Economic Update 07/21/14

STOCKS ADVANCE, EVEN WITH ANXIETIES

The crash of Malaysia Airlines Flight 17 in Ukraine, a ground offensive by Israel into Gaza: these headlines gave investors pause, but M&A action and earnings reports sent stocks higher for the week. Thursday, the CBOE VIX jumped 32% to settle at 14.54, yet the S&P 500 closed just 1.2% lower. The 5-day scorecard: DJIA, +0.92% to 17,100.18; S&P 500, +0.52% to 1,978.22; NASDAQ, +0.38% to 4,432.15.

RETAIL SALES, WHOLESALE PRICES RISE IN JUNE

Overall U.S. retail sales were up 0.2% last month; the gain was 0.4% with car buying factored out. The Commerce Department revised the May gain 0.2% higher to 0.5%. After retreating 0.2% in May, the headline Producer Price Index advanced 0.4% in June; the core PPI rose 0.2%. Annually, producer prices were up 1.9%.

FEWER HOUSING STARTS LAST MONTH

The Census Bureau noted 9.3% less groundbreaking in June, plus a 4.2% retreat in building permits. Single-family starts dipped 9.0% to the slowest annualized pace since November 2012.

HOUSEHOLD SENTIMENT DIPS

July’s preliminary University of Michigan consumer sentiment index came in at 81.3, missing expectations (economists surveyed by Briefing.com forecast an 84.0 reading). The index was down 1.2 points from its final June mark.

THIS WEEK: Earnings from Netflix, Skechers, Expedia, Texas Instruments, BB&T, Twitter, Royal Caribbean, CBRE, Halliburton, Hasbro, GNC, Electronic Arts, Mitek and Chipotle arrive Monday. Tuesday offers the June CPI, June existing home sales numbers and earnings from Apple, Altria, Broadcom, Kimberly-Clark, Gannett, Ingersoll-Rand, Comcast, Coca-Cola, TripAdvisor, Lockheed Martin, The Travelers, State Street, Verizon, Alleghany Technologies, Harley-Davidson, McDonalds and Microsoft. Wednesday sees earnings from AT&T, Macerich, Northrop Grumman, Varian, Whirlpool, O’Reilly Automotive, Boeing, Biogen, Citrix, Norfolk Southern, Delta Air Lines, PepsiCo, Qualcomm, Facebook, Dow Chemical, Costco, CoreLogic and General Dynamics. Thursday, June’s new home sales report and new initial claims figures accompany earnings from Ford Motor Co., General Motors, VeriSign, DR Horton, Pulte Group, Raytheon, Union Pacific, Nucor, Hershey, Ingram Micro, Dunkin Brands, Pandora, Starbucks, Dr. Pepper Snapple, Invacare, Starwood Hotels & Resorts, VISA, Jet Blue, Eli Lilly, Under Armour, Noble Energy, Amazon, Airgas, Baidu, 3M and Southwest Airlines. Friday, a report on June durables complements quarterly results from Colgate-Palmolive, Tyco, Xerox and Stanley Black & Decker.