US equities fall
The US equities market (SPY) fell 3.40% during the week ended September 4, 2015. The fall was due mainly to a global sell-off in equities on concerns of a slowdown in China. Emerging market (EEM) equities and European equities (EFA) also fell during the week.
However, the fundamentals of the US economy improved on a lower unemployment rate and a trade deficit as well as higher productivity in 2Q15 and faster growth in the service sector. These were partially offset by declining manufacturing activity.
The US trade deficit fell to $41.9 billion in July compared to $45.2 billion in the prior month. This came on an increase in exports by 0.4% and a fall in imports by 1.1%. The fall in imports was partially due to the strong US dollar. US non-farm productivity also rose 3.3% in 2Q15 compared to a fall of 1.1% in the first quarter. However, when compared to the prior year, growth was only 0.7%, which reflected lower productivity.
US auto sales registered strong growth in the month of August. Sales grew to an annualized rate of 17.8 million vehicles, the highest since 2005. The number of vehicles the six major automakers sold was higher than analyst forecasts. The Ford Motor Company (F) registered the highest sales growth of 5%.
B&G Foods (BGS) has agreed to acquire Green Giant frozen foods and Le Sueur canned vegetables from General Mills (GIS) for a cash consideration of $765 million. B&G’s stock has risen 14% on the announcement of a strategically fit acquisition.
Stock market performance is a key driver of asset managers’ revenues, and performance flows directly to earnings and share prices. Major asset managers such as State Street (STT), BlackRock (BLK), Franklin Resources (BEN), Morgan Stanley (MS), T. Rowe Price (TROW), and Berkshire Hathaway (BRK-B) are affected by the performance of US equities.