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Snoqualmie Pass Real Estate, Mortgage, and Economy 8/30/10

Here is the Snoqualmie Pass Real Estate Report for August 30, 2010.

INFO THAT HITS US WHERE WE LIVE  You can’t sugar-coat last week’s housing reports, but they don’t necessarily foretell a “double-dip” recession in real estate. July Existing Homes Sales were off 27.2%, at an annual rate of 3.83 million, well below the expected 4.65 million rate. The months’ supply went from 8.9 to 12.5 and there was also a rise in inventories. The truth is, the expectation was a bit high. An annual rate below 4 million for July makes sense, given that the home buyer tax credit was slated to end in June.Getting an $8,000 check from the government certainly encouraged lots of people to move up their purchases. For the same reason, experts also predict weak August numbers, but after that, some feel existing home sales will start heading back to about 5.5 million units annually. For the year, inventories are down 2.0%, while the median price is UP 0.7%.

July New Home Sales were down 12.4% to a 276,000 annual rate, below the expected 330,000 pace. The months’ supply went to 9.1, but inventories were unchanged at 210,000, their lowest level in decades. Part of the sales drop was because the now expired tax credit required a signed contract by April 30. New homes sales are counted at contract and the April number hit 414,000. In the three months since then, sales are averaging only 291,000 annually. New home buyers may also be going for recently built homes, now at attractive prices. New homes, typically about 15% of sales, are now around 7%!

The Mortgage Bankers Association’s weekly survey showed purchase loan applications UP 1% from the week before, refinance applications UP 6%, and mortgage rates at record low levels. 

 THANK YOU, BEN… Ben, of course, is Chairman Bernanke, head of the Federal Reserve. Friday he said the Fed has no triggers set for further easing of monetary policy and he sees continued economic growth. These comments at a central bank summit in Jackson Hole, Wyoming, were all the Wall Street bulls needed to hear to push stocks up Friday after a week of declines. The big rally wasn’t quite big enough, though, as the three major indexes still ended down for the week just a tad.

There were other decent economic signs. The August Richmond Fed index of manufacturing in the mid-Atlantic region was +11, down from July’s +16, but higher than expected and showing that the factory sector still continues its strong growth. Durable Goods orders were UP 0.3% for July, but disappointed because 3.0% was forecast. Nonetheless, Durable Goods are UP 9.3% over a year ago. Initial unemployment claims dropped by 31,000 to 473,000 for the week, a nice sign after last week’s surge. Continuing claims also fell, by 62,000 to 4.46 million.

Friday featured two big news items. First, Q2 GDP was revised lower, from 2.4% to 1.6% growth, but this was measurably better than what many economists had expected and significant parts of the report showed improvement. Personal spending and business Investment were both revised UP, with domestic purchases UP 4.3%. Corporate profits continued their strong growth in Q2, UP at a 20% annual rate and UP 39% over a year ago. Then we had Chairman Bernanke reassuring investors he expects growth to pick up in 2011 and the Fed is ready to use “unconventional measures if it proves necessary.” Again, thank you, Ben!

For the week, the Dow ended down 0.6%, to 10150.65; the S&P 500 was down 0.7%, to 1064.59; and the Nasdaq was down 1.2%, to 2153.63.

Snoqualmie Pass Real Estate, Mortgage, and Economy 8/23/10

Here is the Snoqualmie Pass Real Estate Report for August 23, 2010

Housing starts were UP 1.7% for July to a 546,000 annual pace, but this was below expectations and all the gain came from a big boost in multi-family starts. Single-family starts were off 4.2%, declining for the third straight month.  Looking at the market further out, we saw new building permits down 3.1% for July to a 565,000 annual rate.

There is no denying that these reports reflect a softness in the home building market.  But some experts see the data as part of a temporary housing market hangover following the expiration of the tax credits.  You may remember how the government cash-for-clunkers program pushed a ton of auto sales into July and August last year.  This resulted in a dip in sales immediately afterwards. But that was followed by a pretty nice recovery, with auto sales now up 20% from the first half of 2009. Stay tuned for housing.

The Mortgage Bankers Association’s weekly survey showed purchase loan applications down from the week before, but refinance applications soared, equaling their May 2009 level. Mortgage rates, of course, continue at historically low levels. 

