Housing Market Dominates Headlines
After halting four weekly advances in the stock market on Friday, investors are rapidly extending market losses in pre-session trading Monday morning. Dow futures are trading 185 points lower at 9,136, and S&P 500 futures are 2% down, or 22 points lower at 984. Of course, this is all great news for the fixed income market.
This week could confirm that broad-based stabilization has, in fact, taken hold in the economy, or, some downward surprises could indicate that stocks were too optimistic as the benchmark S&P 500 advanced nearly 50% from early March to last week.
Carl Weinberg, chief economist at HFE, is of the school believing that recovery will be a slow process. “The global economy may have stopped contracting, but the declines in GDP to date have left economies severely depressed,” he said a weekly note. “Higher interest rates will further hinder the recovery from depression, and rising prices will erode consumers’ real incomes.”
Many analysts believe the economy cannot recovery until the housing market, which played the prime mover in the financial crisis, has recovered. Whether that’s the case will become clearer this week, with Housing Starts & Building Permits scheduled for Tuesday, Existing Home Sales slated for Friday, and several minor housing reports scattered throughout the rest of the week.
Real estate and other data are expected to be mostly positive this week. Aside from data, earnings reports from retail stores could also shake markets, as Home Depot, Sears and Target all report for the second quarter this week.
In the headlines this morning is news that Japan has exited recession after five quarters. Second quarter GDP expanded 0.9%. Though that was actually a bit below the consensus call, it’s far better than the 3.1% contraction in Q1, revised up from a preliminary reading of -3.8%.
Key Releases This Week:
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