Money Talk Podcast, Friday July 31, 2015
Landaas & Company newsletter August edition now available.
Advisors on This Week’s Show
Week in Review (July 27-31, 2015)
Significant economic indicators & reports
An erratic indicator of U.S. manufacturing hinted that demand might be picking up for the sector in June. The Commerce Department said durable goods orders grew by 3.4% from May, the first gain in three months and only the second time so far this year. Commercial aircraft orders led the increase but even excluding the volatile transportation equipment category, orders rose more than analysts expected. Hampered by the dampening effects of a strong dollar on exports, durable goods orders were down 2.8% from June 2014, 4.5% if you exclude transportation equipment.
The S&P/Case-Shiller Home Price Index showed year-to-year price gains slowing in May, up 4.9% for the 20-city composite index, vs. 5% in April. The deceleration prompted a housing economist for S&P to forecast further pricing slowdowns over the next couple of years. Housing has been outpacing overall inflation as well as wages, but the report cited fewer first-time buyers because of trouble affording down payments.
Considered a harbinger of greater spending, consumer confidence dipped in July by more than analysts expected. The Conference Board index declined to 90.9 from 99.8 in June. The business research group said the reading remained at a level suggesting optimism and economic expansion, but it said consumers’ short-term outlook has suffered from weaker feelings toward the labor market and perhaps concerns over Greece and China.
In a sign of rocky roads in the housing recovery, the National Association of Realtors said its pending home sales index slipped 1.8% in June, while analysts had anticipated a gain. It was the first decline in six months, but May’s index reading was the highest in nine years. An economist for the trade group said demand for houses remains steady but supply is tight, which has pushed prices higher, discouraging some buyers, especially first-timers.
The U.S. economy grew at a 2.3% annual rate in the second quarter, which was slower than analysts forecast, but the first quarter was not as weak as previously estimated. The Bureau of Economic Analysis said gross domestic product advanced by 0.6% in the first three months of the year, revised from a slight decline. Consumer spending contributed to the second-quarter rebound, rising at a rate of 2.9, vs. 1.8% in the first quarter. The Fed’s favorite measure of inflation showed prices rising 1.8%, up from 1% in the two previous quarters and closer to the Fed target of 2%.
The four-week moving average of initial unemployment claims fell for the second week in a row, edging closer to its 15-year low in April. Since early 2013, jobless claims generally have been staying below the point at which new job losses don’t outnumber new entrants to the job market.
Another gauge of consumer sentiment, from the University of Michigan, dropped in July but stayed level with a relatively optimistic outlook. An economist with the longstanding survey said the reading was consistent with a “prevailing positive trend” and that the last eight months of consumer sentiment was the most upbeat than any time in the last decade.
Where the Markets Closed for the Week
- Nasdaq – 5,128, up 39 points or 0.8%
- Standard & Poor’s 500 – 2,104, up 24 points or 1.2%
- 10-year U.S. Treasury Note – 2.19%, down 0.07 point
- Dow Jones Industrial – 17,694, up 126 points or 0.7%