The Markets
In a week that saw mostly mixed economic data and generally positive
earnings reports, markets posted mixed results as well. While tech and
international stocks posted slight gains, the Dow Jones Industrial
Average lost a little less than 1% after Friday's 123-point drop. Small
caps continued their slump, and the S&P 500 finished the week flat
despite hitting new records mid-week.
Last Week's Headlines
- Consumer prices rose 0.3% in June.
According to the Bureau of Labor Statistics, the increase was driven
largely by higher gas prices, which rose 3.3% and accounted for
two-thirds of the increase. By comparison, last month's rise in
inflation was more broad-based. Energy prices were mixed in June:
electricity prices rose, while natural gas and fuel oil prices fell.
Food prices rose modestly, while the index for all items except food and
energy rose by a slight 0.1%. For the 12 months ended in June,
inflation rose 2.1%.
- Existing-home sales climbed 2.6% in
June, reported the National Association of Realtors® (NAR). At a
seasonally adjusted annual rate of more than 5 million, sales are at
their highest rate since October 2013. Inventories rose 2.2% to 2.3
million homes, indicating a 5.5-month supply at the current rate of
sales. Lawrence Yun, NAR chief economist, said, "Inventories are at
their highest level in over a year and price gains have slowed to much
more welcoming levels in many parts of the country. This bodes well for
rising home sales in the upcoming months as consumers are provided with
more choices."
- On the other hand, sales of new
single-family homes plummeted by more than 8% in June from May,
according to a report issued jointly by the U.S. Census Bureau and the
Department of Housing and Urban Development. The seasonally adjusted
rate of 406,000 homes was 11.5% lower than the June 2013 estimated
figure.
- The Securities and Exchange Commission
(SEC) announced amendments to the rules that govern money market mutual
funds. According to a press release issued by the SEC, the amendments
are intended to guard against a run on such funds in times of crisis,
"while preserving the benefits of the funds." The rules require a
floating net asset value for prime money market funds serving an
institutional client base. Prime money market funds serving individual
investors will continue to strive for a stable $1 share price, although
there can be no guarantees that such a price will be maintained. The new
regulations also allow non-governmental money market funds to charge
fees or impose other restrictions on investors attempting to withdraw
funds during trying times. "This strong reform package will make our
markets more resilient and enhance transparency and fairness of these
products for America's investor," said Mary Jo White, SEC chairperson.
- In a move that surprised many
observers, the Bank of Russia raised its key interest rate for the third
time in five months. The central bank lifted the rate by 0.5% to 8% in a
move intended to curb inflation, respond to continued geopolitical
unrest, and perhaps stymie additional flight of capital resulting from
any further economic sanctions.
- Unemployment insurance weekly claims
(i.e., weekly jobless claims), were 284,000 for the week ending July 19.
That was a decrease of 19,000 from the previous week and, more notable,
the lowest level for initial claims since February 2006.
Eye on the Week Ahead
Next week, market watchers will keep an eye on manufacturing data,
home prices, comments from the Fed, and the government's initial
estimates for second-quarter growth figures.
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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