Stocks were mixed last week, with the Dow and the Russell 2000 adding value, while the Nasdaq, the S&P 500, and the Global Dow ended the week in the red. Tech shares took a hit as traders prepared for this week’s earnings data from four megacap giants. For the week, communication services, information technology, and energy closed lower among the market sectors. Health care and utilities posted the largest gains. The June personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, was somewhat encouraging. While the data is not favorable enough for the Fed to lower interest rates next week, it is trending in the right direction to lead to a possible interest rate cut in September. Crude oil prices declined on rising expectations of a cease-fire in Gaza and growing concerns on waning demand in China.
Last Week’s Economic News
- According to the estimate gross domestic product increased in the second quarter. GDP rose 1.4% in the first quarter.
- The PCE price index inched up in June and 2.5% over the last 12 months.
- New orders for manufactured durable goods decreased in June following four consecutive monthly increases.
- The international trade in goods deficit decreased in June. Exports of goods in June rose 2.5%. Imports of goods in June inched up 0.7%.
- Existing-home sales slumped in June, falling 5.4% below the May rate and 5.4% below the estimate from a year earlier. According to the National Association of Realtors®, homes are sitting on the market a bit longer, and sellers are receiving fewer offers. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.77% as of July 18.
- Sales of new single-family homes fell in June from a month earlier and were 7.4% below the June 2023 estimate.
- The national average retail price for regular gasoline was $3.471 per gallon on July 22.
- For the week ended July 20, there were 235,000 new claims for unemployment insurance.
Eye on the Week Ahead
The Federal Open Market Committee meets this week, and while it is highly unlikely that the Fed will adjust interest rates at this time, the Committee might provide a more concrete indication as to when rates may be lowered. The employment data for July is also out this week. The labor sector has been steady during the period as the Fed tries to harness inflation.
Have a nice week!
Sincerely,
Robert G. Carpenter