The stock market finished the week mixed as investors continue to digest earnings reports and conflicting economic data. The tech-heavy Nasdaq index dropped over 1.0% largely due to Facebook stock dropping nearly 20% on lower than expected revenue and a poor outlook. Interest rates rose with the 10-year treasury yield rising 7 basis points to 2.96%. Yet, the spread between the 10-year treasury yield and the 2-year treasury yield only widened by 1 basis point to 0.29% as short-term yields also rose. Commodity prices moved lower with the price of gold dropping 0.64% to $1,222.80 an ounce and crude oil dropping 1.85% to $69.01 a barrel. The U.S. dollar index finished slightly higher, rising from 94.44 to 94.67.
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THIS WEEK’S HIGHLIGHTS
- U.S. existing home sales fell by 0.6% in June to an annualized rate of 5.38 million, marking the third consecutive drop in sales. Additionally, a shortage of properties on the market continues to drive up the prices of homes to a record high median price of $276,900.
- U.S. new home sales also dropped in June but by a larger margin then existing home sales, falling 5.3% to an annualized rate of 631,000. However, supply of new homes rose by 1.7% to 301,000 new homes on the market.
- Durable goods orders surged 1.0% in June, lifted by a sharp rise in the heavily weighted aircraft sector which rose 15.7%. Excluding the heavily weighted transportation sector (which includes aircrafts), durable goods orders still rose a moderate 0.4%.
- The goods portion of the international trade deficit grew deeper than expected, increasing from $64.8 billion in May to $68.3 billion in June. The increase in the deficit came from a 1.5% drop in exports to $141.9 billion, and a 0.6% increase in imports to $210.3 billion.
- Initial unemployment claims remain very low at 217,000 despite rising by 9,000 for the week ending July 21st. The less volatile 4-week average of initial unemployment claims dropped by nearly 3,000 to 218,000. Continuing unemployment claims fell by 8,000 to 1.74 million, however its 4-week average rose by 10,000 to 1.75 million.
- Second quarter GDP rose significantly higher to a 4.1% annualized growth rate, coming off the first quarter’s rate of 2.0%. A 4.0% increase in consumer spending largely drove the rise in GDP as it accounts for roughly 2.7% of the 4.1% annualized growth rate. Net exports also contributed to a significant amount of second quarter GDP, accounting for approximately 1.1% of the 4.1% annualized growth rate.
QUOTE OF THE WEEK
“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.”
– Henry Ford
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