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 26.81.1,2
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.3
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%.4
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.5
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.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -7.65 -3.40 +12.23 +5.57
NASDAQ -0.63 +3.84 +23.18 +11.98
S&P 500 -4.27 -1.08 +16.78 +6.13
REAL YIELD 8/21 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.52% 0.24% 1.05% 1.86%
Sources: wsj.com, bigcharts.com, treasury.gov – 8/21/156,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
WEEKLY QUOTE
“Don’t make long term investment decisions based on short term returns of one asset class of individual investment.”
– Mark Lund
WEEKLY TIP
Starting up a business? Talk to a CPA to determine the tax benefits you might be eligible for and the expenses you may be able to itemize.
WEEKLY RIDDLE
I am a port city in Canada, a state in southeast Australia, a big lake in Africa, and a renowned queen. What is my name?
Last week’s riddle:
It grows down, yet it also grows up. What is it?
Last week’s answer:
A goose.
Citations.
1 – thestreet.com/story/13263507/1/stocks-end-brutal-week-as-market-nears-correction.html [8/21/15]
2 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [8/21/15]
3 – usnews.com/news/slideshows/5-things-to-know-about-the-economy-this-week-8-21-2015 [8/21/15]
4 – briefing.com/investor/calendars/economic/2015/08/17-21 [8/21/15]
5 – money.cnn.com/2015/08/21/investing/stocks-market-lookahead-august-21/index.html [8/21/15]
6 – markets.wsj.com/us [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F21%2F14&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F21%2F14&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F21%2F14&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F20%2F10&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F20%2F10&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F20%2F10&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F22%2F05&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F22%2F05&x=0&y=0 [8/21/15]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F22%2F05&x=0&y=0 [8/21/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/21/15]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/21/15]
This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Mark Lund, Mark is known as The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and financial Advisor services for professional athletes and individuals. Stonecreek is located in Salt Lake City, Murray, West Jordan, Sandy, Draper, South Jordan, Provo, Orem, Lehi, Highland, Alpine, and American Fork in Utah.
