect the Federal Reserve to lift interest rates.

That ended yesterday, when utilities outperformed the 0.5 percent increase in the overall S&P. Still, the utilities sector is down 3 percent for all of October.

The Stress of Success

Does being wealthy stress you out? Money and education confer plenty of advantages in life, and research has long shown that people with them live healthier, longer lives and tend to have more stable, less-monotonous jobs - but apparently, with more stress, too.

In a recent study, Penn State University researchers gave 122 workers living in a northeast U.S. city Palm Pilots to carry with them on the job. Several times a day, the handheld computers prompted them to rate how stressed and how happy they felt.

People with higher incomes and levels of education reported being about 28 percent more stressed and 8.3 percent less happy overall than did workers with lower incomes and levels of education. In addition, those higher-status workers—those in the top fifth of a combined measure of income and education, tending to earn at least $100,000 a year—also reported having more trouble meeting the demands of their jobs.

September Jobs Report

The September employment report is out this morning, with the Bureau of Labor Statistics reporting that the economy created 156,000 jobs in the month. Private-sector payrolls added 167,00 jobs, while  government payrolls fell by 11,000. The unemployment rate ticked up to 5.0 percent from 4.9 percent.

That makes September a slow month, but not really out of line with what we've seen this year. Thus far this year, job growth has averaged 178,000 per month. That compares with an average of 229,000 per month in 2015.

The strongest sector was professional and business services employment, which rose by 67,000 in September and has risen by 582,000 over the year. Health care added 33,000 jobs in September and has added 445,000 jobs over the past 12 months.

Optimistic but Wary

Here's a paradox that is affecting the mind-set of today's investors: They are more optimistic about the stock market than they’ve been in nine years, since before the market collapse of 2008-09. But at the same time, they’re also moving more money into cash and CDs.

The latest Wells Fargo/Gallup Investor and Retirement Optimism Index gained 11 percent in the third quarter. Slightly more than half of investors are now “very” or “somewhat” optimistic  about the 12-month outlook for markets, up from 42 percent last quarter.

But an almost equal percentage of respondents are more worried about stock market volatility than low interest rates, and 43 percent reported they have moved money to cash or cash equivalent savings over the past year. That’s substantially higher than the 29 percent who moved funds into individual stocks or stock funds.

The Rising Price of Stock Shares

The era of the stock split appears to be comping to an end. So far in 2016, only five companies in the S&P 500 stock index — and only 63 among more than 10,100 U.S. companies tracked by S&P Dow Jones Indices — have split their shares. This year is on track to be the third-lowest for stock splits in modern history, behind only 2009 and 2010, when companies were too traumatized by the financial crisis to dare lowering their share prices.

One result of this is that the price of stock shares has gone markedly higher. After decades of remaining in a range between $25 and $45, the average price of an S&P 500 stock has risen to a near-record $86 per share.

So you should get used to single-share prices that look like sizable investments. It’s not just Berkshire Hathaway, at more than $217,000; there’s also homebuilder NVR, at more than $1,640; Priceline Group, near $1,500; and Alphabet, the parent of Google, over $800.

Third Quarter's Big Winners

In the midst of a pretty solid third quarter, there were several stocks in the S&P 500 that really shone. Ten of the stocks in the index returned a whopping 30 percent or more in the third quarter alone. Those stocks:

1. Seagate Technology, up 61%    
2. NetApp, up 47%    
3. Chesapeake Energy, up 46%    
4. Nividia, up 46%    
5. Williams Cos., up 43%    
6. eBay, up 41%     
7. Nordstrom, up 37%    
8. Autodesk, up 34%   
9. State Street Corp., up 30%    
10. American Airlines Group, up 30%

Third Quarter Scorecard

The third quarter, which concluded on Friday, was a big one for the stock markets. The S&P 500 ended the third quarter up by 3.3 percent, making the index up by 6.1 percent so far in 2016 overall.

The Dow Jones industrial average also had a solid quarter, though it's still trailing the S&P. It rose 2.1 percent on the quarter, and is now up by 5.1 percent on the year.

But the real excitement was in the Nasdaq. The tech-heavy index was up 9.7 percent in the third quarter, its best quarterly performance since 2013. Because of losses earlier in the year, though, the Nasdaq is up by just 6.1 percent in 2016 overall.

Soybean Power

What has economists excited about the third quarter GDP figure? The humble soybean. Soybean exports are expected to add about 1 percent to third-quarter GDP growth, due to bumper harvests at home, crop shortfalls in South America and solid demand.

That has many institutions raising expectations for the quarter. J.P. Morgan Chase has revised its outlook to 3 percent annualized growth in the third quarter, up from its earlier estimate of 2 percent. Barclays inched up to 2.6 percent from 2.4 percent.

Any of those figures would be a big improvement from 1.4 percent GDP growth in the second quarter and 0.8 percent in the first. The Commerce Department will release its first estimate of third quarter GDP on October 28. 

The Lopsided Sectors of the Third Quarter

Just two days remain in the third quarter, and with a gain of 2.9 percent for the S&P 500, it hasn’t been that bad for the overall market.  But so much of the quarter's success depends on which sectors investors have gotten into.

Of the eleven sectors, just two are outperforming the overall S&P 500: Technology and Financials.  The Technology sector, which is up 12.1 percent this quarter, is way out in front. Technology is also the largest sector in the S&P 500, which is why it has such a disproportionate effect on the entire index. 

Financials are a distant second with an increase of 3.6 percent. Five sectors are actually in the red for the quarter. The biggest declines have come in Telecom Services, down 5.2 percent, and Utilities, down 4.4 percent.

