Weekly Market Commentary July 15th to July 19th 2024

U.S. Retail Sales were flat in June, exceeding expectations of a decline of 0.3%. Sales excluding autos and gas came in at 0.8%, far above estimates of 0.2%. Non-store online sales rose 1.9% (vs. 1.1% prior) and were a meaningful contributor to the headline print. Data from the prior month was revised higher as well. Despite the recent uptick, year-to-date sales in the control group (directly factored into GDP) are growing more slowly than long-term averages.

Homebuilder confidence fell for the third consecutive month in July, as elevated rates deter new development and construction loans. The latest reading is the lowest since Dec 2023. Housing Starts in June however, increased 3.0%, driven by a 19.6% surge in multifamily construction. Starts of single-family homes continue to struggle, falling to an eight-month low. Building Permits also beat expectations, higher by 3.4%.

U.S. manufacturing conditions have been improving. Industrial Production posted the largest back-to-back monthly gain since 2021. Higher factory production was led by consumer goods and Capacity Utilization Rates were the highest since September 2023.

The S&P 500 closed the week lower by 2.0% to 5,505. In a rotation away from high-flying large cap technology stocks, the Nasdaq Composite sold off by 3.6%. The more cyclically oriented Dow Jones Industrial Average, however, advanced further into record high territory and closed the week higher by 0.7%. After trading in a range of 4.25 to 4.15%, the yield on the 10-Year U.S. Treasury closed the week at 4.23%.

Key economic releases next week include an initial estimate of second quarter GDP, Durable Goods, and Existing and New Home Sales along with Consumer Sentiment.