The third week in June was another consequential one despite the markets being closed for the Juneteenth holiday. There were several scheduled news releases that provided volatility to the market such as the release of retail sales and unemployment claims figures. The Federal Reserve made its interest rate decision for June and also made some comments about how it might proceed in terms of long-term monetary policy.
On Tuesday, retail sales data was made public, and in May, retail sales were down 0.9 percent overall while core retail sales were down 0.3 percent. It was believed that overall retail sales would be down 0.5 percent in May while core retail sales were expected to rise by 0.2 percent. April retail sales were revised downward to show that sales were down 0.1 percent while core retail sales were flat.
On Wednesday morning, the unemployment claims for the past week was made public. Over the last seven days, there were 245,000 requests for benefits, roughly in line with expectations. That afternoon, the Federal Reserve opted to keep interest rates where they were, which was a range of 4.25 percent to 4.5 percent.
Fed Chair Jerome has said that tariffs might lead to higher prices in the future, and that keeping rates where they are gives the Fed more flexibility to take action if that occurs. One voting member of the FOMC said that the Fed could possibly be in position to cut rates in July.
Poor retail sales numbers and other data have hinted to the possibility that the American consumer may be in a vulnerable state, which could force the Fed to ease policy. However, there is no way to know what the Fed is going to do until the next meeting roughly 30 days from now.
On Friday, the last piece of important news came out in the form of the Philadelphia Fed Manufacturing Index. It came in at negative 4 compared to an expected negative 1.7.
The S&P 500 was down 38 points this week to close at 5,967 at the end of trading Friday. The market had climbed as high as 6,046 on Monday before reversing and falling to a weekly low of 5,959 on Friday morning. After the 0.64 percent loss this week, the index is currently up 0.39 percent over the past month.
Like the S&P, the Dow was also lower finishing down 276 points over the past five trading days to finish at 42,206 on Friday. Over the past five days, the market made a high of 42,698 and a low of 42,130. The high of the week came on Monday while the low came on Wednesday.
As with the other two major indexes, the Nasdaq was largely constrained within a trading range this week. It fell 42 points to close at 19,447 at the close of trading on Friday. Over the past five days, the market made a high of 19,716 and a low of 19,408. The high of the week occurred on Monday while the low occurred on Friday.
In international news, Switzerland announced on Thursday morning that it was cutting its key interest rate to 0 percent from .25 percent. In addition, Great Britain announced later that day that it would keep that nation’s key interest rate at 4.25 percent. Early Friday, Great Britain announced that retail sales in the nation had dropped by 2.7 percent in May. On Monday, Japan announced that it would also keep its key interest rate unchanged at .5 percent.
The upcoming week will be another interesting one for market participants as several news releases are on the schedule. On Monday, the Flash Services PMI and Flash Manufacturing PMI will be made public. Jerome Powell is expected to give testimony on Tuesday and Wednesday. The Core PCE Index will be out on Friday morning, which is the Fed’s preferred inflation gauge. It’s expected inflation increased by .1 percent in May.