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Overview: Last week’s economic releases—housing market takes center stage

Overview: Last week’s economic releases—housing market takes center stage (Part 1 of 7)

Why the housing market rebound dominates economic data releases

Economic releases for the week ending May 23

Consumption, housing, and manufacturing indicators dominated the economic releases last week. Although the prognosis for economic growth was mixed, the S&P 500 Index (SPY) reached an all-time record high of 1900.53 on Friday, based on the favorable housing market data.

Part 1.1Enlarge Graph
Housing market upswing

Major housing market releases last week, included existing and new home sales data for the month of April, which released on Thursday and Friday, respectively. Both existing and new home sales were up in April—suggesting the housing market might be coming out of hibernation after an unusually severe winter. We’ve covered the key takeaways of these housing releases in the fourth and fifth articles of this series.

Positive sales trends in the housing market are likely to benefit homebuilders like D.R. Horton (DHI) and Toll Brothers (TOL). Investors can invest in DHI and TOL through the iShares U.S. Home Construction ETF (ITB), which tracks the performance of the Dow Jones U.S. Select Home Construction Index. ITB invests in homebuilders and provides a good representation of the home construction sector of the U.S. equity market.

Composite economic indicators

The Chicago Fed’s National Activity Index (CFNAI), the Conference Board’s Leading Economic Indicators (or LEI) Index, and the Kansas City Fed’s Manufacturing Survey Index, all released on Thursday, May 22. The CFNAI, which covers economy-wide trends, implied that the rate of economic growth was slowing. The LEI, which marks turning points in business cycles, indicated that the economy was on the growth trajectory. The Kansas City Fed’s manufacturing survey also painted an upbeat picture, recording strong gains in production, new orders, and employment. We’ll be discussing all these indicators in greater detail in the following sections.

Consumer-related releases

The weekly Bloomberg Consumer Comfort Index (or CCI) was released on Thursday. According to the CCI, consumer confidence dropped for the week of March 16, with the overall U.S. economic outlook falling to a 7-month low. Consumer sentiment dropped for the third consecutive week, as higher food and energy prices took their toll on household budgets. Lower consumer sentiment and economic uncertainty usually implies higher demand for safe haven assets like U.S. Treasuries (TLT).

The weekly retail sales indices of ICSC-Goldman Store Sales and Johnson Redbook were also released on Tuesday. We’ve covered these in a separate series, Must-know: The primary movers and shakers in this quarter’s retail releases    

The next section of this series will cover the Conference Board’s LEI report that released on Thursday, May 22. Please read on.

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