Confidence Finally Gets Past the Recession

Maybe the last lingering effects of the recession are finally over. The Conference Board’s consumer-confidence index rose in September to its highest level in nine years, a sign that American households have finally escaped the recession’s long shadow.

The  index increased to a seasonally adjusted 104.1 in September, up from 101.8 in August. That was its highest level since August 2007, the month that marked the start of the financial crisis.

The biggest changes concerned jobs. The report noted that consumers are  feeling better about employment prospects: The proportion of those expecting more jobs in the upcoming months rose to 15.1 percent from 14.4 percent, and the proportion of those expecting less jobs dropped to 17.0 percent from 17.5 percent. Moreover, those expecting a drop in incomes to decreased to 10.3 percent from 11.0 percent.

Cards Overtake Cash

In 2016, for the first time ever, consumers will spend a greater amount with cards than they do with cash, according to the market-research firm Euromonitor International. They figure that consumers worldwide will spend about $23.2 trillion in card payment transactions and $22.6 trillion in cash.

Cash is still used much more frequently. Cash is used for about 85 percent of transactions worldwide, but that can mostly be attributed to the popularity of using cash for small transactions, according to research from MasterCard and management consulting firm McKinsey.

The rise of debit cards is another reason why cash has declined in recent years. Debit card use worldwide grew about 8 percent in terms of cards in circulation from 2015 and 2016. By that same measure, credit card use grew about 5 percent worldwide.

Marital Bliss

American marriages seem to be in pretty good shape, at least as far as money is concerned. A recent Ameriprise study found that 88 percent of couples ranging from 25- to 70-year-olds are happy with the way they manage their money in their relationships. In addition, 68 percent say they communicate well about their dollars.

The study also revealed five steps to living in a successful financial relationship. Those include making money a priority, talking through and agreeing on financial goals, setting spending limits and discussing big purchases, keeping a joint account, and planning retirement and investments.

When couples do face disagreements, it often has to do with major purchases and children-related conversations, such as how much to spend on their kids. The study found 82 percent of couples say they’re able to resolve their disagreements on such issues.

The Most Hated Stocks in America

The stock of the venerable retailer Sears is already down 43 percent this year, but people are still betting on it to fall further, leading the web site MarketWatch to call Sears the most hated stock in the U.S. The level of short interest in Sears is at 65.6 percent, meaning nearly two thirds of people interested in the stock expect it to drop.

The other leaders on the list of "most hated":

• Weight Watchers, 62.4 percent short interest
• Insys Therapeutics, 57.1 percent
• Adeptus Health, 54.3 percent
• Clayton Williams Energy, 53.1 percent
• RPC Inc., 47.0 percent

The Interest Rate Outlook

One of the key releases after each Federal Reserve meeting is the so-called dot plot, where committee members use dots to suggest where they see rates heading in the months and years to come. Following today's meeting, the median of the dots at the end of the year is now 0.6 percent, suggesting just one rate increase this year, which would come after the December meeting.

But the spread of opinions is unusually broad. Three officials see no increases this year, while four members expect more than one increase to be appropriate. Looking ahead, policy-makers see two increases in 2017, and three each in 2018 and 2019. The longer-term rate beyond 2019 is forecast to be at 2.9 percent, down from 3 percent in June.

The summary of economic projections also suggested slightly lower expectations for inflation this year, 1.3 percent now versus 1.4 percent in June. The outlook for economic growth also dropped some, sitting at 1.8 percent now versus 2 percent in June.

Buybacks Losing Favor

Once the hottest trend among major American companies, stock repurchases have waned considerably in recent months. Year-over-year, S&P 500 company stock buybacks for the second quarter fell 6.8 percent to $125.1 billion. That's their lowest level since the third quarter of 2013.

Mega-buybacks, where a given company spends $1 billion or more in a quarter, have also tapered and are near a three-year low. The decline follows a record amount spent by companies on stock  repurchases for a 12-month stretch that ended in the first quarter of 2016.

The number of S&P 500 companies actively engaged in share buybacks has dropped to 350, marking the lowest number of companies since the fourth quarter of 2010. That's down from 380 in last year’s second quarter.

Housing Is Unexpectedly Strong

Some surprising news from the housing industry: U.S. home builder sentiment unexpectedly rose in September to its strongest level in 11 months, prompted by renewed interest in home purchases following a summer lull. The National Association of Home Builders and Wells Fargo said their index on builder confidence regarding newly built, single-family homes climbed to 65 points in September.

This matched the level set in October 2015, which was the highest this figure has been since the height of the housing boom. The index that tracks buyer traffic rose four points to 48: It hasn’t topped the neutral 50 mark since mid-2005.

All that housing growth has lifted U.S. household wealth as well. It increased 1.2 percent to $89.1 trillion in the second quarter,  while housing wealth rose 1.9 percent to $25.6 trillion.

Americans Keep On Working

When it comes to retirement, a whopping 75 percent of Americans say they plan to work “as long as possible” in retirement, according to a new report from Bankrate.com. And for many of them, it’s not because they love their jobs:

• 38 percent say they are planning to work because they want to
• 35 percent say they plan to work because they need the money
• 27 percent said they plan to work because they need the money and want to work

According to the Bankrate.com survey, 47 percent of retirees are either very worried or somewhat worried about outliving their retirement savings. That’s up from 37 percent the last time that question was asked, in 2009. Only 25 percent said they had no plans at all to work during retirement.