 NOT SO BAD… Really???!!! Listening to the pundits who were fixated on last week’s negative economic news, you might think things were awful.  But as usual, the situation actually wasn’t so bad, with the markets closing Friday with mixed results.  The Dow and the S&P 500 dropped for the week, but far less than the week before.  And the third major index, the Nasdaq, was UP 0.3%, so there are plenty of investors not paying that much attention to fretful pundits.  Yet for the week, the Dow ended down 0.9%, to 10213.62; the S&P 500 was down 0.7%, to 1071.69; but the Nasdaq was UP 0.3%, to 2179.76.

Make no mistake, the week did have its disappointments.  The housing starts and building permits covered above were not cheered on Wall Street.  Then, initial weekly jobless claims came in at 500,000, a bit over estimates and higher than they’ve been for a while.  On top of that, the Philadelphia Fed index of manufacturing was down for the month, instead of up as expected, indicating a souring of the outlook in that region.

But wait just a minute.  Mortgage refinancings took off, helping consumers and lenders.  The Empire State index showed manufacturing in the New York region UP to 7.1 in August from 5.1 in July and suggesting more rapid growth to come.  July Industrial Production and Capacity Utilization moved up nicely.  Corporations continued to deliver strong profits and we even had renewed M&A action, with Intel buying McAfee for a cool $7.7 billion in cash.  None of these are bad economic signs.

Snoqualmie Pass Real Estate, Mortgage, and Economy 8/16/10

Here is the Snoqualmie Pass Real Estate Report for August 16, 2010.

INFO THAT HITS US WHERE WE LIVE.  Last Wednesday the National Association of Realtors reported the median price of existing single-family homes UP for Q2 in two thirds of U.S. metropolitan areas, or100 markets.  This compares with only 26 markets with price gains in the same quarter a year ago.  Experts say these figures show the federal tax credits helped stabilize home prices in the first half of the year.  Nationally, the median price for single-family homes increased to $176,900 in Q2, UP 1.5% from a year ago.

The NAR also reported sales of existing single-family homes and condos for Q2 were UP 9.1% over Q1, hitting an annual rate of 5.61 million.  That number is UP 17.3% from Q2 a year ago. With the tax credit gone, the NAR is forecasting a Q3 sales drop to a 4.55 million annual rate. But they do see sales coming back in the last three months of the year, to a 5.27 million unit annual rate.  The NAR’s chief economist added: “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes…we don’t expect any consequential movement in home prices for the foreseeable future.” 

Freddie Mac’s weekly survey showed mortgage rates staying at record low levels for conforming loans. But demand for purchase loans has dropped after the tax credit expiration, according to the Mortgage Bankers Association. 

 DIPPY… It was a week of “double-dip recession” fears, but when all was said and done, the economic recovery continued, albeit at a slower pace.  The only dipping that occurred happened on Wall Street, as investors’ worries sent the Dow Industrials down 265 points on Wednesday. By the time the markets closed Friday, all three major indexes had truly dipped — from 3% to 5% for the week.  For the week, the Dow ended down 3.3%, to 10303.15; the S&P 500 was down 3.8%, to 1079.25; and the Nasdaq was off 5.0%, to 2173.48.

That Wednesday dip in the Dow was the delayed reaction to the results of the Fed meeting on Tuesday.  The central bank kept the rate down at 0%–0.25%, but their policy statement raised investors’ “double-dip” worries.  The Fed said the economy isn’t as strong as they thought it would be two months ago and they would begin buying Treasury bonds “to support the economic recovery.”  But in spite of Wall Street’s jitters, the real economic data wasn’t so bad.

Preliminary Q2 Productivity slipped a tad, but it’s UP 3.9% over last year.  The trade deficit in June grew more than expected, but exports dropped only slightly and are UP 17.7% for the year, a healthy sign for American companies.  July Retail Sales were up less than expected, but when May and June upward revisions were included, the numbers beat expectations, UP 0.7% overall and UP 0.2% excluding autos.  And those talking up a global double-dip recession were quieted when Germany’s Q2 GDP showed a 2.2% expansion from the previous quarter, that country’s fastest growth in two decades.

Snoqualmie Pass Real Estate, Mortgage, and Economy 8/9/10

Here is the Snoqualmie Pass Real Estate Report for August 9, 2010.

