Equities
took a break across the board from their recent upward surge. After
fresh all-time record closes early in the week, both the S&P 500 and
the Dow Industrials saw profit-taking that also returned the small caps
of the Russell 2000 to negative territory for the year. Renewed
conflict in Iraq contributed to equities' swoon, raising concerns about
global oil supplies and pushing oil to roughly $107 a barrel.
Last Week's Headlines
- U.S. retail sales rose 0.3% in May and
were 4.3% higher than a year earlier. The Department of Commerce said
the biggest increases were seen at auto and auto parts dealers,
building/garden supplies stores, and miscellaneous store retailers such
as florists, office suppliers, and used-merchandise stores.
- Wholesale prices fell 0.2% in May,
leaving the wholesale inflation rate for the last 12 months at 2%.
According to the Bureau of Labor Statistics, that's down slightly from
the previous month, but substantially higher than the 1% of last May.
The decline in prices at the final stage of wholesale distribution was
evenly split between goods and services. Inflation is one of the
measures being watched by the Federal Reserve as it unwinds its
bond-buying efforts.
- The World Bank cut its estimate of 2014 global economic growth to 2.8% rather than the 3.2% it predicted in January. The Global Economic Prospects
report said developing countries have been especially hurt by bad
weather in the United States, a slowing housing market in China,
political conflicts, and slow progress on structural economic reform;
the report sees emerging-market growth at 4.8% this year rather than
5.3%. However, 2015 is expected to be better, with a 3.4% global growth
rate and 5.4% growth in the developing economies.
Eye on the Week Ahead
The Fed is expected to once again reduce its monthly bond purchases,
and options expiration at the end of the week could mean volatility as
traders on the wrong side of equities' recent surge attempt to manage
those positions. U.S. manufacturing data and the state of the oil market
also could influence the mood of the markets.
Data sources: Economic: Based on
data from U.S. Bureau of Labor Statistics (unemployment, inflation);
U.S. Department of Commerce (GDP, corporate profits, retail sales,
housing); S&P/Case-Shiller 20-City Composite Index (home prices);
Institute for Supply Management (manufacturing/services). Performance:
Based on data reported in WSJ Market Data Center (indexes); U.S.
Treasury (Treasury yields); U.S. Energy Information
Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing,
OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency
exchange rates). All information is based on sources deemed reliable,
but no warranty or guarantee is made as to its accuracy or completeness.
Neither the information nor any opinion expressed herein constitutes a
solicitation for the purchase or sale of any securities, and should not
be relied on as financial advice. Past performance is no guarantee of
future results. All investing involves risk, including the potential
loss of principal, and there can be no guarantee that any investing
strategy will be successful.
The Dow Jones Industrial Average
(DJIA) is a price-weighted index composed of 30 widely traded blue-chip
U.S. common stocks. The S&P 500 is a market-cap weighted index
composed of the common stocks of 500 leading companies in leading
industries of the U.S. economy. The NASDAQ Composite Index is a
market-value weighted index of all common stocks listed on the NASDAQ
stock exchange. The Russell 2000 is a market-cap weighted index composed
of 2,000 U.S. small-cap common stocks. The Global Dow is an equally
weighted index of 150 widely traded blue-chip common stocks worldwide.
Market indices listed are unmanaged and are not available for direct
investment.
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