Market Perspective for June 26, 2017

Equities opened the week near their all-time highs and both the S&P 500 and Dow Jones Industrial Average closed higher on Monday. The Nasdaq lost 0.29 percent on the day.

Durable goods orders fell 1.1 percent in May, close to the -0.8 percent estimate. The Case-Schiller home price index for April and pending home sales in May will be released later in the week, and the third and final estimate of first-quarter GDP will be out on Thursday. Economists expect it will match the second estimate of 1.2 percent growth. Core PCE inflation for May and personal spending data will be out on Friday. Forecasts call for 0.1 percent inflation and a 0.1-percent rise in spending.

Both the Conference Board and University of Michigan consumer confidence surveys for June will be out this week. Analysts anticipate a slight drop in the Conference board report, while the Michigan data is expected to remain steady.
Janet Yellen will speak on the global economy on Tuesday. It will be her first major speech since the June rate hike. As of today, speculators in the futures market don’t expect another rate hike until March 2018.

The 10-year Treasury yield edged lower on Monday. Crude oil climbed above $43 on Monday, but remains under pressure. UBS reported potential financial difficulty for oil companies if prices consistently fall to $40 or lower.

KB Home (KBH) will report earnings on Tuesday. Analysts are looking for 26 cents-per-share, a 53 percent increase versus a year ago. New home sales were up strongly in May. The median home price jumped as well as wealthier buyers dominated the market. That should benefit builders with high-end offerings, such as KBH.

Monsanto (MON), General Mills (GIS) and Paychex (PAYX) are scheduled to report earnings on Wednesday. Monsanto is expected to report a decline from last year with earnings of $1.74 per-share. Consensus estimates call for 71 cents in earnings at General Mills and 53 cents at Paychex.

Nike (NKE) and Walgreens (WBA) announce earnings on Thursday. Nike is expected to deliver 49 cents per share, same as a year ago. Analysts forecast $1.31 per share at Walgreens. The bigger news for Walgreens is the upcoming Federal Trade Commission vote on its merger with Rite-Aid (RAD). The FTC must make a ruling by July 7.

Chipmaker Micron Technology (MU) also reports on Thursday. The company lost 8 cents per share in the year ago quarter, but is expected to have earned $1.37 in the most recent quarter.

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