Tuesday we had Pending Homes Sales, which after dropping 30% in May, fell just 2.6% in June, with the push to qualify for the tax credit no longer a factor.  These figures indicate there should be a drop in Existing Home Sales come July and maybe again in August.  But some analysts feel that after this post-tax-credit dip, housing will come back solidly, just like auto sales did after “cash for clunkers” expired last year.

The report did include encouraging words on home pricing from the National Association of Realtors chief economist: “…since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values.  Some local markets continue to show strengthening prices.”  We all know you can’t time a bottom, but it looks like serious buyers might want to act now.

The Mortgage Bankers Association reported an increase in demand for purchase loans for the third week in a row. Its Weekly Mortgage Applications Survey had purchase loan demand UP 1.5% for the week ended July 30. 

 SUMMER RALLY LITE… Coming off July’s hot month for stocks, August began with a 208-point gain in the Dow.  But before this summer rally could really take off, investor optimism cooled, sending market indexes up and down by small amounts for the rest of the week.  Friday’s July jobs report came in below expectations, which drove stocks lower, though only by 21 points.  All major indexes ended UP for the week, so it’s still a rally, if not a particularly strong one.  For the week, the Dow ended UP 1.8%, to 10653.56; the S&P 500 was UP 1.8%, to 1121.64; and the Nasdaq was UP 1.5%, to 2288.47.

What made investors cautious included the July ISM Manufacturing Index, which fell from June’s 56.2 reading to 55.5. Wall Street ignored the fact this is still a strong number, above the 50 level that signals expansion.  Then Personal Income and Consumption came in unchanged for June. But income after taxes is UP 3.2% annually the last six months and “real” (inflation-adjusted) consumer spending was UP 0.1% for June and UP 1.6% annually the last six months. PCE consumer inflation dropped for the third month in a row, but core PCE, excluding food and energy, is up 1.1% the last six months, calming fears of deflation.

Wednesday, July ISM Services climbed to 54.3 from 53.8 in June, showing continued expansion in the non-manufacturing arena.  Now for the July jobs report.  Private sector payrolls grew less than expected and government payrolls declined more than expected.  But private payrolls are up 90,000 per month since the beginning of the year.  In addition, average weekly earnings are UP 0.5% for July and UP 3.0% in the last year, which should continue to drive up consumption and the economy.  The unemployment rate held at 9.5%.

Snoqualmie Pass Real Estate, Mortgage, and Economy 8/2/10

MARKET RECAP

Here is the Snoqualmie Pass Real Estate Report for August 2, 2010.

Could we be seeing the beginning of a post-tax-credit rebound? We can’t say for sure – too many variables and too many contrasting opinions to vet – but we hold out hope that June’s rebound in new-home sales could presage better days.

On that front, sales rebounded to 330,000 units annually, a 23.6 percent increase over May’s rate of 267,000 units. More encouragingly, sales were up in three of four major regions: The Northeast posted the biggest gain at 46.6 percent, followed by the South at 33.1 percent, and the Midwest at 20.5 percent. The West was the notable loser, posting a 6.6 percent drop, but it’s worth noting that the West had been posting stronger sales over the past few months.

We don’t want to get carried away and read too much into one month’s worth of data, but if there is a bright spot for homebuilders, it’s that inventories are as lean as they’ve been in forty years.

Homebuilders can also take solace knowing that home prices rose nationally, in May. According to Standard & Poor’s/Case-Shiller home price index, prices increased 1.3 percent, with 19 of 20 markets posting month-over-month gains. Of course, we are speaking of national prices, and real estate is local. If you bought a home in San Francisco recently you might be asking, what housing slump? If you had bought a home in Las Vegas anytime over the past four years, you’re still wondering when the nightmare will end.

Some think the nightmare won’t end soon. Fiserve, for one, projects that home prices will fall another 4.9 percent nationally over the next 12 months, with the usual suspects – Nevada, Arizona, and Florida – taking the hardest hits. Not surprisingly, these areas have also been hardest hit by unemployment.

That said, we still believe we are looking at a relatively stable pricing environment for most parts of the country. The Miami metropolitan area, one of the more notoriously overbuilt burgs, has even posted some price improvement over the past twelve months. Again, real estate is local, so it’s impossible to predict how any one market will perform over the coming months. In aggregate, though, we question Fiserve’s projections.

