Weekly Economic Overview (August 19 - 23, 2013)


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The US stock market caught a summer cold last week after weaker-than-expected earnings and better-than-expected data on jobs and housing, brought the bears back in action after almost a two month-long snooze.

Consumer and technology stocks were among the biggest decliners after Wal-Mart(NYSE:WMT) shares fell on a surprise decline in quarterly same-store sales and Cisco Systems (NASDAQ:CSCO) shares dropped after the network equipment maker provided weak guidance and announced it was cutting 4,000 jobs. While majority of tech stocks ended in the red, price action in Apple (NASDAQ:AAPL) , gave lift to the spirits of Apple (NASDAQ:AAPL) investors — Shares soared approximately 11% for the week, after activist investor Carl Icahn tweeted that he owns a big stake in the company, which he believes to be "extremely undervalued".

For the week, DOW fell 2.23%, S&P 500 slumped 2.1%, and NASDAQ dropped 1.57%.

Investors took notice of an improved outlook in Europe last week — it was reported that EU GDP has risen to 1.2%, the first positive-territory reading since late 2011. Investors have been looking for signs of a rebound in Eurozone stock markets as they had been badly lagging the US for the first half of the year.

This upcoming week, data on Existing Home Sales and New Home Sales will be on focus to determine signs of a bottom in homebuilding stocks that have sharply declined since May 2013. Release of minutes from the Federal Reserve would also be watched closely to determine when the US central bank will start withdrawal of its monetary stimulus.

Following are Sentiment charts for S&P 500 (NYSE:SPY), DOW Jones, and NASDAQ (NASDAQ:QQQ).

Following is an economic overview for the week August 19 - August 23, 2013.

(All times EST)

Wednesday, August 21

10:00 — US Existing Home Sales:

This report will present developments in existing home sales for July 2013. In June 2013, home sales declined to a seasonally adjusted annual rate of 5.08 million houses missing forecasts for 5.27 million. If the declining trend persists, the US dollar and housing stocks may get adversely impacted.

10:30 — UCrude Oil Inventories:

EIA (Energy Information Administration) will publish its weekly report on US oil and petroleum inventories for the week ended on August 17 2013.

14:00 — FOMC Meeting Minutes:

Considering the slow growth in the job market, low inflation, and moderate signs of growth in other facets of the economy, the Fed is expected to keep its monetary policy unchanged.

21:45 — HSBC Flash Manufacturing PMI:

In July 2013, Manufacturing PMI fell to 47.7 from 48.3 in June 2012, indicating contraction in the Chinese manufacturing sector. If the index continues to decline, major commodities prices may get adversely impacted.

Thursday, August 22

08:30 — Canada Retail Sales (m/m):

This report will present changes in retails sales for June 2013. In May 2013, retails sales increased by 1.2%, well above consensus estimates of a rise by 0.1%.

08:30 — US Unemployment Claims:

Weekly report will refer to changes in initial jobless claims for the week ending on August 16. In the previous report jobless claims decreased by 15K to reach 335K. This upcoming weekly report may affect the US dollar and consequently commodities and equities markets.

Friday, August 23

04:30 — Second Estimate UK GDP:

This report will show the revised estimate for Q2 2013 GDP growth. In the preliminary estimate, Q2 GDP expanded by 0.6%. Any upside revisions may positively impact the British Pound.

08:30 — Canada Consumer Price Index:

This report will refer to the Consumer Price Index (controlling the volatile components such as energy, fruit and vegetables) for July 2013. In June, the core CPI declined by 0.2%. This upcoming report might affect the Canadian dollar, which is also strongly linked with crude oil prices.

10:00 — US New Home Sales (July 2013):

In June 2013, new home sales increased to an annual rate of 497K — 8.3% gain (m/m). If the trend continues, it may suggest the housing market in the US continues to improve which may positively affect the US dollar and housing stocks.



This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Economy , Business , US Markets
Referenced Stocks: AAPL , CSCO , WMT

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