FED DELIVERS EXPECTED & UNEXPECTED NEWS
As Wall Street anticipated, the Federal Reserve raised interest rates on June 14. The Federal Open Market Committee voted 8-1 to take the benchmark interest rate north by a quarter-point to the 1.00-1.25% range. The Fed also said it would begin to reduce its $4.5 trillion balance sheet at some point "this year" by slowing reinvestments. As a start, it will let $6 billion per month in Treasury holdings run off, along with $4 billion per month in agency debt and mortgage-linked securities. This implies upward pressure on long-term interest rates.1,2
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RETAIL SALES, HEADLINE INFLATION BOTH RETREAT
The Consumer Price Index declined 0.1% in May, noted the Bureau of Labor Statistics; core consumer inflation rose 0.1%. A bigger May decline came for retail purchases - the Census Bureau said that they fell 0.3% even with car sales factored out.3
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HOUSING STARTS SLIP
The Census Bureau's new residential construction snapshot showed groundbreaking at an 8-month low, with total housing starts down 5.5% in May. Total building permits decelerated 4.9% last month to their slowest pace since April 2016.4
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GAUGE OF SENTIMENT DESCENDS
In its preliminary June edition, the University of Michigan's consumer sentiment index fell short of expectations. Economists, polled by Briefing.com, forecast a reading of 97.0 for the index, but it came in at 94.5.3
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DOW 30 OUTPACES S&P 500
Rising 0.53% in five days, the Dow Jones Industrial Average ended the week at 21,384.28. The S&P 500 made a weekly advance of 0.06% to a Friday close of 2,433.15. Tech shares kept selling off, resulting in the Nasdaq Composite's 0.90% weekly descent to a Friday settlement of 6,151.76. The Dow Jones Utility Average had the best week among consequential U.S. equity indices, rising 1.75%.5
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THIS WEEK
:
Nothing major is scheduled for Monday. Tuesday, Adobe Systems, FedEx, La-Z-Boy, Lennar, and Red Hat all present earnings. Wednesday offers May existing home sales figures and earnings announcements from CarMax, Oracle, and Winnebago. Earnings news from Accenture, Barnes & Noble, Bed Bath & Beyond, Carnival, and Sonic arrives Thursday, plus new initial jobless claims numbers. Friday, investors consider May new home sales and Q2 results from Finish Line.
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% CHANGE
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Y-T-D
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1-YR CHG
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5-YR AVG
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10-YR AVG
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DJIA
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+8.21
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+20.59
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+13.50
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+5.68
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NASDAQ
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+14.28
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+26.97
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+22.83
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+13.42
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S&P 500
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+8.68
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+17.09
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+16.24
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+5.87
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REAL YIELD
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6/16 RATE
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1 YR AGO
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5 YRS AGO
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10 YRS AGO
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10 YR TIPS
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0.49%
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0.15%
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-0.54%
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2.73%
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Sources: wsj.com, bigcharts.com, treasury.gov - 6/16/175,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
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President
Wealth Advisor
Ryan Heybeck
Wealth Advisor
Terry Maziarka
Operations Manager
847.550.6100
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WEEKLY QUOTE
"We learn by example and by direct experience because there are real limits to the adequacy of verbal instruction."
- Malcolm Gladwell
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WEEKLY TIP
Do you have a child heading off to college this fall? Financially, it may be time for his or her first credit card. One idea: have your son or daughter sign up for a basic, low-limit card through a credit union or independent bank and have the monthly statements sent to you.
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WEEKLY RIDDLE
What are you able to keep after you give it to someone?
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LAST WEEK'S ANSWERS:
Last week's riddle:
I often stand straight and tall. I can illuminate your wall or hall. If you push me, I may fall. What am I?
Last week's answer:
A candle.
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