Sales Still Sluggish

Will the economy rebound in the third quarter? Retail sales figures released yesterday show that we haven't gotten out of gear yet. U.S. retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods, pointing to cooling domestic demand.

The Commerce Department said retail sales declined 0.3 percent after edging up 0.1 percent in July. Sales were up 1.9 percent from a year ago. So-called core retail sales correspond most closely with the consumer spending component of gross domestic product, and there the numbers were a little better: Excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.1 percent last month after a similar drop in July.

The trend was widespread, with sales, rising in only four categories, including clothing stores and restaurants and bars. Receipts at auto dealerships fell 0.9 percent, while online sales, whose share has grown in recent years, dropped 0.3 percent.

Benefits in Danger?

Are your benefits at work being cut back? According to a new Gallup poll, more U.S. workers say they worry about having their benefits reduced (30 percent) than worry about having their wages cut (20 percent), being laid off (19 percent), or having their hours cut back (17 percent).

Benefits cuts consistently have been the top worry since Gallup first asked the question in 1997, but it's easing from recent years. U.S. workers' concern about having their benefits cut spiked to 46 percent in 2009 before falling to 34 percent in 2014. The 30 percent who worry about benefits reductions today is essentially back to where it was before the September 2008 financial crisis.

Workers' concerns about having their wages cut or their hours reduced remain at least slightly higher than they were at any point before the recession. While the 19 percent worried about being laid off is also higher than just before the financial crisis (15 percent), it is similar to where that mark was in the late 1990s and early 2000s.

Incomes Are Finally Rising

For the first time since the recession, Americans' income rose last year. A new report from the Census Bureau Tuesday showed a 5.2 percent increase in U.S. household incomes in 2015, the first annual increase in eight years. The median income in 2015 was $56,500, an increase of $2,800 from the prior year, after adjusting for inflation.

But that's not the end of the story. We're still not back to where we were prior to the recession. The median household income is still 1.6 percent lower than it was in 2007, before the recession.

It also remains 2.4 percent lower than the all-time peak in American incomes. We reached the high-water mark during the economic boom of the late 1990s.

A Spike in Volatility

Friday's rout in the markets led many investors to expect further volatility. The VIX, a measure of stock-market fear which is based on S&P 500 options, had climbed 40 percent on Friday, raising the specter of more market upheaval in the weeks to come after months of eerie calm. Sure enough, the S&P 500 sank nearly 2.5 percent.

But that same volatility Index, or VIX, fell 13 percent to 15.16 on Monday. The S&P, which is typically up when the VIX is down, climbed 1.47 percent as investor concerns subsided.

We may be due for a period of elevated volatility. This summer, the S&P 500 had a streak of 43 consecutive days without a move, positive or negative, or more than 1 percent.

A Wide Rout

After a Fed board governor hinted at the possibility of a rate increase, pretty much everything on the market fell on Friday. It was the worst day for stocks since the Brexit vote. How widespread was the rout?

• The S&P 500 dropped by 2.5 percent, and all ten sectors suffered losses.
• The Dow Jones industrial average dropped 2.1 percent, with all 30 component stocks falling on the day.
• On the New York Stock Exchange, only one in every 20 stocks advanced.
• Oil prices, which had been rising, fell by nearly 4 percent.

Gas It Up!

With gas prices still low, it's not much of a surprise that Americans fueled up this summer at levels not seen since the recession began almost nine years ago, new data shows. Americans purchased about 406 million gallons of gasoline per day, on average, in June, according to data the U.S. Energy Information Administration released last week.

That just surpassed a previous record set in July 2007. But fuel consumption typically peaks for the year later in the summer, in July or August, when road-trip season is in full swing. So Americans likely purchased an all-time record volume of gasoline this summer.

Of course, part of this growth has been the drop in gasoline prices. The average price for a gallon of regular gasoline topped $4 in spring 2008, and approached that level again in 2011 and 2012. When it began dropping - now down close to $2 a gallon - we began driving more again.

A Record Number of Job Openings

According to the new JOLTS report - the Job Openings and Labor Turnover Survey - the number of job openings available at the end of July climbed to a new record of 5.9 million. The number of unemployed workers per job opening has fallen to 1.3, the lowest ratio since 2001.

Another strong indication of a healthy labor demand was the second straight month where layoffs were just 1.1 percent of the labor force, matching the lowest level ever.  Private layoffs are down to 1.2 percent this month, which also ties an all-time low.

One confounding complication: The number of people actually being hired into a job was just 5.2 million for the second month in a row, despite the 5.9 million openings.  About 300,000 fewer people are being hired each month compared with the pace reached in February.

Services Slipping

A troubling sign for the economy: The Institute for Supply Management’s services gauge fell to a six-year low this week. The ISM’s non-manufacturing index slumped to 51.4, the lowest since February 2010, when we were emerging from the recession. 

The raw drop in the figure, indicating ISM's measure of orders and business activity, was the biggest since 2008, at the outset of the Great Recession. Still, readings above 50 indicate expansion, so we're not in dark territory yet.

Seven of 18 industries that are tracked in the ISM services survey showed a contraction in August, including retail; arts and entertainment; transportation and warehousing; and mining. That compares with just three industries that had fallen in the July survey.

End-of-Summer Gas Savings

If you went driving over this past Labor Day weekend, you may have noticed that gas prices are still at very low levels historically. The U.S. national average for a gallon of gasoline ended the summer driving season at about $2.24, which means that drivers enjoyed the cheapest summer at the pump since 2004.

