If you had a bad case of the Mondays last week, you weren’t alone. The stock market had a horrible case of the Mondays – so bad it lasted into Tuesday. The stock market was dragged down by many global concerns. Over the weekend, China’s Finance Minister said that China would not make any major adjustments to its economic policy as the country is facing downward economic pressures. Stocks received further bad news on Monday morning when the Chicago Federal Reserve reported that the National Activity Index was negative in August, suggesting below average growth. The index fell from a positive .26 in July to a negative .21 in August. Manufacturing production was down .4 percent and manufacturing Capacity Utilization also declined. The National Association of Realtors reported that Existing Home Sales fell 1.8 percent in August. Economists expected sales to increase to 5.15 million in August and instead, they fell to 5.05 million.
The early morning news on Tuesday wasn’t any better. Geopolitical concerns sent stocks even lower. The United States began airstrikes in Syria on Monday night, and there was weak economic data out of Europe. The markets finally got a little ray of sunshine in that Home Prices rose .1 percent in July according to a report released by The Federal Housing Finance Agency. The U.S. Markit Flash Purchasing Managers Index was flat at 57.9 in September. Anything over 50 indicates growth. Manufacturing employment increased at the fastest pace since March 2012.
Things were looking a little better heading into Wednesday morning. The U. S. Commerce Department reported an 18 percent increase in New Home Sales on Wednesday. This is the fastest pace since May of 2008 and the largest one month gain since January of 1992. The median price of a new home increased to $275,000, up 8 percent from last year. August’s supply of new homes fell to 4.8 months from 5.6 months in July. The President of the Cleveland Fed, Loretta Mester, spoke on Wednesday. In her speech, she said that the economy is returning to normal territory and that the Fed is carefully planning its exit from it’s zero-rate policy stance. She also said that she expected real GDP to expand at about 3 percent for the rest of the year and through 2016. She stressed that the Fed’s phrase, “Considerable Time” did not point towards a calendar date, but, more towards economic conditions improving.
Jobless Claims rose last week by 12,000 to end at 293,000. The number was predicted to rise to 300,000. The new claims for the month fell by 1,250 to 298,500. There were fewer jet contracts in August; which was negative for overall U.S. Durable-Goods Orders. The government reported that orders were down 18.2 percent for August, slightly more than what was anticipated. The markets got further bad news when Mark Carney, the Governor of the Bank of England, said that the first interest rate hike was getting closer.
In other news last week, Norway jumped to the second largest foreign buyer of U.S. real estate, only trailing Canada. Norway has spent more than $3 billion on U.S. real estate this year, according to research firm, Real Capital Analytics, Inc. Norway’s wealth fund is seeking to meet a target of investing as much as 5 percent of its assets in real estate. The U.S. prices for top-tier buildings in major markets are being pushed up by foreign investors that are looking for a safe place to invest, and are willing to take a lower yield for that safe investment. Last week, Norway acquired a 45 percent stake in what use to be the Citigroup Center in Manhattan and in Boston’s Atlantic Wharf Office Building for $1.5 billion.
Monday will be another busy day with several reports coming out, including; Personal Income, Consumer Spending, and Core PCE Price Index. The Chicago PMI and Consumer Confidence Indexes will be released on Tuesday. Tuesday is also the start of Major League’s Baseball Playoffs. Wednesday’s reports include; ISM, Construction Spending, and Motor Vehicle Sales. You may not want to stay up to watch the late baseball games as the week continues its busy schedule with Weekly Jobless Claims and Factory Orders on Thursday. The first Friday of October brings Nonfarm Payrolls, Unemployment Rate, Trade Deficit, ISM Non-Manufacturing, and of course, many exciting high school football games!
Have a great week and thank you for the business!