Market Perspective for June 25, 2018

Equities opened the week lower as losses in the Chinese market were followed by declines in Europe and then the United States. The Dow Jones Industrial Average bounced off its 200-day moving average.

Technology led the market lower with SPDR Technology (XLK) sliding 2.08 percent. SPDR Utilities (XLU) and Consumer Staples (XLP) rallied 1.66 and 0.50 percent. Some of this rotation may be seasonal as investors position for the second-half of the year. June was the only down month for technology in 2017.

New home sales rose to an annualized pace of 689,000 in May, beating expectations and April’s figure. Sales were 8.8 percent higher than year-ago levels. Over the past 10 years, only November 2017’s figure of 712,000 was higher. Later this week, the government will release durable goods orders, advance trade in goods and pending home sales for May. Economists forecast a 1.3-percent decline in durable goods and see the trade deficit in goods climbing to $69.2 billion. Initial claims for unemployment should remain near multi-decade lows. The final estimate of first-quarter GDP growth should match the prior 2.2 percent estimate.

Overseas data this week will include Eurozone inflation and Australian new home sales. China will release its manufacturing and service PMIs after the markets have closed on Friday.

Crude oil was steady on the day at $68 a barrel. The 10-year Treasury yield eased to 2.88 percent amid declining equities. The U.S. Dollar Index declined slightly as the euro and yen strengthened, but it gained against a broad basket of emerging-market currencies.

Homebuilder Lennar (LEN), Bed, Bath & Beyond (BBBY), General Mills (GIS), Paychex (PAYX), RiteAid (RAD), Accenture (ACN), KB Home (KBH), Nike (NKE) and Walgreen’s (WBA) will report earnings this week.


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