And the price could be falling even further. With the summer driving season ending, gasoline demand may drop by around 400,000 barrels a day after Monday, according to the Oil Price Information Service. That will help send prices even lower. 

That same research firm said that the first 10 days of September should see average U.S. gasoline prices drop by five or ten cents a gallon. We could be back to $2 a gallon by Halloween.

Thoughts for Labor Day

"The fight is won or lost far away from witnesses--behind the lines, in the gym, and out there on the road, long before I dance under those lights." ~ Muhammad Ali

"Plans are only good intentions unless they immediately degenerate into hard work." ~ Peter Drucker

"Winners embrace hard work. They love the discipline of it, the trade-off they're making to win. Losers, on the other hand, see it as punishment. And that's the difference." ~ Lou Holtz

August's Jobs Report

The economy slowed a bit last month, with employers adding 151,000 jobs in August, according to the numbers out from the Bureau of Labor Statistics this morning. Over the past three months, job growth has averaged about 232,000 a month, and in 2015, monthly job growth averaged 229,000. The unemployment rate held steady at 4.9 percent in August, its third straight month at that level.

The food service industry led in hiring last month, adding 34,000 positions. Financial services grew by 20,000 jobs, with particular growth in securities, commodity contracts and investment. The health-care industry added 14,000 new jobs.

The biggest loser continues to be mining. Mining jobs fell by 9,000 in August, the 23rd straight monthly decline for that sector, totalling 225,000 jobs lost, or one-quarter of the industry's total employment.

The Dreaded September

Today is the first day of September. No matter how you look at it, September has been an awful month for the U.S. stock market, and has been for more than a century.

Since the Dow Jones Industrial Average was created in the late 1890s, September has produced an average loss of 1.1 percent. The 11 other months of the calendar, in contrast, have produced an average gain of 0.8 percent.

Furthermore, September has an impressively consistent record at or near the bottom of the rankings. September was a below-average performer in all but one of the dozen decades since the late 1800s. And in more than half of those decades, it was in 11th or 12th place in a ranking of monthly average performance.

A Sleepy August

Trading is usually quiet in August, but this month has been particularly muted, in several different ways. The month is on pace to have the fourth narrowest August trading range, just 2.1 percent from top to bottom, since at least 1928, according to FBN Securities. The August range was only smaller in 1958, 1964, and 1965.

In the 17 trading days through last Thursday, the S&P 500 moved less than 0.75 percent between its daily high and low. That is the most consecutive days with such a narrow trading range in records that go back to 1970, according to at LPL Financial. The streak was broken on Friday when the S&P 500 swung a whopping 1.28 percent, but it began anew on Monday.

Fewer shares are also changing hands. New York Stock Exchange composite trading volume fell to 2.6 billion shares on Monday, its lowest level all year. That’s also about 38 percent of the volume on June 24, the highest volume trading day this year.

Inside the GDP Numbers

The U.S. economy grew at a slightly slower pace in the second quarter than previously thought, the Commerce Department said last week: GDP grew at a 1.1 percent annual rate, instead of the previously reported 1.2 percent. The revised figures also shed more light on the overall state of American business.

Corporate profits after taxes, but without inventory valuation and capital consumption adjustments,  has risen for two consecutive quarters, after a sharp decline in 2015. This figure rose 4.9 percent in the second quarter on the heels of an increase of 8.9 percent in the first quarter. Profits had fallen 8.5 percent in 2015.

But the boost in corporate profits hasn’t led businesses to increase spending on big-ticket equipment. Nonresidential fixed investment, a good proxy for business spending on equipment and facilities, fell at a 0.9 percent rate in the second quarter.

Americans Have Gotten a Raise

Has your salary gone up in the past five years? Sixty-eight percent of Americans say they are making more money than they did five years ago, up from 58 percent who said so then, according to a new Gallup survey. Meanwhile, 20 percent of U.S. workers report they are making less money, down from 28 percent when Gallup last asked this question in 2013. 

Thirty-one percent of Americans say they are making "a lot more" than they did five years ago, while 13 percent who say they are making "a lot less." In 2013, a slightly higher 18 percent said they were making a lot less money.

While 22 percent of those employed at their job for less than five years say they are making less money, nearly as many who have worked in their job for more than 10 years (19 percent) also report making less money. In other words, workers who were already in their job before the recession began are just as likely as those who began working after the recession to say they are making less money.

More Losses for Hedge Funds

For hedge funds, the news is getting worse. Investors pulled an estimated $25.2 billion from hedge funds last month, the biggest monthly redemption since a net $28.2 billion was redeemed in February 2009.

The monthly withdrawals were the second straight for the beleaguered industry, which had already seen $23.5 billion pulled in June. They bring total outflows this year to $55.9 billion.

Performance appears to be the main issue:  The ten funds with the highest redemptions in July lost an average of 4.1 percent in the first seven months of this year. Industrywide, funds returned an average of 1.2 percent this year through July, according to data compiled by Bloomberg, compared with about 7.6 percent for the S&P 500 Index.

Sales Down, Prices Up

After four straight months of strong gains, U.S. home resales finally fell in July, and by more than was expected. Existing home sales declined 3.2 percent to an annual rate of 5.39 million units last month, the National Association of Realtors said.

The NAR blamed the drop in sales on the small number of properties on the market. The upside of that: The median house price rose by 5.3 percent from a year ago.

A separate report from the Federal Housing Finance Agency showed house prices rose 1.2 percent from the first quarter to the second quarter. They were up 5.6 percent from the second quarter of 2015.

