Economy Watch: Existing Home Sales Drop Slightly
Existing U.S. home sales dropped by 1.5 percent month-over-month in May, according to the National Association of Realtors.
NAR also reported that the national housing inventory at the end of May slipped 0.4 percent to 2.49 million existing homes available for sale, which represents a 6.6-month supply, according to the organization’s reckoning. There was a 6.5-month supply in April. Inventory decreased 20.4 percent year-over-year in May.
The ever-optimistic NAR chief economist Lawrence Yun chalked the downtick in sales to inventory issues. “The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand,” he noted in a press statement. “The normal seasonal upturn in inventory did not occur this spring.”
Moody’s downgrades 15 major banks
A slew of downgrades by Moody’s was rumored all day on Thursday, but the ratings agency didn’t make its move until the trading day was over in North America. The downgrades involved 15 of the world’s largest banks, with their credit ratings being lowered by one, two or, in one case, three notches. Credit Suisse had the dubious distinction of winning the only three-notch downgrade of the day, coming a week after the Swiss central bank issued a warning about the bank’s weak capital levels.
Morgan Stanley had its long-term debt downgraded by two notches, despite expectations of a three-notch hit. Other international financial institutions downgraded by two notches by Moody’s on Thursday included Barclays, BNP Paribas, Credit Agricole, Citigroup, Goldman Sachs Group, JPMorgan Chase and Royal Bank of Canada.
“All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” Moody’s Global Banking managing director Greg Bauer said in a press statement. On the whole, investors didn’t seem impressed by the downgrades, with bank stocks among the few classes of stocks that did well on Thursday.
Unemployment claims edge down
For the week ending ending June 16, initial unemployment claims were 387,000, a decrease of 2,000 from the previous week’s revised figure of 389,000, according to the U.S. Department of Labor on Thursday. The less volatile four-week moving average was up by 3,500 to 386,250, the highest that figure has been in 2012. Previously, the four-week average has been floating between 363,000 and 384,000 since January.
Separately, the Conference Board reported on Thursday that its index of leading economic indicators rose 0.3 percent in May. “Economic data in general reflect a U.S. economy that is growing modestly, neither losing nor gaining momentum,” posited Ken Goldstein, an economist at the organization.
Wall Street was playing close attention to the rumors of bank downgrades on Thursday, and investors got nervous, bringing the indices down the most in one day all year. The Dow Jones Industrial Average lost 250.82 points, or 1.96 percent, while the S&P 500 and the Nasdaq were down 2.23 percent and 2.44 percent, respectively.
