The U.S. stock market ended the week little changed with a conflicting mix of economic data. However, since the beginning of the year the stock market has moved largely upward with the S&P 500 posting its best first half since 1997 as expectations for lower interest rates have mitigated trade concerns. That said, interest rates have dropped in the same time frame, with the 10-year treasury yield falling from 2.66% at the beginning of the year to 2.00% today. However, the spread between the 10-year treasury and the 2-year treasury yield has widened from 0.16% to 0.27% since the beginning of the year, but still remains historically very narrow. The price of gold has risen 8.4% year-to-date to $1,413 an ounce primarily due to the expectation of lower interest rates, while the U.S. dollar index (DXY) has been virtually unchanged at 96.2. The price of crude oil has risen 29.0% year-to-date to $58.17 a barrel as production of the oversupplied commodity has since slowed down.

Index               Started Week         Ended Week         Change         Change %         YTD %
DJIA 26,719.1326,599.96-119.17-0.45%14.03%
Nasdaq 8,031.71 8,006.24-25.47-0.32%20.66%
S&P 500 2,950.46 2,941.76-8.70-0.29%17.35%
Russell 2000 1,549.63 1566.5716.941.09%16.17%

This Week’s Economic Highlights

  • New home sales dropped to 7.8% in April to a five-month low of 626,000.  Over the past year new home sales are down 3.7% while the median sales price is down 2.7% to $308,000.
  • Durable goods orders fell by 1.3% in May for the third consecutive monthly drop as the suspension of the Boeing 737 continues to weigh on orders.  However, if transportation orders (i.e. planes, trains, and automobiles) are excluded, orders actually rose 0.3%.
  • Initial unemployment claims rose by 10,000 to 217,000 for the week ending June 22nd.  However, the less volatile four-week moving average only rose 2,250 to 221,250.  Despite the weekly rise, initial claims remain historically very low.
  • Consumer spending, which accounts for nearly 70% of the economy (i.e. GDP), rose by a strong 0.4% in May.  Personal income also rose by a strong 0.5%, after rising by the same amount the month prior.
  • The Personal Consumption Expenditures (PCE) price index, a measure of inflation, rose by a moderate 0.2% in May.  Over the past year PCE is up only a slight 1.5%, well below the Federal Reserve’s 2.0% target.

Quote

– “Loss aversion is the idea that we regret losses twice as much as gains make us feel good.  Looking at the stock market on a daily basis means you’ll basically feel terrible every single day, since the pain from loss will outweigh the joy from gains.”

– Ben Carlson

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