Beating Google

It was 12 years ago this month the Google (now known as Alphabet) had its IPO.  Since that IPO 12 years ago, Google has gained 1,781 percent, compared to a gain of 99 percent for the S&P 500.

Surprisingly enough, that's not the best stock performance over that period. In fact, there are ten current members of the S&P 500 that are up more than Google since the date of its IPO.  Leading the way higher, shares of Monster Beverage are up over 11,000 percent.  Priceline and Illumina are both up triple Google’s gain. 

Regeneron, Apple, and Netflix are all up over 4,000 percent in that time frame.  Overall, there are 23 current members of the S&P 500 that are up more than 1,000 percent since the Google IPO.

The Fallout From Rising Oil

Rising energy prices have offered good news to the shares of energy companies that have been hamstrung by plunging oil prices. In contrast, though, one sector among the S&P 500 isn’t eager to applaud the oil rally: telecommunications.

Telecom stocks have performed the worst among the S&P 500’s ten sectors since August 2, when oil prices bottomed out. According to S&P Dow Jones Indices, for every 1 percent increase in the price of oil, the telecom sector declines by two-tenths of a basis point.

The energy and materials sectors are the most obvious beneficiaries of gains in crude oil prices. More surprisingly, the technology sector also benefits: It rises an average of 21 basis points for every percentage point climb by crude.

Trouble in New Jersey

The Labor Department released its state-by-state employment figures on Friday. New Jersey is pretty much average as far as jobs are concerned: The state's unemployment rate is 5.2 percent, just a little above the the national average of 4.9 percent.

But the trend is going in the wrong direction. The Garden State's unemployment rate is up from 5.1 percent in June and has risen from 4.3 percent in February.

The state with the lowest jobless rate is South Dakota, where unemployment sits at just 2.8 percent. The highest unemployment rate in the nation can be found in Alaska, where it's 6.7 percent.

Oil Is Coming Back

With little fanfare, the price of oil reached bull-market status yesterday, completing the turnaround from a bear market dive in just three weeks. Crude is now up 22 percent since it settled for just one day below $40 a barrel on August 2.

Prices are still down by more than half from when they traded above $100 a barrel in 2014, but they are also up more than 80 percent from just six months ago. That's when they crashed to a decade low of less than $30 a barrel.

The price of light, sweet crude for September delivery has now risen for six straight trading sessions. It's up 16 percent in that span, oil's longest and biggest winning-streak by percentage since April.

A Divided Fed?

According to the minutes released yesterday, Federal Reserve officials at their July meeting were relieved that their concerns over Brexit and the job market eased. But as for the big question on interest rates, they were divided over whether that meant they should quickly raise them again.

Fed officials voted 9 to 1 to hold rates steady at the meeting. According to the minutes, two Fed officials pushed for a rate hike at the meeting, but more officials judged it was a good idea to wait for additional information.

Fed officials in recent days have stressed that a rate hike could come at any of the three remaining meetings this year — in September, November or December. New York Fed President William Dudley said earlier this week that a rate hike in September was possible, but the minutes  said simply that Fed officials would be “open” and “flexible” about when to take another step.

Medical Costs for Retirees Keep Rising

A 65-year-old couple retiring this year will need an estimated $260,000 to cover health care costs in retirement, a 6 percent increase over the 2015 calculation, according to Fidelity’s new Retiree Health Care Cost Estimate. Not surprisingly, this is the highest figure since Fidelity started making these estimates in 2002.

Fidelity based its estimate on a hypothetical 65-year-old heterosexual couple retiring in 2016, with life expectancies of 87 for the woman and 85 for the man, and warns that costs could be more or less depending on actual health status, location and longevity. The estimate was net of taxes.

Fidelity also looked at costs associated with long-term care. Given that Medicare covers long-term care costs only in limited circumstances, Fidelity estimated that a 65-year-old couple would need $130,000, in addition to savings for retiree medical expenses, to insure against long-term care expenses.

The Latest on Inflation

Inflation may be inching up again. The consumer-price index, which measures what Americans pay for everything from shelter to sweets, increased a seasonally adjusted 0.2 percent in June from the prior month, the Labor Department said Friday. It had climbed 0.2 percent in May and 0.4 percent in April.

Excluding the often-volatile categories of food and energy, consumer prices also rose 0.2 percent in June. Measuring from a year earlier, prices excluding food and energy climbed 2.3 percent in June, matching the highest level since May 2012.

While energy prices remain well below their levels from last June, costs for shelter, medical care, transportation services and clothing all have risen sharply. Shelter costs, which account for about one-third of CPI, are up 3.5 percent from a year earlier, the strongest rise since September 2007.

Hedge Funds Keep Shrinking

The number of hedge funds is on track to shrink this year as disappointing returns have forced an increasing number to shut down, Barclays said in a report last week. The industry is expected to contract for the first time since the 2008 financial crisis as fewer funds are likely to be launched and more managers shut down operations.

Research firm Hedge Fund Research counted a total of 10,007 hedge funds worldwide in July. Barclays estimated 2016 would end with 340 fewer hedge funds worldwide, down about 4 percent from last year.

The last time the number shrank was in 2009, when it also fell by 4 percent. That followed an 11 percent contraction at the height of the financial crisis.

Prices, Retail Slow Down

The Labor Department said on Friday its producer price index dropped 0.4 percent last month, the first decline since March and the largest monthly drop since September 2015. That followed an increase of 0.5 percent in June.

