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Market Week: June 29, 2015

Key Dates/Data Releases

6/29: Pending home sales

6/30: S&P Case-Shiller HPI, consumer confidence

7/1: PMI manufacturing index, ISM manufacturing index

7/2: Employment situation, jobless claims, factory orders

7/3: Markets closed for Fourth of July

The Markets

Bolstered by very favorable housing news and heightened consumer expectations, the economic news was generally good for the week ending June 26. Unfortunately, the markets, which had experienced gains the prior week, can be described as mundane at best. Both large-cap benchmarks dipped this week, while small caps were not immune to a slight skid as the Nasdaq and Russell 2000 closed in negative territory. Possibly influencing the weak domestic market returns is the situation involving Greece and its creditors, who have not yet reached an accord regarding terms of a bailout. However, on Friday Greek Prime Minister Alexis Tsipras called a referendum for July 5 on bailout terms proposed by the country’s creditors as deadlines loom.

Market/Index 2014 Close Prior Week As of 6/26 Weekly Change YTD Change
DJIA 17823.07 18015.95 17946.68 -0.38% 0.69%
Nasdaq 4736.05 5117.00 5080.51 -0.71% 7.27%
S&P 500 2058.90 2109.99 2101.49 -0.40% 2.07%
Russell 2000 1204.70 1284.66 1279.79 -0.38% 6.23%
Global Dow 2501.66 2565.76 2577.80 0.47% 3.04%
Fed. Funds 0.25% 0.25% 0.25% 0% 0%
10-year Treasuries 2.17% 2.26% 2.47% 21 bps 30 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

  • The housing market continues its upward trend as existing home sales in May rose 5.1% to 5.35 million, according to the National Association of Realtors┬«. New home sales also were up 2.2% in May, as reported by the Census Bureau. Compared to April, the median existing home selling price jumped 4.2% to $228,700, however new home prices dropped 5.1% from $297,300 to $282,800.
  • According to the Census Bureau advance report, orders for manufactured durable goods (products intended to last three years or longer, such as appliances, trucks, aircraft, and computers) fell 1.8% in May–the third such decline in the last four months. Nevertheless, excluding transportation equipment, new orders actually rose 0.5% in May, possibly signifying some positive movement in the manufacturing sector.
  • The third estimate of the gross domestic product for the first quarter (based on more complete source data) revealed that the economy wasn’t quite as bad as initially projected. According to the Bureau of Economic Analysis, first quarter real gross domestic product–the value of the production of goods and services in the United States–decreased at an annual rate of 0.2% (compared to the previous estimate of -0.7%). The improved GDP projection reflects stronger consumer spending, increased inventory, and greater exports than first estimated. All in all, the more favorable report could be a precursor to a stronger economy in 2015.
  • Consumers had more money to spend and invest in May and they did just that, according to the Bureau of Economic Analysis. Compared to the prior month, personal income increased $79.0 billion, or 0.5%, while consumer spending increased to $105.9 billion, or 0.9% ahead of April.
  • While claims for unemployment insurance are still at historic lows, both the number of new claims and the total number of claimants receiving unemployment insurance ticked higher for the week ending June 20. Initial claims increased by 3,000 from the previous week’s revised level, as did the number of unemployment insurance claimants, which grew from 2.225 million to 2.247 million–an increase of 22,000.
  • Consumers are as confident in the economy as ever, according to results from the University of Michigan’s latest survey of consumers. The index of consumer sentiment for June increased by 6.0% to 96.1 compared to May and is 16.5% higher year-on-year. This is the largest and most sustained increase in economic optimism since 2004, according to the survey’s chief economist, Richard Curtin.

Eye on the Week Ahead

The stock market has been generally trending upward and will likely continue to do so with the Supreme Court’s decision to uphold Obamacare and a possible Greece/creditor resolution. New information on manufacturing may indicate whether that sector is ready to pick up steam. As jobless claims have increased lately, will there be more claimants again next 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/ 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.