CHINA DATA, CRUDE PRICES DRIVE MAJOR SELLOFF
Fierce headwinds hit Wall Street last week. A report showed that Chinese factory activity hit a 6-year low in July, raising serious doubts about whether that country’s economy was still maintaining 7% annual growth. (The Shanghai Composite lost 4.3% Friday and 11% for the week.) Friday, WTI crude dipped under $40 before settling at $40.45 on the NYMEX; oil is on an 8-week losing streak.) Under such pressure, U.S. stocks had their poorest week of the year: in five days, the Dow fell 5.82% to 16,459.75, the Nasdaq 6.78% to 4,706.04 and the S&P 500 5.77% to 1,970.89. The CBOE VIX soared 40% last week to a Friday close of 26.81.
EXISTING HOME SALES AT AN 8-YEAR PEAK
New National Association of Realtors data showed 2.0% more resales in July and a yearly gain of 10.3%, with the annualized sales pace at its hottest since February 2007. July also saw single-family housing starts rise 12.8%. Total starts were up just 0.2%, however, and the Census Bureau measured a 16.3% dip for building permits.
LATEST CPI SHOWS MINIMAL INFLATION PRESSURE
In July, both the headline and core Consumer Price Index rose only 0.1%. That was half the gain projected by analysts in a Briefing.com consensus forecast. In June, consumer prices were up 0.3% with core CPI rising 0.2%.
JULY FED MINUTES: UNCERTAINTY ABOUT A RATE HIKE
Minutes from the July Federal Open Market Committee meeting released last week showed no apparent consensus about raising short-term interest rates, with some Federal Reserve officials leaning against an increase because of muted U.S. inflation and slowing overseas economies and others wishing to proceed. Wall Street was left a bit less certain about the long-assumed September rate move.
THIS WEEK: Stateside, nothing major is scheduled for Monday. Tuesday, the Conference Board’s August consumer confidence index comes out, along with the June S&P/Case-Shiller home price index, July new home sales data and earnings from Best Buy, DSW, Toll Bros., and Valspar. A report on July durable goods orders arrives Wednesday, plus earnings from Abercrombie & Fitch, Chico’s, Express, Tilly’s, and Williams-Sonoma. The second federal government estimate of Q2 GDP appears Thursday, plus NAR’s July pending home sales index, a new initial claims report and earnings from Aeropostale, Autodesk, Burlington Stores, Dollar General, Fred’s, GameStop, J.M. Smucker, Smith & Wesson, and Tiffany. Friday brings the final August University of Michigan consumer sentiment index, July personal spending figures and earnings results from Regis Corp. and Big Lots.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.