25 Jun

Slowdown Fears Ignite after Housing and Consumer Confidence Data

WRITTEN BY Mohit Oberoi, CFA

Slowdown fears

On June 25, we got a look at new home sales and consumer confidence data. The Conference Board consumer confidence index was 121.5 in June—compared to 131.3 in May. The reading was way below analysts’ expectations and fell to the lowest level since September 2017.

Trade war

Lynn Franco, the senior director of economic indicators, said in Conference Board’s press release that “The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence. Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.”

The new home sale data also missed analysts’ estimates. The data released by the Department of Commerce showed that new home sales fell 7.8% to a seasonally adjusted annual rate of 626,000 in May—the lowest level since December 2018. However, the new home sales in April were slightly higher. New home sales haven’t taken off despite the fall in mortgage rates.

Soft economic data

On June 25, the soft economic data isn’t an isolated case. We have been getting a flurry of dismal data points. The US economy added only 75,000 non-farm jobs in May, which was below analysts’ expectations. On June 21, US IHS Markit Flash June manufacturing PMI was 50.1—compared to 50.5 in May. June’s manufacturing PMI was at the lowest level in 117 months. While the Fed has indicated its amenability to cut rates, it’s coming on the backdrop of slowing economic growth. To learn more, read Why It’s Time to Get Over Fed Mania and Look at the EconomyChinese economic data hasn’t restored any confidence either.

While the S&P 500 (SPY) is in the red on June 25, it’s near all-time highs. Apple (AAPL) and Amazon (AMZN) have gained almost 27% each in 2019 based on the closing prices on June 24. Amazon has announced its entry into professional beauty products. Apple fell sharply in January after lowering its guidance due to China concerns.

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