What I’m Watching This Week – 24 June 2019

The Markets (as of market close June 21, 2019)

Stocks enjoyed another week of strong growth as investors were encouraged by the Fed’s decision to keep interest rates unchanged and hope for a resolution to the ongoing trade war between the United States and China. Each of the benchmark indexes listed here posted solid gains last week, led by the Nasdaq and the Global Dow. During the week, the S&P 500 reached a record high, as did the Dow — this despite growing tensions between the United States and Iran. For the year, the Nasdaq is firmly ahead of its 2018 closing value, while the S&P 500 is approaching a gain of 20% for 2019.

Oil prices rose to $57.60 per barrel by late Friday afternoon, up from the prior week’s price of $52.51. On news that interest rates might be in line for a reduction, the price of gold (COMEX) spiked last week, climbing to $1,402.70 by late Friday afternoon, up from the prior week’s price of $1,344.80. The national average retail regular gasoline price was $2.670 per gallon on June 17, 2019, $0.062 lower than the prior week’s price and $0.209 less than a year ago.

Market/Index 2018 Close Prior Week As of 6/21 Weekly Change YTD Change
DJIA 23327.46 26089.61 26719.13 2.41% 14.54%
Nasdaq 6635.28 7796.66 8031.71 3.01% 21.05%
S&P 500 2506.85 2886.98 2950.46 2.20% 17.70%
Russell 2000 1348.56 1522.50 1549.63 1.78% 14.91%
Global Dow 2736.74 2998.79 3081.62 2.76% 12.60%
Fed. Funds target rate 2.25%-2.50% 2.25%-2.50% 2.25%-2.50% 0 bps 0 bps
10-year Treasuries 2.68% 2.09% 2.06% -3 bps -62 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 Economic Headlines

  • Once again, the Federal Open Market Committee decided to maintain the federal funds rate at its current range of 2.25%-2.50%. Interestingly, one member of the voting Committee, St. Louis Fed President James Bullard, dissented in favor of lowering the target range for the federal funds rate by 25 basis points. The Committee noted that job gains have been solid, the unemployment rate has remained low, and household spending has picked up from earlier in the year. However, business fixed investment has been soft and inflation is running below the Committee’s 2% target rate.
  • New home construction slowed in May, which could impact available inventory over the summer. Housing starts and home completions fell 0.9% and 9.5%, respectively, in May. On the positive side, building permits increased 0.3%, and permits for single-family homes jumped 3.7% in May over April’s totals.
  • The housing market finally may be picking up steam. Sales of existing homes rose 2.5% in May over April’s revised total, which rose from a decline of 0.4%, to no change over March. Over the last 12 months, sales of existing homes are down 1.1%. The median existing-home price in May was $277,700 ($267,300 in April), up 4.8% from May 2018 ($265,100). Total housing inventory at the end of May increased to 1.92 million, up from 1.83 million existing homes available for sale in April. This represents a 4.3-month supply at the current sales pace, up from the 4.2-month supply in April.
  • For the week ended June 15, there were 216,000 claims for unemployment insurance, a decrease of 6,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended June 8. The advance number of those receiving unemployment insurance benefits during the week ended June 8 was 1,662,000, a decrease of 37,000 from the prior week’s level, which was revised up by 4,000.

Eye on the Week Ahead

The May figures on new home sales are available this week. Prices are rising and sales have been picking up. Also out this week are the final figures on the gross domestic product for the first quarter. The second iteration of the report showed the economy grew at an annualized rate of 3.1%.

To view the What I’m Watching This Week Portfolio, please click here. (Free Membership is required) https://www.barchart.com/my/featured-portfolios