Dow climbed 212, advancers over decliners about 3-1 & NAZ added 62. The MLP index fluctuated in the 185s & the REIT index gained 3 to 467 (another record). Junk bond funds were mixed & Treasuries saw selling. Oil went up to 63 & gold jumped 26 to 1826.
AMJ (Alerian MLP index tracking fund)
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The US economy grew less than expected in the 3 months thru Jun as
supply-chain disruptions & labor shortages slowed the pace of economic
activity while the country reopened from its
COVID-19 lockdowns. GDP – the broadest measure of economic performance – grew
at a 6.5% annual rate during Q2, according to an advance
estimate by the Commerce Dept. The forecast was expecting 8.5% growth. Q1 GDP was
revised down to 6.3% from its previous reading of 6.4%. The
above-trend growth in Q2 reflected the continued
reopening of the US economy & gov support via business loans,
stimulus checks & extended unemployment benefits. Businesses have since the economy reopened navigated supply-chain
issues caused by factories shutting down to help slow the spread of
COVID-19. They have also struggled to find workers as extended
unemployment benefits have encouraged many to stay home. The
issues have combined to lift core personal consumption expenditures, the
Federal Reserve's preferred inflation measure, to 3.4% annual growth,
the fastest since 1992.
GDP falls far short of expectations as Biden's economic recovery stumbles
Pending sales of existing homes in Jun as measured by signed contracts fell 1.9% from May, according to the National Association of Realtors. Sales were also down 1.9% compared with Jun 2020. Pending sales are a forward-looking indicator of closed sales in 1-2 months. “Pending sales have seesawed since January, indicating a turning point for the market,” said Lawrence Yun, Realtors' chief economist. “Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat.” Prices in May were up nearly 17% compared with May 2020, according to the latest reading from the S&P Case-Shiller national home price index. That is the largest annual gain on record. Prices in Jun could very well top that, given the still tight supply of homes for sale, especially on the low end of the market. Prices are high because inventory has been so low. But that is starting to change. The number of newly listed homes in Jun rose 5.5% compared with Jun 2020, according to Realtor.com. “With prices at record highs and mortgage rates still hovering near record lows, sellers are recognizing the favorable conditions,” said George Ratiu, senior economist at Realtor.com. Mortgage rates moved slightly higher at the start of Jun, which only added to affordability issues. Rates then came down again by the end of the month. Yun is predicting mortgage rates will rise more steadily toward the end of the year. “This rise will soften demand and cool price appreciation,” he added. Sales of newly built homes, which are counted by signed contracts, also fell in Jun, down 6% for the month & nearly 20% year over year, according to the US Census.
Pending home sales drop in June — more evidence of a housing turnaround
The Senate voted to advance a bipartisan infrastructure plan, a critical step toward Dems passing their sweeping economic agenda. Senators voted 67-32 to push the bill forward; 17 Reps & all 50 Dems voted yes. The vote opens the process to debate & amend the proposal, which would put $550B into transportation, broadband & utilities. While senators who backed the procedural motion could oppose a final package, this votes bodes well for its chances of passage. “Despite the popularity of it and the need for it Washington hasn’t been able to get it done,” said GOP Sen Rob Portman, the lead GOP negotiator of the deal, after the infrastructure vote. “This time we’re going to get it done.” The deal came together earlier in the day after Dem & Rep negotiators resolved disputes over transit & broadband funding, among other issues. The plan was trimmed from the $579B in new spending senators & the White House agreed to last month — a sum many Dems considered paltry. Senators have not released final legislation.
Senate votes to advance bipartisan infrastructure bill as Democrats forge ahead with economic agenda
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