Market Perspective for August 20, 2023 – Mutual Fund Investor Guide


This past week featured the release of several reports that provided important clues about where the economy may be headed. On Tuesday, monthly retail sales figures were released. On a monthly basis, retail sales increased by .7 percent, which was much higher than the .4 percent increase predicted by analysts. It was also more than double the .3 percent increase seen in July.

Core retail sales were up 1 percent on a monthly basis, which was higher than the predicted .4 percent increase and roughly 500 percent higher than the .2 percent increase seen in July. it is worth noting that retail sales figures for July were revised downward after their initial release. Therefore, it’s possible that the acceleration in consumer spending is nothing more than a problem with the data itself.

Also on Tuesday, the Empire State Manufacturing Index came in at -19 percent, which means that there was a significant slowdown in this sector over the previous month. This likely adds further proof to the narrative that inflation is largely being fueled by spending on services as opposed to durable goods. Analysts had expected the index to come in at -.9 percent for the month.

On Wednesday, building permit data for July was released, and it found that there were 1.44 million permits, which was the same as June. However, it was believed prior to Wednesday that there were 1.47 million permits issued. Housing starts increased from 1.40 million to 1.45 million, which may be good news for a market that has been haunted by a lack of inventory for several years now.

Of course, the main event on Wednesday was the release of the FOMC minutes from the July meeting. It was revealed that some members of the FOMC were against raising rates in July. It was also revealed that many in the group also feel as if inflationary pressures are still too great and that further rate hikes might be necessary.

It was assumed after the release of CPI and PPI data last week that the Fed was done with its hiking cycle. While this may still be true, it’s less likely that investors can count on a dovish Fed coming to their rescue anytime soon. The FOMC will meet again in September to determine whether to increase the Fed Funds Rate from its current level of 5.25 to 5.50 percent.

Thursday saw the release of unemployment claims data, and it was revealed that 239,000 people had filed for unemployment benefits over the past week. This was slightly below the 240,000 claims predicted by analysts and was also lower than the 250,000 claims filed a week ago.

In addition, the Philly Fed Manufacturing Index was released and came in at 12 percent. It was expected to come in at -9.8 percent and was at -13 percent last month. It’s not clear what led to the sudden rise and why it seems to be at odds with the data released from New York just two days prior.

For the week, the S&P 500 lost 91.34 points to finish at 4,369, which is 2 percent lower than its Monday open. The market hit a high of 4,489 on Monday afternoon before spending the rest of the week losing ground. It would hit a low of 4,350 on Friday morning before moving toward its closing price on Friday afternoon.

The Nasdaq also lost about 2 percent this week closing at 13,290. Like the S&P 500, the Nasdaq would also hit its high of 13,747 on Monday afternoon before spending most of the week in freefall. It would hit its low of the week of 13,176 on Friday morning.

Finally, the Dow would also lose about 2 percent this week closing at 34,500 on Friday afternoon. As with the other two major indices, the Dow hit its high of 35,267 on Monday and would fall throughout the rest of the week to its low of 34,392 on Friday morning.

Next week will likely see several developments as Federal Reserve Chair Jay Powell is expected to speak on Friday. Manufacturing and services PMI data will also be coming out this week along with unemployment claims and housing market data.



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