The stock market had an outstanding first half of 2017 and is poised for more gains if low interest rates, low energy costs persist. If congress improves the health insurance market and passes tax reform, and that’s a big “if”, then the business climate will be stronger and would likely be good for the stock market.
Household Earnings Outpace Spending
According to newly released Department of Commerce data, personal incomes improved 0.4% in May, but personal spending advanced just 0.1% after a 0.4% gain in April. Core consumer prices (minus food and energy costs) rose only 1.4% during the 12 months ending in May.1,2,3
Were Consumers More Confident in June?
By the looks of the University of Michigan’s monthly household sentiment index, no – that gauge fell 2.0 points to a mark of 95.1. On the other hand, the Conference Board’s consumer confidence index rose 1.3 points to a reading of 118.9.2,3
Pending Home Sales Weaken
A National Association of Realtors report showed housing contract activity declining by 0.8% in May. This follows a 1.7% dip for pending home sales in April.3
1st Quarter GDP Revised Higher
Apparently, the opening three months of 2017 were not as economically sluggish as first thought. The Bureau of Economic Analysis released its third, concluding estimate of Q1 growth Thursday, modifying the number again to 1.4% from the previous revision to 1.2%.3
Wall Street takes a half-day on Monday, with stock trading wrapping up at 1:00pm EST; during the abbreviated session, investors will consider the June ISM factory PMI. Stock and bond markets are closed Tuesday for the July 4th holiday. Minutes from the June Federal Reserve policy meeting arrive Wednesday, plus May factory orders data. Thursday, the latest Challenger job-cut report and ADP payrolls report complement new initial claims figures and ISM’s June service sector PMI. On Friday, the Department of Labor issues its June employment report, and the Federal Reserve Board hands its semi-annual monetary policy report to Congress.
|% CHANGE||YTD||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||6/30 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.58%||0.48%||-0.46%||2.65%|
Sources: wsj.com, bigcharts.com, treasury.gov – 6/30/175,6,7,8
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.
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- 1 – cnbc.com/2017/06/30/us-personal-income-may-2017.html [6/30/17]
- 2 – sca.isr.umich.edu [6/30/17]
- 3 – marketwatch.com/economy-politics/calendars/economic [6/30/17]
- 4 – marketwatch.com/story/stocks-end-mostly-higher-to-book-best-half-year-gains-in-years-2017-06-30 [6/30/17]
- 5 – markets.wsj.com/us [6/30/17] 6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F30%2F16&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F30%2F16&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F30%2F16&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F29%2F12&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F29%2F12&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F29%2F12&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F29%2F07&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F29%2F07&x=0&y=0 [6/30/17]
- 6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F29%2F07&x=0&y=0 [6/30/17]
- 7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/30/17]
- 8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/30/17]