Wall Street saw stocks close lower last week as traders soured on risk following the release of weaker-than-expected economic data and inflation worries. The major benchmark stock indexes ended the week in the red. Among the market sectors, consumer discretionary and communication services underperformed. Bond prices moved higher on increased demand, dragging yields lower. Crude oil prices declined for the third straight week. The dollar index ticked lower, while gold prices advanced.
Last Week’s Economic News
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- The number of building permits issued in January was 0.1% above the revised December rate but is 1.7% below the January 2024 estimate. Single-family building permits in January were virtually unchanged from the revised December rate. Housing starts in January were 9.8% below the revised December estimate and were 0.7% under the January 2024 rate. Single-family housing starts in January were 8.4% below the revised December figure. Residential housing completions in January were 7.6% above the revised December estimate and 9.8% higher than the January 2024 rate. Single-family housing completions in January were 7.1% above the revised December estimate.
- Sales of existing homes declined 4.9% in January but were up 2.0% from a year earlier. Elevated mortgage rates slowed sales. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.85% as of February 20. That’s down from 6.87% one week ago and 6.90% one year ago. Inventory of homes for sale increased from 3.2 months in December to 3.5 months in January. The median existing home price fell 1.7% to $396,900 last month but was 4.8% above the January 2024 price of $378,600. Single-family home sales declined 5.2% in January but were 2.2% above the year-earlier rate. The median existing single-family home price was $402,000 in January, down from the December price of $408,200 but higher than the January 2024 price of $382,900.
- The national average retail price for regular gasoline was $3.148 per gallon on February 17.
- For the week ended February 15, there were 219,000 new claims for unemployment insurance, an increase of 5,000 from the previous week’s level.
Eye on the Week Ahead
A considerable amount of economic data is being released this week, however the most attention will be paid to the second estimate of fourth-quarter gross domestic product. The initial estimate showed the economy expanded at a rate of 2.3%. The report on personal income and outlays for January is also out this week. Investors will be paying particular attention to the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation. It is expected that the PCE price index will move higher, in line with other inflation indicators, such as the Consumer Price Index.
Have a nice week!
Sincerely,
Robert G. Carpenter