(As of 7:30 am pacific)
Stocks drifted lower in early trading as a slew of economic
reports gave investors time to weigh the health of the overall economy ahead of
this week’s central bank meetings. This
morning the Commerce Dept. reported that personal spending for the month of June
fell 0.1%, while May personal spending was revised downward to a 0.1% decline. It was the first time since early 2009 that
personal spending declined for 2 consecutive months, suggesting a slowdown in
economic growth. On a positive note, data
continues to support a slight recovery in the housing market with a report
showing today that home prices rose 2.2% on the month for the 2nd
straight month of increases. Also, a
report out of Chicago, the Chicago PMI, showed the manufacturing gauge rising
ahead of expectations. Today, kicks off
a 2 day meeting at the Federal Reserve where officials will discuss potential
policy actions to help stimulate growth.
Economists do not expect the Fed to conduct any new asset purchase
programs, or QE3, until September, however it is expected that the Fed will
announce extending its plan to keep interest rates at near record lows through
mid 2015, a year longer than previously announced. Last month the Fed announced it will extend
its program called Operation Twist, a strategy that has brought 30 yr. mortgage
rates to historic lows. In Europe, it’s
a similar story today as investors are anxiously awaiting Thursday’s European
Central Bank (ECB) meeting. Stocks were
down on negative earnings reports. Asian
markets were mixed as India’s Reserve Bank announced its cutting its GDP forecast
for this current fiscal year to 6.5% growth from previously forecasted 7.3%
growth. Commodity prices were mixed with
oil and gold down slightly. The US
dollar was also mixed and volatility was up slightly. We expect a quiet day with the markets
looking for direction on clues from Fed meeting this week.