The biggest driver was energy. Last month, energy prices fell 1.0 percent after jumping 4.1 percent in June. Prices for services fell 0.3 percent, with apparel, jewelry, footwear and accessories retailing accounting for nearly 60 percent of the drop.

The Commerce Department also reported that U.S. retail sales were virtually unchanged in July, down from a gain of 0.8 percent in June, Auto sales rose 1.1 percent in July, their strongest growth since April. But excluding autos, retail-sales growth slumped 0.3 percent last month—the weakest reading since January.

Dow 20,000?

Are we 12 months away from Dow 20,000? We're headed there exactly a year from now, according to the company-level prediction  submitted by Wall Street analysts for the Dow Jones Industrial Average’s 30 components.

Lumping together their average price targets for these companies and then weighting them appropriately, S&P Dow Jones Indices says the “consensus 1-year target price” for the Dow industrials  just reached 20,004 late Tuesday. That means that on next August 9, the consensus expectation is for the Dow to reach that price.

The Dow’s consensus one-year price target previously reached that big round number back on July 28, 2015. But that target didn’t pan out, as the Dow actually closed at 18,456 on July 28 of this year.

The Worrying News on Productivity

Nonfarm business productivity—the goods and services produced each hour by American workers—decreased at a 0.5 percent seasonally adjusted annual rate, the Labor Department said Tuesday. It was the third consecutive quarter of falling productivity, the longest such streak since 1979.

That was a further step down from already tepid average annual productivity growth of 1.3 percent in 2007 through 2015, which itself was just half the pace seen in 2000 through 2007. Moreover, the year-over-year rate fell 0.4 percent last quarter, it first annual decline in three years. It’s no coincidence that GDP has running at a roughly 1 percent pace for the past three quarters.

Productivity growth has averaged just 1.3 percent since 2007, half of the 2.6 percent that rate was at from 2000 to 2007. It’s even further away from the 3 percent rate seen in the boom years of the 1990s. 

Earnings Beats by Sector

More than 2,000 companies have reported earnings since the second quarter reporting period began on July 11th.  Of these reports, 65 percent posted earnings numbers that were stronger than consensus analyst expectations. 

That's a strong number, but some sectors beat that pretty handily. A whopping 74 percent of tech stocks have beaten consensus analyst earnings estimates so far this quarter.  The industrials sector beat rate is at 67 percent, while it’s 66 percent for health care.

Even the worst sector is beating the analysts more than half the time. The utilities sector has the lowest beat rate for the quarter, but it's still at 51 percent.

Good News for the Financials

One outcome from Friday's strong jobs report: The 1.9 percent gain in the financial sector on Friday, making it the best performing sector for the day. The S&P 500 as a whole climbed 0.9 percent.

The sector tends to outperform after strong jobs reports, rising an average of 0.6 percent after positive surprises over the last two years, according to Bespoke Investment Group. It’s now up 0.5 percent for the year, marking the first time in 2016 that all 10 S&P 500 sectors are in positive territory.

At the same time, the rally highlights divisions between the firms in the category, which may be an ominous sign for the sector later in the year. S&P Dow Jones Indices plans to split real-estate investment trusts from the financial sector in September, creating a new 11th sector for those 28 stocks. Without REITs, which make up about 20 percent of the sector, financials would still be down on the year, according S&P.

July Jobs Report

Another good month for jobs, as total nonfarm payroll employment rose by 255,000 in July, and the unemployment rate was unchanged at 4.9 percent, the U.S. Bureau of Labor Statistics reported this morning. The leading sector was a strong one: Professional and business services added 70,000 jobs in July and has added 550,000 jobs over the past 12 months.

On the heels of June's increase of 292,000 jobs, it's looking more and more like May's disappointing number of 24,000 new jobs was an anomaly. Taken together, June and July mark the best two-month stretch of job growth since late last year.

Another good sign was the increase in wages. Average hourly earnings were up 8 cents on the month, to $25.69, and are now up 2.6 percent from a year ago.

The Trouble With Endowments

If you think the S&P 500 hasn't performed up to your expectations lately, it could be worse: It could be a college endowment fund. Endowment funds lost a median 0.74 percent in the fiscal year through June 30, according to results published Tuesday by Wilshire Trust Universe Comparison Service.

After double-digit gains in fiscal 2014, endowment performance trailed off in fiscal 2015 to 2.8 percent. In the past 10 years, the worst year for returns was 2009, the year of the market crash, with a loss of 21.8 percent for the richest schools.

The largest endowments are no longer mostly invested in U.S. equities. Endowments follow a model designed by Yale University, which now invests more than 50 percent of its fund in private equity and other illiquid assets. For endowments with more than $1 billion, only 13 percent of assets in fiscal 2015 were allocated to domestic equities.

A C-Note a Day

We're emptying our pockets on a daily basis these days. Americans' daily self-reports of spending averaged $100 in July, a $12 increase from June, according to a new survey from Gallup. This measure of consumer spending has not been at this level since July 2008, though it reached $99 in December.

After dropping dramatically in 2008 and early 2009 amid the global financial crisis, Americans' reported spending levels gradually held at low levels -- mostly in the $60 to $70 range -- through late 2012. At that point, they began to increase and have typically been in the $80 to $90 range since.

July typically ranks among the highest spending months, but large increases between June and July, such as those this year, are not common. The average June-to-July increase had been $2 before this year.

An All-Tech Top Five

Earnings reports have been shuffling the list of America's largest companies the past few days. Amazon has now climbed three spots from seventh place in the two sessions since it reported second-quarter results, passing Berkshire Hathaway  and Facebook on Friday, then pushing past Exxon Mobil Corp. Monday to become the fourth-largest U.S. company.

