A weekly update from Jeff Mitchell, your Trusted Advisor.
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Market Week: July 25, 2016
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The Markets
The S&P 500 reached a
record high last Friday as each of the indexes listed here posted
marginal gains over the prior week. Equities have demonstrated a
positive trend over the past several weeks. The Nasdaq eclipsed its
previous high only to slip a bit by week's end. While the indexes
continue to forge ahead, overall trading has been light. Across the
"pond" the UK's economy has likely contracted in July, according to IHS
Markit's Purchasing Managers' Index, which showed businesses responding
to the uncertainty of Brexit by cutting output and payrolls.
Crude oil (WTI) closed
at $44.21 a barrel last week, down from $46.28 per barrel the previous
week. The price of gold (COMEX) fell to $1,330.30 by late Friday
afternoon, dropping from the prior week's price of $1,337.70. The
national average retail regular gasoline price decreased for the fifth
week in a row to $2.230 per gallon on July 18, $0.023 under the prior
week's price and $0.572 below a year ago.
Last Week's Headlines
- June was a good month for new home
construction as the number of building permits, housing starts, and new
home completions each eclipsed their respective May totals. Building
permits for housing units and single family homes were up 1.5% and 1.0%,
respectively. Housing starts, marked by the beginning of construction,
increased by 4.8% for all housing units and 4.4% for single family
housing. Housing completions were 12.3% ahead of May (single-family
completions gained only 3.7%). Increasing demand and low inventory have
promoted home building, which may be a sign of economic growth.
- Sales of existing homes also improved
in June, according to the National Association of Realtors®. Closings
for existing homes (including single family homes, townhomes,
condominiums, and co-ops) climbed 1.1% to an annual rate of 5.57 million
from a downwardly revised 5.51 million in May. Over the last 12 months,
existing home sales are up 3.0%--the highest level since 2007.
According to the NAR, sustained job growth and lower mortgage rates are
factors driving home sales. The median existing home price for all
housing types in June was $247,700--up 4.8% from last June and 3.7%
ahead of May's median price. Available inventory remains an issue for
homebuyers as it dipped 0.9% to 2.12 million, which is 5.8% lower than a
year ago.
- Builders remained cautiously
optimistic about the newly built, single-family home market in July,
according to the latest survey from the National Association of Home
Builders. The Housing Market Index, based on respondents' feedback, fell
1 point to 59 from June's index of 60. An index reading above 50
indicates generally favorable expectations.
- According to the Markit Flash U.S.
Manufacturing PMI™, the Purchasing Managers' Index™ was 52.9 in July, up
from 51.3 in June. This reading signals solid improvement in overall
business conditions, with the latest reading the strongest since October
2015. Manufacturing output, new orders, and employment continue to
rise.
- In the week ended July 16, the advance
figure for seasonally adjusted initial unemployment insurance claims
was 253,000, a decrease of 1,000 from the prior week's level. The
advance seasonally adjusted insured unemployment rate dropped to 1.5%.
The advance number for seasonally adjusted insured unemployment during
the week ended July 9 was 2,128,000, a decrease of 25,000 from the
previous week's revised level.
Eye on the Week Ahead
This week is an important one for economic news. The FOMC meets and may
consider raising interest rates based on the surging stock market,
slowly advancing inflation, and the rebounding employment situation.
Also, the latest figures on the second-quarter gross domestic product
are released at the end of the week.
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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