Seeking normalcy. Stocks were generally higher last week, though some days it was hard to find any real news driving them either up or down. I heard one analyst say there has been so much trouble in the world lately, the markets are seeking normalcy. So when they get a day with no or little news, traders take it as a good sign.
Retail week. A number of retailers issued quarterly reports last week. Walmart, for example, posted a slight profit increase for the second quarter. Amazon rose on news that it will introduce a new secure credit card reader and mobile app for businesses. That announcement sent a strong signal that Amazon thinks retail is headed in a positive direction and the company intends to compete head-to-head with PayPal and Square in the credit card transaction business. Probably the best indicator we got regarding retail this week was a Commerce Department report on Wednesday saying July retail sales were virtually unchanged from June, ending five months of increases. When that report came out, most analysts called it lukewarm at best.
Jobs reports mixed. We also got some jobs news this week, and it was mixed, too. The good news, according to a report released by the Bureau of Labor Statistics, is that the number of job openings rose for the fifth straight month in June, reaching the highest level since February 2001. Job openings stood at 4.7 million on June 30, up from 4.6 million at the end of May. That’s 800,000 more jobs available today than at the beginning of the year. But the other news is that first-time claims for unemployment jumped back above 300,000, though I should note that is still a strong number, close to pre-recession levels.
Overseas. News out of Europe says the eurozone economy is stalling. The shaky economic recovery in the 18-country eurozone ground to a halt in the second quarter. The region’s powerhouse, Germany, shrank during the second quarter, as did Italy. France’s economy also was flat. That news sent European markets down on Friday, though they recovered a bit today. Also helping today’s recovery was news that Russian and Ukrainian foreign ministers met in Berlin on Sunday night.
The week ahead. It will be a slow week for economic reports, but the few we get will be worth watching. The Consumer Price Index comes out Tuesday, giving us a look at inflation. There’s some concern that the Federal Reserve’s bond-buying binge of the past two years will prove to be inflationary, so this number gets scrutinized closely each month as analysts look for signs of that. Also tomorrow, we’ll get housing starts and building permits for July. If those numbers are not strong—as they should be in the middle of summer and in the middle of an economic recovery—expect to see the markets react.