Stocks end mixed ahead of big reports and rising Mideast tensions

Monday, July 28, 2014 -

Stocks attempted a valiant recovery following last week’s selling, but ended mostly flat with a mixed close because of strong early selling pressure that several indexes were not able to overcome by the close.

The indexes ended the day on the opposite sides of a mostly unchanged line. While the Nasdaq edged down 5 points (-0.1%) to 4,445, the Dow crept up 22 points (+0.1%) to 16,983 and the S&P 500 inched up about a halt points (less than a tenth of a percent) to close at 1,979. The NYSE finished even more “unchanged” at +0.01% with the small cap Russell 2000 at -0.5%.

Traders continue to show a nervous sell trigger and remain cautious ahead of some potentially market-moving events later this week, with the Federal Reserve’s monetary policy announcement on Wednesday and the release of the Labor Department’s monthly jobs report on Friday likely to be the major focal points for the markets.

However, traders are also likely to keep an eye on other economic reports due out this week as well, including second quarter GDP, manufacturing activity, consumer confidence, and personal income and spending.

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More Housing Woes

We mentioned last week that this time of year is traditionally the boom time for housing construction and sales – but not this year. Today the National Association of Realtors released their report of pending home sales in the month of June, showing an unexpected drop of 1.1% (after surging up by 6% in May.

The decrease came as a surprise to economists, who had expected pending home sales to increase by another 0.5 percent. In spite of another negative housing report, stocks shrugged it off and climbed well of the early lows seen in early trading. Unfortunately, bad housing data is always going to be treated as yesterday’s news.

Lawrence Yun, NAR chief economist, said, “Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved.

However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates,” he added.

Yun went on to say that existing home sales are projected to fall another 2.8% this year despite the projection that housing prices are expected to rise between 5-6% over the next 12-18 months.

Tomorrow will give us another look at housing via the Case-Shiller 20-city Housing Price report. Prices have been going up in many places, typical of a moderate inflationary cycle. Should we see prices begin to flatten or fall off, it means that demand, i.e., sales are quickly having an effect and would not be a positive barometer for the economy.

Markets on Pause
Is it FOMC or Geopolitical?

It is pretty clear that the markets are on pause right now, as we head into the Federal Reserve’s 2-day FOMC meeting. The question might be asked whether traders are in a holding pattern looking for guidance from . . .

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