Weekly Economic Update June 28, 2021
In this week’s recap: Stocks reach all-time highs and the housing market showed significant improvement.
THE WEEK ON WALL STREET
Stocks reached new all-time highs last week as markets staged a strong rebound from the previous week’s declines.
The Dow Jones Industrial Average rose 3.44%, while the Standard & Poor’s 500 picked up 2.74%. The Nasdaq Composite index increased 2.35%. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.97%.1,2,3
Stocks rallied on the first day of trading last week and gained further momentum on Thursday and Friday. Despite some discouraging data on housing and initial jobless claims, stocks managed to set new highs, as investors cheered an agreement between President Biden and a group of senators that appeared to pave the way for the passage of a $1 trillion infrastructure bill.4
Positive results from the Federal Reserve’s stress tests of banks, which raised the prospect of banks raising their dividend payouts and share buybacks, and a key inflation measure coming in at market expectations provided impetus for further gains. The S&P 500 had its best week since February and ended the five-trading days at a record high.5
Historically low mortgage rates, the COVID-19 pandemic, and a flush consumer have contributed to a very strong housing market in recent months. Last week’s housing data for May, however, showed that housing may be running into headwinds. The rising cost of materials and labor led to a 5.9% decline in new single home sales in May even as the median price hit an all-time high.6
Meanwhile, sales of existing homes fell 0.9%, the fourth-straight month of declines, owing to a very low inventory. High demand, coupled with a depressed supply, led to a 23.6% increase in the median price of an existing home.7
Tip of the Week
Double-check that your legal documents (your will, power of attorney, and trusts) are appropriately titled.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Consumer Confidence.
Wednesday: ADP (Automated Data Processing) Employment Report.
Thursday: Jobless Claims. ISM (Institute of Supply Management) Manufacturing Index.
Friday: Employment Situation Report. Factory Orders.
Source: Econoday, June 25, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Wednesday: Micron Technology, Inc. (MU), Constellation Brands, Inc. (STZ), General Mills, Inc. (GIS).
Thursday: Walgreens Boots Alliance, Inc. (WBA), McCormick & Company, Inc. (MKC).
Source: Zacks, June 25, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
The Weekly Riddle
Can you write down eight eights so that they add up to one thousand?
LAST WEEK’S RIDDLE: Before Mt. Everest was measured, in 1819, what was the highest mountain on earth?
ANSWER: Mt. Everest was the highest - it simply hadn't been measured yet.
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
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1. The Wall Street Journal, June 25, 2021
2. The Wall Street Journal, June 25, 2021
3. The Wall Street Journal, June 25, 2021
4. CNBC, June 23, 2021
5. CNBC, June 23, 2021
6. Fox Business, June 23, 2021
7. CNBC, June 22, 2021