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    Stocks gave in to gloom about low global oil prices and fell again last week, erasing the previous week’s gains. For the week, the S&P 500 lost 1.25%, the Dow fell 1.79%, and the NASDAQ dropped 1.65%.1
     
    Domestically, the data looks more positive. Friday’s July jobs report might have given the Federal Reserve the ammunition it needs to raise interest rates in September. The latest data shows that the economy added 215,000 new jobs last month, bringing the total for 2015 to 1.48 million so far.2  Unemployment held steady at 5.3% (very close to the Fed’s long-term average of 5.1%) and wages edged up 0.2%.3 Combined with growth in the total number of hours worked, workers’ total cash earnings are up 4.8% from a year ago, giving American workers more money to spend.4

    Last month was also the 65th month in a row with growth in private (non-government) payrolls, marking the longest jobs-growth streak since the 1930s.5 All told, the labor market continues to improve. While we’re not in the boom times of the 80s or 90s, our “Plow Horse economy” is moving ahead moderately, which may set the stage for a rate increase later this year.6

    In not-so-great news, Puerto Rico missed a municipal bond payment, marking a major setback for the U.S. territory, which has suffered from years of stagnant growth and rampant unemployment. Technically, Puerto Rico’s Finance Corporation (PFC) has until this Tuesday to make its debt payment, but it’s not likely to make the deadline. Puerto Rico owes $73 billion in debt, much of it to investors in its municipal bonds.7

    While the default may spell financial disaster for the territory, long-term investors are unlikely to be affected. The default has been widely expected, and ratings agencies downgraded Puerto Rico’s debt into junk territory earlier this year.8 The default is also unlikely to affect the broader muni bond market since the situation in Puerto Rico is not representative of most municipal bond issuers. Improving credit conditions and broad economic growth across the country mean that investment-grade muni bonds may be an option for some investors as part of a well-diversified portfolio strategy.

    Looking ahead, the week is light on economic data, though analysts will be looking for consumer sentiment and retail sales data for clues about the back-to-school shopping season. Back-to-school shopping is the second largest retail shopping event after the winter holidays and is an important barometer of overall consumer spending.9
     

    Sources

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