U.S. Market Weekly Summary – Week Ending 06.22.2018

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The Standard & Poor’s 500 index fell 0.9% this week as industrials and materials stocks led the market lower amid continued trade worries.

The market benchmark ended the week at 2,754.88, down from last week’s closing level of 2,779.42. The decline came as investors continued to fret over the potential impacts of a trade war amid a request earlier this week by US President Donald Trump for a new list of $200 billion in Chinese goods to be hit with tariffs.

The industrial sector posted the largest percentage drop of the week, down 3.4%, followed by a 2.1% decline in materials. A number of other sectors followed suit in the red, but four sectors bucked the downward trend: utilities and real estate, up 2.5% each, followed by a 1.5% gain in energy and a 0.1% edge up in consumer staples.

The industrial sector’s decliners included FedEx (FDX), whose shares tumbled 8.6% this week despite the package-shipping company’s report of higher-than-expected fiscal Q4 results as the midpoint of its guidance range for fiscal 2019 adjusted earnings per share was below the Street view at the time. The company sees fiscal 2019 adjusted EPS of $17.00 to $17.60, compared with a Street mean estimate ahead of the report for $17.47; analysts reduced their mean estimate to $17.39 after the guidance was released.

The drop in the materials sector came as the prices of industrials metals such as copper slid on the trade concerns. Shares of copper-and-gold mining company Freeport-McMoRan slipped 2.7% this week.

On the upside, the utilities sector’s gainers included Southern (SO), whose shares rose 3.1% as Citigroup upgraded its investment rating on the stock to neutral from sell.

The energy sector’s gains came as oil futures climbed, boosted by reports of the Organization of the Petroleum Exporting Countries agreeing to a smaller-than-anticipated increase in oil output. Among the gainers, Chevron (CVX) shares climbed 0.9% this week while Exxon Mobil (XOM) also added 0.9%.

State Quarterly Personal Income, 1st quarter 2018

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State personal income increased 4.3 percent at an annual rate in the first quarter of 2018, after increasing 4.7 percent in the fourth quarter of 2017, according to estimates released today by the Bureau of Economic Analysis.

Personal income increased in all states and the District of Columbia.

The percent change in personal income across all states ranged from 7.4 percent in Washington to 2.0 percent in Idaho.

U.S. International Transactions, 1st quarter 2018 and annual update

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The U.S. current-account deficit increased to $124.1 billion (preliminary) in the first quarter of 2018 from $116.1 billion (revised) in the fourth quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA).

The deficit was 2.5 percent of current-dollar gross domestic product (GDP) in the first quarter, up from 2.4 percent in the fourth quarter.

U.S. housing starts jumped 5 pct. in May off Midwest building

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A surge of construction in the Midwest drove U.S. housing starts up 5 percent in May from the prior month.

The Commerce Department said Wednesday that housing starts rose to a seasonally adjusted annual rate of 1.35 million, the strongest pace since July 2007. All of May’s construction gains came from a 62 percent jump in the Midwest, while building slumped in the Northeast, South and West. Home construction can be volatile on a monthly basis, so May’s gains may be a blip rather than a trend.

The solid job market has helped to boost demand for new homes. Housing starts have risen 11 percent so far this year, with gains for both single family houses and apartment buildings. Permits to build tumbled 4.6 percent in May, but permits are running 8.9 percent higher year-to-date.

Still, builders are concerned that tariffs announced by President Donald Trump that could affect steel, aluminum and lumber would make construction much more expensive, possibly limiting how many properties are built.

The risk of trade war with Canada caused builder confidence to sink this month. The National Association of Home Builders/Wells Fargo builder sentiment index released Monday fell two points to 68 this month. Any reading above 50 signals expansion.

The home builder association said higher lumber prices have increased the price of a new single-family home by $9,000 since January 2017.

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