Equity Markets Advanced Last Week

Investors finally heard what they had been waiting for after Federal Reserve Chairman Jerome Powell gave clear indications that the central bank will lower interest rates in September. Powell noted that the labor market has cooled and inflation is slowing. In an up- and-down week for stocks, each of the major benchmark indexes ended up closing higher, led by the Russell 2000. Crude oil prices rallied at the end of the week but not enough to avoid closing in the red. Typically, falling interest rates stimulate economic growth, which includes rising demand for oil. However, worldwide energy demand, particularly in China, has waned, keeping oil prices somewhat muted. Ten of the 11 market sectors closed higher, led by materials, consumer discretionary and financials. Energy ticked lower.

Existing Home Sales Increased in July

Sales of existing homes increased in July for the first time since February. Existing home sales rose 1.3% in July. Year over year, sales were down 2.5%. Total inventory sat at a 4.0-month supply. The median existing home price was $422,600 in July, down from June’s $426,900 but above the July 2023 price of $405,600. Sales of single-family homes advanced 1.4% in July but declined 1.4% from a year ago. The median existing single-family home price was $428,500 last month, down from the June estimate of $432,900 but above the July 2023 price of $411,200. As of Aug. 15, the 30-year fixed-rate mortgage averaged 6.49%, according to Freddie Mac, which was up from 6.47% one week ago but down from 7.09% a year ago.

Eye on the Week Ahead

The second release of gross domestic product for quarter two is out this week. The initial estimate showed the economy expanded at an annualized rate of 2.8%. Also out this week is the report on personal income and outlays for July, which is also a potential market mover. One of the most important parts of the report is the personal consumption expenditures price index, a measure of inflation favored by the Federal Reserve. In June, consumer prices ticked up 0.1% and rose 2.5% for the year ended in June.