US stocks soared to set fresh closing highs this week, propelling the S&P 500 above the 1,700 mark as the Fed said it will maintain its bond-buying policy in its ongoing effort to bolster the economy, dispelling concerns its equity-friendly asset-purchasing programme would be reduced.
US Q2 GDP growth and positive pace of growth in the manufacturing sector also gave investors plenty to cheer about.
Following is an economic review for the week July 29 - August 02, 2013.
Monday, July 29
US Pending Home Sales:
Contracts to purchase previously owned homes fell 0.4% in June, retreating from a more than six-year high and suggesting rising mortgage rates were starting to dampen home sales.
Tuesday, July 30
US Consumer Confidence:
Consumer confidence index dipped to 80.3 in July, down from a reading of 82.1 in June 2013. Despite the drop in July, confidence remains well above year-ago levels.
Wednesday, July 31
EU CPI Flash Estimate:
EU-harmonised index fell 1.8% in July from 0.3% in June, missing expectations of 1.6%.
Canada GDP (m/m):
Canada's economy continued its slow pace of growth in May (up 0.2% vs. estimate of 0.3%), supported by service industries like retail and wholesale trade but tempered by weaker oil and gas extraction activity.
US GDP (m/m):
US economy grew by an annualized rate of 1.7% crushing expectations of 1.1% in Q2 2013. The rise stemmed from business investments, particularly in buildings, and an upturn in exports and the civilian aircraft industry.
FOMC Meeting Minutes:
FOMC policy guidance remained unchanged while some language changes "reaffirmed" that a highly accommodative policy for rates will remain far into the future
HSBC China Manufacturing PMI:
China's manufacturing activity contracted for the third consecutive month to an eleven-month low in July. The reading came in at 47.2, down from June's final reading of 48.2. However, HSBC's PMI is in contrast with China's official PMI data, which showed signs of a slight recovery in the economy. According to official data, manufacturing PMI rose to 50.3 in July from 50.1 registered in June. The index has managed to stay in the above-50 territory for 10 straight months.
Thursday, August 01
ECB Official Bank Rate and Asset Purchase Plan (August 2013):
ECB kept its benchmark interest rate at a record low of 0.5%. ECB president Mario Draghi reiterated that rates would remain at current levels, or lower, "for an extended period of time." Separately, the BoE said it would also stay the course with its monetary policy, leaving interest rates at a record low of 0.5%, and keeping its asset purchase program unchanged at 375 billion.
US Manufacturing PMI:
US manufacturing sector reached its highest production level of the year in July as stable demand combined with slowly improving business conditions. Purchasing Managers Index (PMI) increased by 4.5%in July to 55.4%, registering higher than June's reading of 50.9%. That rise indicates that the manufacturing sector expanded for the fifth time in the first seven months of 2013, while the overall economy grew for the 50th consecutive month.
Friday, August 02
US Non-Fram Payroll:
The number of jobs outside the farming sector increased by 162K missing expectations of 184K.
US Factory Orders:
Demand for US factory goods rose in June, boosted by higher demand for aircraft, as businesses stepped up investments but at a slower pace than earlier in the spring. Total factory orders expanded 1.5% to a seasonally adjusted $496.7 billion from May. Orders have risen for four of the past five months.
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