Exxon Mobil also fell behind Facebook into sixth place, to make it an all-technology top five. As of right now, these are the five biggest companies in America:

1. Apple
2. Alphabet (Google's parent)
3. Microsoft
4. Amazon
5. Facebook

The Weak Recovery

To follow up on Friday's disappointing GDP number: The economy has now grown at a 2.1 percent annual rate since the U.S. recovery began in mid-2009. In terms of average annual growth, that makes this expansion by far the weakest of any since 1949.

The prior expansion, from 2001 through 2007, was the only other business cycle of the past 11 when the economy didn’t grow at least 3 percent a year, on average.

Despite the current expansion’s lack of intensity, this recovery now stands as one of the longest. There have only been three longer expansions in the past seven decades. Total growth this expansion ranks 8th of the past 11 cycles. with the economy being 15.5 percent larger than it was when the recession ended in 2009.

GDP Stumbles Again

People hoping for a strong bounceback from the weak GDP numbers we saw in the first quarter were disappointed by the figure released by the Commerce Department this morning. The economy grew at just 1.2 percent in the second quarter.

Corporate spending on equipment, structures and intellectual property fell by 2.2 percent after a 3.4 percent drop in the first quarter. Outlays for equipment dropped for the fourth quarter in the last five. Another problem was a decrease in residential investment, which fell at a 6.1 percent pace.

The good news is, household consumption, which accounts for about 70 percent of the economy, grew at a 4.2 percent annualized rate. That's the biggest jump since the end of 2014, and added 2.8 percentage points to growth.

The Fed's Outlook Brightens

After its meeting yesterday, the Federal Reserve opted to keep interest rates unchanged. But it did open the door to further rate rises in the coming months by adding in the following line to its statement: “Near-term risks to the economic outlook have diminished.”

That line suggests the Fed has increasing confidence in the improving labor market and the ability for inflation to move toward its 2 percent annual target. The addition follows a positive string of data, including a strong June jobs report, which helped ease concerns about the labor market after a dismal May report.

All in all, the Fed expects a brighter outlook for the U.S. economy. In addition to the job gains in June, household spending has been growing at a brisk clip, the Fed said. Yet the central bank also noted that business investment remained “soft.”

The Confidence in a 401(k)

Retirement savers are getting more optimistic about how much they’ve saved, according to a just-released survey by J.P. Morgan Asset Management. It took a look at defined contribution plans like 401(k)s, as well as participants’ views on how their retirement readiness has changed since 2012.

Fewer plan participants (59 percent, down from 70 percent in 2012) think they will have to remain employed beyond their desired retirement age. A larger proportion (44 percent, up from 31 percent) are confident that their savings will last throughout their lifetimes.

On the other hand, the survey found that more than half of defined-contribution plan participants still fear that their savings may not see them through to the end of their lives. Participants are also aware that they are not saving enough: 68 percent say their 2015 contribution rates were below where they should have been.

The Yahoo! Conundrum

One upon a time, Yahoo! was the poster child for highflying Internet stocks. At its peak, in 2000, the company's market cap was more than $100 billion. Yesterday, it was sold to Verizon for $4.8 billion. What happened?

Yahoo was never really able to adapt its technology and culture to an Internet that became focused on social media and mobile devices, falling behind rivals such as Google and Facebook. But what ultimately forced the hand of Yahoo CEO Marissa Mayer was an investment that worked too well. In 2005, Yahoo invested $1 billion in China's hottest technology startup, Alibaba. By last year, Yahoo’s Alibaba shares accounted for the majority of the company’s value.

The problem was that if Yahoo sold off its stake, it would trigger a massive tax bill. So instead, Mayer was forced to sell the rest of the company. Yahoo will be folded in with AOL, another struggling internet brand that was acquired by Verizon last year. 

What Americans Don't Know About Bonds

A new study called "Financial Capability in the United States 2016" looks at what Americans know and don't know about their financial environment. And what is the one aspect that they understand the least? How the bond market works.

The worst performance for people who took the survey was on a question about how bond prices respond to rising interest rates. Only 28 percent of people in 2015 got that one right.

The correct answer is that bond prices will fall. That’s because interest rates and bond prices move in opposite directions. It’s the primary reason why bond mutual funds, on average, returned a solid 2.6 percent in the second quarter of this year: Falling interest rates drove bond prices higher.

Young America the Indebted

More than one in three young adults are worried about the amount of debt they’re carrying, according to a new report Fair Isaac Corp, which provides FICO credit scores. Thirty-seven percent of millennials aged 25 to 34 are concerned about their debt levels.

Their biggest debt burdens are mortgages, followed by student loans. Some 32 of millennials say they owe at least $20,000 on student loans. Another 45 percent said they owe at least $7,000 on auto loans.

There are mixed reports about whether student-loan debt is holding back homeownership among the young. Some 71 percent of people who don’t own homes and are paying their student loans say the debt is making it harder for them to purchase a home, according to a survey by the National Association of Realtors. But the Brookings Institution has released a report saying that student-loan debt isn’t dragging down home ownership.

Winning Streaks on Earnings

Yesterday we looked at stocks that have dropped after each of their recent earnings reports. Now let's look at the other side: stocks that have been batting 1.000 for the last couple of years. 

There’s one stock in the S&P 1500 that has traded higher in reaction to its quarterly earnings reports for the last three years.  Natus Medical, a California-based provider of medical devices for newborns, has gone up in share price following its last 12 quarterly earnings.

