A long time 'til September: new home sales, flash PMI, etc.
U.S. indexes tumble; S&P 500 off >1%, Nasdaq down >2%
Utilities leads S&P 500 sector gainers; Comm svcs biggest loser
Euro STOXX 600 index falls ~0.6%
Dollar dips; gold, bitcoin gain, crude up >1%
U.S. 10-Year Treasury yield edges down to ~4.22%
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A LONG TIME 'TIL SEPTEMBER: NEW HOME SALES, FLASH PMI, ETC.
The Federal Reserve, which is due to convene next week for its July monetary policy meeting, has signaled that rate cuts are in the offing as soon as September.
But with indicators pointing increasingly to economic softness, is September soon enough?
The sales of freshly constructed single-family U.S. homes USHNS=ECI unexpectedly dipped 0.6% in June to 617,000 units at a seasonally adjusted annualized rate (SAAR).
That's a seven-month low.
The number fell 3.6% short of the 640,000 units SAAR analysts anticipated.
Looking closer at the Commerce Department's report, new home sales are down 7.4% from a year ago while the median home price rose 2.5% from the month prior.
At the current rate of sales, it would take 9.3 months to sell every new home on the market, up from 9.1 months in May, the highest reading since November 2022.
While the report surprised to the downside, it reflects recent weakness seen in housing starts, building permits and homebuilder sentiment.
But Nancy Vanden Houten, lead U.S. economist at Oxford Economics, sees brighter days in the second half of the year:
"We expect new home sales to improve slightly in the second half of the year, with the downward trend in mortgage rates expected to continue as Federal Reserve rate cuts get under way," Houten writes.
Speaking of mortgage rates, although the cost of financing home loans dipped last week to a near six-month low, overall mortgage demand dropped by 2.2%, according to the Mortgage Bankers Association (MBA).
The average 30-year fixed contract rate USMG=ECI shed 5 basis points to 6.82%, its coolest level since early February.
While that was enough to prompt a 0.3% uptick in refi applications USMGR=ECI, demand for loans to purchase homes USMGPI=ECI - considered among the more forward housing market indicators - plunged by 4.0%.
"Purchase applications decreased as ongoing affordability challenges persist with rates at their current levels and with home-price appreciation still strong in many markets," writes Joel Kan, MBA’s deputy chief economist.
The 30-year fixed contract rate is now 5 bps cooler than it was the same week last year. Over that same time period, refi demand has jumped 38.3% while purchase applications are off 15.3%.
Switching gears, S&P Global provided its preliminary "flash" purchasing managers' indexes (PMI) for the manufacturing USMPMP=ECI and services sectors USMPSP=ECI.
The bad news comes from the manufacturing side, which dipped 2.1 points, thereby landing the index in contraction territory for the first time since December.
Services, on the other hand, unexpectedly accelerated its expansion, rising 0.7 points to an even 56.
The level of 50 is the line dividing monthly contraction and expansion.
"The flash PMI data signal a 'Goldilocks' scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates," says Chris Williamson, chief business economist at S&P Global Market.
"From the output perspective, growth has become worryingly skewed, with manufacturing slipping back into contraction as the service sector gains further strength."
Finally, the indefatigable Commerce Department also released its advance take on the goods trade balance USGBAL=ECI and wholesale inventories USAWIN=ECI for June.
The goods trade balance showed the gap between exported and imported merchandise narrowing by 2.5% to $96.84 billion, due to a welcome and unexpected 2.5% jump in exports, which offset a 0.7% uptick in imports.
Even so, international trade is shaping up to be a drag on U.S. GDP for the second consecutive quarter.
"The shortfall between exports and imports has been the largest since 2022 in each of the last three months," says Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "Q2 imports were higher than the Q1 average, while exports were weaker. The data continue to show strong demand for imports and a softer trend in exports for now and modest increases in inventories of unsold goods."
Wholesale inventories grew by 0.2%, which was a deceleration from May's 0.6% increase.
(Stephen Culp)
*****
FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
WALL STREET TURNS RED WITH ALPHABET, TESLA RESULTS WEIGHING - CLICK HERE
NASDAQ COMPOSITE: 50-DAY MOVING AVERAGE MAY BE A MAGNET - CLICK HERE
EURO ZONE RECOVERY HITS THE SKIDS - CLICK HERE
STOXX FACES A STEEPENING WALL OF DEBT MATURITIES - CLICK HERE
EUROPEAN STOCKS DROP, LUXURY LAGS - CLICK HERE
EUROPEAN FUTURES SLIP ON HEAVY EARNINGS DAY - CLICK HERE
LACKLUSTRE EARNINGS KEEP INVESTORS JITTERY - CLICK HERE
Wall Street indexes fall https://tmsnrt.rs/3SmlPuH
New home sales https://reut.rs/4bRtFmY
Flash PMI https://reut.rs/3yiPvC0
Advance goods trade balance https://reut.rs/3LEdgYq
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