Ups and Downs on the Dow

The markets are still swinging in all directions, which put investors wondering if this volatility is going to be normal for the next few weeks on Wall Street. During the last week, the Dow had wild ups and downs – On Monday it dropped 634 points and on Wednesday it fell 519 points – Tuesday it went the other way up 429 points the same on Thursday with a rise of 423 points. At the end of Friday, the stocks had seen a gain and were holding on.

These swings are making investors quite leery, with the Chicago Board Options Exchange’s Market Volatility Index (VIX) also showing irregular shifts throughout the week. At the close on Monday, the VIX saw a two-year high of 48, however, on Tuesday it fell 27 percent, then Wednesday it made a come back to 32.99. Fear is at the top of the list when it comes to market today.

Adam Sussman, director of research at financial data firm Tabb Group, told the Los Angeles Times stated, “People are afraid of things that could happen rather than things that have already occurred”.

Productivity in the labor sector for the second quarter showed a slightly different story as reported by the Bureau of Labor Statistics.

The Bureau, reported that non-farm business sector labor productivity fell at a 0.3% annual rate during the second quarter, while output increased 1.8% and hours worked increased 2.0%.

If you look at the long term, productivity is on the rise. For the second quarter of 2010 to the second quarter of 2011, output rose 2.5% and hours increased 1.6%, providing an increase in productivity of 0.8%.

Manufacturing was hit hard, with the sector showing a productivity decrease of 2.0% during the second quarter of 2011, while output increased 0.6% and hours rose 2.6%. Durable goods manufacturing saw productivity drop 3.5%. During the second quarter, this sector saw a 5.1% rise in hours outpace a 1.4% rise in output. Nondurable goods manufacturing productivity rose 1.2% while hours fell quicker than output.

Sales for merchant wholesalers in the month of June, not including branches and sales offices, rose 0.6% from May and 15.4% from June of 2010 hitting $395.8 billion as reported by the Census Bureau. Prominent performances were durable goods, up 1.6% and motor vehicles up 8.7%.

Wholesale inventories were also up 0.6% from what was seen in the month of May, putting the months’ total value at $459.7 billion. June’s inventories were up 15.8% from what was seen in the month of June 2010. Durable goods and motor vehicles were the prominent sectors, with inventories for both durable goods up 1.3 % and motor vehicles up 4.3%.

Robert Brusca, president of Fact & Opinion Economics, during a public statement explained, “Inventories are likely desired at a much lower level so they’re probably excessive given new expected future economic growth,” and went on to say, “That’s one of the reason we’re seeing the manufacturing industry wind down.”

As reported by the Employment and Training Administration, first claims for unemployment benefits for the week that ended on August 6 fell to 395,000, which is a decrease of 7,000 from the prior week’s figure of 402,000. The four-week moving average was 405,000, a fall of 3,250 from the prior week’s average of 408,250.

The total number of insured unemployed workers during the week that ended on July 30 was 3,688,000, which is a decrease of 60,000 from the prior week’s figure of 3,748,000. The four-week moving average was 3,718,750, a fall of 15,250 from the prior week’s average of 3,734,000.

Upcoming Economic Reports
Housing construction starts
Housing construction permits
Export and import prices for July
Industrial production and capacity utilization data
July’s producer price index
The consumer price index for July
First unemployment claims for the week
Existing home sales totals for July
Leading economic indicators for July

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