Other stocks with similar winning streaks: Perry Ellis and Crane have 11 straight up days on earnings.  Ebix has been up nine quarters in a row, while TJX, Tractor Supply, and Petterson-UTI Energy have been up eight quarters in a row.  Some bigger names - Southwest Air, Aetna, salesforce.com - have been up for seven quarters.

IBM's Unenviable Record

After reporting positive earnings for the second quarter on Monday, IBM's stock price inched up yesterday. Before yesterday, IBM's share price had dropped following its last 11 quarterly earnings reports.  That’s an epic losing streak for a blue-chip company. 

One other stock in the S&P 1500 has dropped after its earnings report for 11 quarters in a row, meaning it has now taken this dubious crown from IBM. That's Arctic Cat, a Minnesota-based manufacturer of snowmobiles and ATVs.

Other long losing streaks: Qualcomm has dropped following its last nine quarterly reports, while Black Box has gapped down eight quarters in a row.  Bristow Group, Brinker International and Daktronics have all opened lower following their last seven quarterly reports.

Convention Investing

The Republicans hold their national convention in Cleveland this week, and no matter which side of the political aisle you're on, this looks like good news for investors. The market has rallied during 12 of 17 occasions when Republicans had their convention, based on data from S&P Capital IQ.

Democrats are likely to provide less of a boost during their convention in Philadelphia next week. The market has risen during only 7 out of 17 of their conventions.

The Appearance of Strong Sales

On Friday, the Commerce Department delivered a report on June retail sales that looked on the surface to be very positive. Sales rose 0.6 percent in June from May, which was far above the 0.1 percent consensus from Wall Street. Sales rose in virtually every category, even department stores. The only categories to see sales drop were clothing stores and restaurants and bars.

But there are some questions lurking underneath. For one thing, May’s initial report was revised down significantly, from a gain of 0.5 percent to only 0.2 percent. So the June number is in large part an offset of what now appears to be a mediocre May.

More importantly, look at the year-over-year number. Sales in June were up 2.7 percent over last June, while as recently as June 2013, that same number was 5.8 percent. That indicates the current monthly numbers are good - but far from great.

Going Cash-Free

Do you ever spend cash any more? Fewer Americans say they are making "all" or "most" of their purchases with cash, compared to what they say they did five years ago, according to a new survey from Gallup.

Gallup asked Americans about the extent to which they use cash for retail purchases -- and how much they used cash five years ago. While 24 percent report currently making all or most of their purchases with cash, 36 percent say they were doing this five years ago. Conversely, 53 percent say they currently make only some or none of their purchases with cash, versus 43 percent saying this five years ago.

Not surprisingly, younger people are leading this shift. Twenty-one percent of young Americans aged 23 to 34 say they make all or most of their purchases with cash, down 18 percentage points from the 39 percent who say they used cash to that extent five years ago. In contrast, those aged 35 to 54 saw just a two-point drop.

Trouble Ahead for the Banking Sector

JPMorgan Chase will kick off the second-quarter earnings season today. But investors and analysts are not optimistic, and it's expected to be a very difficult quarter for banks and other financial services firms.

Analyst estimates project JPMorgan’s second quarter earnings to drop 7 percent from a year ago. Morgan Stanley, which will report its second-quarter results next week, projects even worse, at a 26 percent decline.

All told, second-quarter earnings for banks in the S&P 500 index are set to drop by nearly 12 percent, according to FactSet. The combined net income at the six biggest banks could decline by as much as 18 percent from the year-earlier quarter, according to analysts surveyed by Bloomberg.

New Records!

The Dow Jones Industrial Average and the S&P 500 index both closed at fresh all-time highs yesterday. The Dow marked its first record high in about 14 months, since May 19, 2015. Meanwhile, the S&P 500, set a new record yesterday after closing at a record for the first time in nearly 14 months on Monday.

Over the last ten trading days, the S&P 500 has rallied by more than 7.5 percent.  Throughout the current bull market, there have only been six other periods where equities have seen this sharp of a rally in such a short period of time. We hadn't seen this scenario in over four years, since December 2011.

Meanwhile, the Nasdaq Composite Index rose by 0.7 percent. It didn't finish at an all-time high, but it's now in positive territory for the first time in 2016.

The View on the Economy

As part of its presidential polling, Pew Research last week also asked people for their views on the economy. The public continues to have mixed ratings of the nation’s economy: Currently, 44 percent say conditions are only fair while a roughly equal share views them as excellent or good (27 percent) or poor (28 percent).

But that's a big improvement over where we were at a comparable point four years ago. In June 2012, at about the same point in the previous presidential campaign, just 10 percent expressed positive views of the nation’s economy, while 42 percent described economic conditions as poor.

Looking ahead, a majority of Americans (54 percent) say conditions next year will be about the same as they are now. About three in ten (29 percent) say things will improve over the course of the next year, and 13 percent believe they will get worse.

Mixed Signals on Jobs

The economy added a robust 287,000 jobs in June, the biggest month for new employment since October 2015, according to figures released by the Bureau of Labor Statistics on Friday. But at the same time, the headline unemployment rate rose from 4.7 percent to 4.9 percent. How did that happen?

For one thing, May's already disappointing figure was revised down even further, from 38,000 new jobs added to a paltry 11,000 jobs. More importantly, the work force has expanded, with more people looking for jobs.

That's a sign that the economy may still be heating up. Another positive: Wages also grew at one of the fastest paces since this cycle of economic expansion began in 2009, rising 2.6 percent in June from the previous year.