The Markets
Despite favorable reports on unemployment claims, home sales, and the Greek debt crisis, the market took quite a hit pretty much across the board last week, apparently in response to mediocre corporate earnings reports from some big-name companies. Each major U.S. index listed here lost over 2%, with the Russell 2000 suffering the largest downturn, dropping 41 points and over 3% compared to last Friday's close. Bond prices were higher on the week, pushing yields on the 10-year Treasuries down about 8 basis points.
The price of gold (COMEX) plunged to $1,097.50 as investors exited the market in anticipation of higher interest rates. Crude oil (WTI) continued its tailspin, reaching its lowest level since early spring at $48.14/barrel. The national average retail regular gasoline price was $2.802 per gallon on July 20, 2015, $0.032 less than last week's price and $0.791 below a year ago.
Last Week's Headlines
- Existing home sales increased in June to their highest pace in over eight years, while the cumulative effect of rising demand and limited supply helped push the national median sales price to an all-time high, according to the National Association of Realtors®. Total existing home sales increased to 3.2% in June to a seasonally adjusted annual rate of 5.49 million--up from May's revised rate of 5.32 million. For the 40th consecutive month, the median existing home price for all housing types increased in June ($236,400), which is 6.5% above June 2014 and surpasses the peak median sales price set in July 2006 ($230,400).
- Sales of new single-family houses dipped a bit in June, coming in at a seasonally adjusted annual rate of 482,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.8% below the revised May rate of 517,000, but is 18.1% above the June 2014 estimate of 408,000. It's important to remember that data can be volatile, as reflected in the fact that the revised figures for new home sales in May actually fell 1.1%, as opposed to the initially estimated 2.2% gain. The median sales price of new houses sold in June 2015 was $281,800; the average sales price was $328,700. The seasonally adjusted estimate of new houses for sale at the end of June was 215,000. This represents a supply of 5.4 months at the current sales rate.
- In the week ended July 18, the advance figure for seasonally adjusted initial claims for unemployment insurance was 255,000, a decrease of 26,000 from the previous week's unrevised level of 281,000 according to the Department of Labor's Unemployment Insurance Weekly Claims report. This is the lowest level for initial claims since November 24, 1973, when it was 233,000. The advance number for seasonally adjusted continuing claims for unemployment insurance during the week ended July 11 was 2,207,000, a decrease of 9,000 from the previous week's revised level.
- Greece and its creditors are moving toward formal talks needed to complete a bailout deal after the country's parliament passed an additional set of austerity measures required by creditors. After Greek used emergency funds from the European Central Bank to pay its most pressing debts, the country's banks opened their doors for the first time in three weeks, albeit under still-strict transaction limits.
Eye on the Week Ahead
Next week's Federal Open Market Committee meeting may reveal when interest rates are targeted to increase. Some analysts are predicting September, while others still aren't so sure. Inflationary trends haven't yet picked up steam, while the labor market has remained unremarkably steady at best--both indicators that need to show strength before interest rates are raised, according to Fed Chair Janet Yellen.
Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: 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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