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Market Week: July 6, 2015

Key Dates/Data Releases

7/6: ISM non-manufacturing index

7/7: International trade report, JOLTS

7/8: FOMC minutes

7/9: Jobless claims

The Markets

Stock markets closed the holiday week on a sour note for the second week in a row. While several domestic indicators have been favorable, such as housing and unemployment, the markets across the board continued to lose value on the heels of Greece closing its banks for a week and missing a debt payment, coupled with China cutting lending rates in an attempt to support its sagging economy, while Puerto Rico has indicated it can’t pay its bills. The S&P 500, the Dow, Nasdaq, the Russell 2000, and the Global Dow all lost more than 1% compared to their respective closes last week. Year-to-date, the Dow has reached negative territory, down 0.52%.

The national average retail regular gasoline price decreased to $2.801 per gallon on June 29, 2015, $0.011 under last week’s price and $0.903 below a year ago. Gold closed Friday’s trading period selling at $1,167.80, down $5.40 from a week ago ($1,173.20).

Market/Index 2014 Close Prior Week As of 7/3 Weekly Change YTD Change
DJIA 17823.07 17946.68 17730.11 -1.21% -0.52%
Nasdaq 4736.05 5080.51 5009.21 -1.40% 5.77%
S&P 500 2058.90 2101.49 2076.78 -1.18% 0.87%
Russell 2000 1204.70 1279.79 1248.26 -2.46% 3.62%
Global Dow 2501.66 2577.80 2523.08 -2.12% 0.86%
Fed. Funds 0.25% 0.25% 0.25% 0% 0%
10-year Treasuries 2.17% 2.47% 2.38% -9 bps 21 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • Furthering a positive trend in the housing market, the number of pending home sales continued to rise in May reaching their highest level in over nine years, according to the National Association of Realtors®. The pending home sales index, which is based on the volume of signed residential contracts for existing homes, jumped 0.9% in May from April, and is at its highest level (112.6) since April 2006.
  • The U.S. Census Bureau reports that construction spending in May rose 0.8% compared to April. Building of manufacturing facilities, up 6.2%, outpaced residential construction, which increased by a moderate 0.3%.
  • Following last week’s favorable consumer sentiment report from the University of Michigan, the Conference Board’s consumer confidence index reached 101.4 in June, up from 94.6 in May. According to the report, consumers’ confidence in the economy is growing as an increasing percentage of those polled thought business conditions were good (26.4%) and starting jobs were plentiful (21.4%), while the percentage of consumers expecting business conditions to improve over the next six months rose from 16.0% to 18.5%.
  • Hit with weak exports, the manufacturing sector continues to trend downward. New orders for manufactured goods in May, down nine of the last ten months, decreased $4.5 billion or 1.0% to $470.5 billion, the Census Bureau reported last week.
  • June was not much better for the business sector. Data indicated a tempered improvement in overall business conditions across the U. S. manufacturing sector, with softer output growth offsetting a slight pickup in the pace of new business gains and job creation according to reports from the Institute for Supply Management and Markit’s U.S. Manufacturing Purchasing Managers’ Index™. Both indexes registered over 50.0, which indicates expansion. PMI came in at 53.6 in June, slightly down from 54.0 in May, while June’s ISM index registered 53.5 compared to 52.8 in May. However, each survey noted that export orders are still lagging.
  • According to the Energy Information Administration report, gasoline production increased for the week ending June 26, averaging over 10.0 million barrels per day. Compared to the previous week, crude oil inventories were up 2.4 million barrels, partly attributable to increasing crude oil imports, which were up by 748,000 barrels per day. At 465.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.
  • According to the U.S. Bureau of Labor Statistics report for June, total nonfarm payroll employment increased by 223,000, the unemployment rate declined by 0.2% to 5.3%, and the number of unemployed persons declined by 375,000 to 8.3 million. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing. On the other hand, seasonally adjusted new claims for unemployment insurance increased 10,000 to 281,000 for the week ending June 27, although the number of initial claims is significantly lower compared to this time last year (313,000).

Eye on the Week Ahead

The recent gains achieved in the stock market were virtually wiped out this past week, primarily due to the financial upheaval involving Greece. There is plenty of uncertainty relating to what will happen after Greece’s July 5th referendum. How will the markets, domestically and abroad, react to the vote? Of particular interest this week will be the FOMC meeting and whether the committee is able to provide any indication as to when they will raise interest rates.

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/ Market Data (oil spot price, WTI Cushing, OK); (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.