SPY•Main US indexes modestly green; Nasdaq out front, up ~0.5%
Tech leads S&P sector gainers; Cons staples weakest group
Euro STOXX 600 index up ~0.4%
Dollar, gold slip; bitcoin edges up; US crude falls ~3%
US 10-year Treasury yield falls to ~4.65%
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In other housing news, home prices in major U.S. cities heated up in June.
The Case-Shiller 20-City Composite USSHPQ=ECI rose by 0.2%, slightly better than the 0.1% gain economists predicted. Year-on-year, the composite increased 2.1%, notably warmer than May's 1.6% reading.
Despite the upside surprise, home price growth fell in real terms—rising at a slower pace than broader inflation—for the 13th month in a row.
"While home prices continue to decline in real terms, lower inflation and firmer nominal home price growth in June helped slow that pace of erosion," writes Rebecca Kaufman, associate director of commodities at S&P Dow Jones Indices.
"Seasonal factors continue to support monthly price growth," Kaufman adds. "June typically falls near the peak of the homebuying season, price appreciation often moderates and market activity cools in the months ahead."
Indeed, among the cities in the composite, Chicago and New York again led the year-over-year gainers, rising 6.9% and 4.8%, respectively. On the other end of the scale, home prices in Seattle and Las Vegas were down between 1.9% and 2.0% from last year.
(Stephen Culp)
Crossing the street to the housing market, the sales of freshly constructed single-family U.S. homes USHNS=ECI fell more than expected in July, dropping 10.5% to 607,000 units at a seasonally adjusted annualized rate (SAAR), according to the Commerce Department.
That's the biggest monthly drop since January, and lands 2.1% south of the 620,000 units SAAR analysts predicted.
The number reverses June's upwardly revised 7.6% gain, and agrees with the 1.7% decline in sales of pre-owned homes in July, as reported by the National Association of Realtors earlier this month.
Regionally, new home sales in the Midwest tumbled 42.7%, and in the South they declined an even 13.0%. This was mitigated by an impressive 30.3% jump in the Northeast and a 6.2% gain in the West.
At July's sales rate, it would take 9.6 months to sell every new single-family home on the market, up from 8.5 months in June.
A decreasing population due to the immigration crackdown, a 30-year fixed mortgage rate that has hovered north of 6% for four years, and record home prices are making the prospect of home ownership sound increasingly like mere fantasy, particularly for would-be first-time buyers.
Tuesday's economic data offered generally downbeat news, unless you happen to own a home in Chicago.
But first, the mood of the American consumer, whose spending accounts for about 70% of the U.S. economy, has unexpectedly deteriorated this month, according to the Conference Board (CB).
CB's August consumer confidence index USCONC=ECI landed at 89.4, or 0.8 points south of both consensus and July's downwardly revised reading.
Digging deeper, survey participants' assessment of present conditions actually brightened, rising by 5.9%. But near-term expectations were 7.8% gloomier.
"Consumers’ write-in responses on factors affecting the economy were slightly more pessimistic," writes Dana Peterson, CB's chief economist. "References to prices in general—and oil and gas specifically—remain elevated. Comments about war/conflict, food/groceries, trade, and jobs rose in August.”
A dark cloud on the horizon for data geeks: a large, prolonged gap between the present situation and expectations—as seen in the graphic below—is often a harbinger of recession. So this month's widening of the gulf between the two increases the odds of a near-term economic downturn:
“Perceptions of the current labor market improved, reversing three months of moderate decline," Peterson adds.
Indeed, the longer trend of weakening jobs confidence could be a sign that workers are in danger of being discouraged right out of the labor force.
July's employment report showed the labor market participation rate dipped to 61.4%, the lowest since February 2021, when the economy was clawing its way out of the COVID abyss. Excluding the pandemic, you'd have to go back to 1976 to find a lower participation rate.
So any uptick in jobs confidence is a welcome development.
