Weekly Economic Overview (July 22 - July 26, 2013)

Last week, Fed chairman Ben Bernanke testified twice before Congress and for the first time in weeks, discussion of the Fed's pullback from its bond-buying program did not result in violent market swings. Bernanke re-emphasized that the Fed will slow down its $85 billion a month in bond purchases, when the economic data warrants.

US markets continued to make new highs as bond yields fell and dollar weakened. Gold & oil saw pullbacks while most European Indices also closed with gains.

For the week, DOW rose 0.5%, S&P 500 added 0.7%, and NASDAQ fell 0.3%.

It's still early in the earnings season, but the overall message so far has been mixed. There have been a number of high profile tech misses, like Microsoft (NASDAQ:MSFT) , Google (NASDAQ:GOOG) , and Intel (NASDAQ:INTC) which dragged down NASDAQ last week. But, stronger-than-expected reports have spurred gains in International Business Machines (NYSE:IBM) , General Electric (NYSE:GE) and others. In addition, Wall Street banks Citigroup (NYSE:C) , Goldman Sachs (NYSE:GS) , Bank of America (NYSE:BAC) , and Morgan Stanley (NYSE:MS) have reported strong earnings.

Muni investors moved into Treasurys and funds experienced heavy outflows last week, as investors weighed the consequences of the biggest municipal bankruptcy ever. Treasury prices were lifted, and yields slipped, as investors sold municipal bonds in response to the bankruptcy filing by Detroit.

The Fed-speaking calendar is quiet this coming week, ahead of the next FOMC meeting July 30 and 31. The Fed's stimulus has played a major part in the S&P's advance so far this year. Investors now speculate earnings will be the next catalyst to push stocks higher.

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

Following is an economic overview for the week July 22 - July 26, 2013.

(All times EST)

Monday, July 22

China Manufacturing PMI rose to a six-month high in September, signaling strength in Chinese manufacturing activity — Preliminary reading came in at 51.2 vs. expectations of 50.9.

10:00 — US Existing Home Sales:

This report will present developments in existing home sales for June 2013. In May 2013 the number of homes sold rose to a seasonally adjusted annual rate of 5.18 million houses. A continuation of this trend might pressure up the US dollar.

Tuesday, July 23

08:30 — Canada Retail Sales (May 2013:

21:45 — HSBC China Flash Manufacturing PMI:

China's manufacturing sectors declined at a faster pace last month — In June 2013, Manufacturing PMI declined to 48.3 vs. 49.2 in May 2013. If the index for July indicates further signs of contraction, then the data might adversely impact commodities prices.

Wednesday, July 24

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

In May sales of new homes increased to an annual rate of 476K — a 4.8% gain (month over month). If new home sales rise in June, it may suggest the housing market continues to progress.

10:30 — Crude Oil Inventories:

EIA (Energy Information Administration) will publish its weekly report on US crude oil inventories for the week ending on July 19 2013.

Thursday, July 25

04:30 — UK Preliminary GDP Q2 2013:

This report will present the first estimate of growth rate for the British economy for Q2 2013. During Q1 2013 the British economy expanded by 0.3% (quarter to quarter). If the growth rate for Q2 rises, it could affect the monetary policy of Bank of England and also impact the British Pound.

08:30 — US Unemployment Claims:

Weekly report will refer to changes in initial jobless claims for the week ending on July 19. In the previous report jobless claims declined by 24K to reach 334K. This upcoming weekly report may affect the US dollar and consequently commodities and equities markets.

08:30 — US Core Durable Goods:

This report will pertain to developments in US orders of durable goods in the manufacturing sector for June 2013. This monthly report may indirectly indicate the changes in US demand for commodities such as oil and gas. As of May 2013, new orders of manufactured durable goods increased to $231 billion. If this report shows another increase in new orders, then it could pull up not only the US dollar but also commodities rates.

Friday, July 26

09:55 — Revised University of Michigan Consumer Sentiment:

University of Michigan will come out with its revised consumer sentiment monthly update. This survey could offer an insight to recent developments in US consumers’ sentiment

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

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