Thursday’s financial news read like the sports page as beasts and fowl battled it out to further their economic agenda.
The bulls and the bears ended the day in a stalemate after attempting to push the stock market both lower and higher, in what turned out to be a range bound trading day. The Dow Jones Industrial Average closed nearly flat on Thursday, gaining 0.03 percent, while the Standard and Poor’s 500 skidded 0.13 percent lower. Only three out of the nine economic sectors finished the day in the green with consumer discretionary, financial, and utility stocks closing higher.
On the interest rate front, the hawks scored a point over the doves as July retail sales released on Thursday indicated a gain of 0.6 percent. Additionally, June’s retail sales was revised to unchanged from an initial reading of minus-0.3 percent, and May was revised to 1.2 percent from 1 percent.
The upward revisions to the May and June reports suggests that second quarter GDP may be revised higher as well. Vehicle sales were one of the strong points of the July report gaining 1.4 percent and coming close to May’s historic reading of 1.9 percent. Retail sales ex-autos gained 0.4 percent, while restaurants gained 0.7 percent for the month.
Auto and restaurants sales are expenditures that consumers can put off when times are bad. The improvement in these two areas of the economy points to the strength of the U.S. consumer, and in spite of the problems in China, will give the hawks on the Federal Reserve board the courage to vote in favor of a rate increase in September.
Resent weakness in the U.S. dollar has lifted foreign bonds this week putting them at the top of this week’s research report. The top performing bond index for the week is the S&P/Citigroup International Treasury Bond index gaining 1.63 percent over the past five trading days, while following close behind the S&P International Corporate Bond index rose 1.41 percent over the same period.
Laif Meidell, CMT, President of American Wealth Management, and Portfolio Manager of the AdvisorShares Meidell Tactical Advantage ETF (NYSE Arca: MATH)