Mortgages rates, on the other hand, are influenced by national events. Here, the trend continues to push lower. Just about everything is being quoted under 5 percent these days, with some adjustable-rate mortgages regularly quoted under 4 percent. The low rates offer plenty of options: Moving to a 15-year fixed-rate mortgage to save interest and to more quickly amortize the loan being one of the more obvious. A 20-year fixed-rate mortgage is another worthwhile option, particularly for borrowers unsure if they can handle the monthly obligation of the 15-year loan.

Snoqualmie Pass Real Estate, Mortgage, and Economy 7/26/10

Here is the Snoqualmie Pass Real Estate Report for July 26, 2010.

Tuesday, June Housing Starts came in down 5.0% from May to a 549,000 annual rate. This was below expectations, but still up 15.1% from the low they hit in April 2009. Most of the drop came from volatile multi-family starts. Single-family starts were down a mere 0.7%. Most significantly, housing completions shot up 26.2% in June, the biggest monthly gain going back to the late 1960’s. Builders clearly shifted focus from starting to finishing, as they pushed to close sales qualifying for the homebuyer tax credit. Finally, Building Permits were UP 2.1% for June, beating expectations, so things are looking up for the months ahead.

Thursday saw June Existing Home Sales down 5.1% to an annual rate of 5.37 million. But this beat expectations for the fourth time in five months and was 9.8% above sales a year ago. The median price for an existing home also gained in June, coming in at $183,700. This is up 1.0% from last year. In addition, the FHFA price index for homes financed by conforming mortgages went up 0.5% in May, increasing for the third month in a row.

National average rates for fixed rate mortgages hit new lows, according to Freddie Mac’s weekly survey of conforming loans. So refinance applications shot up 7.6% over the week before, but best of all, purchase loan applications were also up a healthy 3.4%.

>> Review of Last Week

UP WE GO… It was another interesting week on Wall Street, with stocks briefly headed in the wrong direction before ending the week decidedly UP. The fact was, the good economic news simply outweighed any disappointments by a lot. The net result for the stock markets left all major indexes resoundingly UP for the week…from 3% to 4%! For the week, the Dow ended UP 3.2%, to 10424.62; the S&P 500 was UP 3.5%, to 1102.66; and the Nasdaq was UP 4.1%, to 2269.47.

Topping the disappointments were Fed Chairman Ben Bernanke’s comments before Congress that the U.S. economic outlook is “unusually uncertain.” This allowed him to add that the Fed stands ready to take additional action, if necessary, to either do more boosting or halt inflation. OK, but right now there’s plenty of evidence the world’s largest economy is recovering just fine, if at a slightly slower rate than before. Earnings from IBM and Amazon.com also disappointed, but overall there were pretty slim pickings for the bears.

There actually was a big batch of strong earnings. Of the 150 S&P500 companies who have reported Q2 results, 85% of them beat earnings estimates by an average of 7%. General Electric raised its quarterly dividend 20%, the first increase since it historically cut its dividend over a year ago. Even the media is beginning to admit companies appear to be doing well. Then Friday we got the long-awaited results of the European bank stress tests, which came out better than expected. There was some grousing over how stressful the tests truly were, even though the Committee of European Banking Supervisors hadn’t seemed too soft before.

Snoqualmie Pass Real Estate, Mortgage, and Economy 7/19/10

Here is the Snoqulmie Pass Real Estate Report for July 19, 2010

Some analysts feel the homebuyer tax credits artificially boosted the housing market by pushing forward home sales that would have happened later. Others feel most buyers would have bought anyway. In any case, there’s now concern about a coming drop in sales. Well, June sales figures should still benefit from activity spurred on by the tax credits. And tax credit sales should even help monthly reports through September, now that buyers in contract on April 30 have been given until September 30 to close. 

Nonetheless, we ought to keep an eye on monthly Pending Home Sales, which track signed contracts that turn into sales a few months out. Even though we may have a sales dip after the tax credit, the fact remains that near historic low mortgage interest rates are getting people back into the market. These rates, combined with today’s prices, have made homes more affordable than they’ve been in years, letting many buyers move up to better neighborhoods with more choices.

But buyers shouldn’t wait. The National Association of Realtors chief economist sees the median home price rising nationally 2% to 3% this year. The NAR’s CEO feels sales will pick up in the fall and that the down-cycle has run its course. The chief economist at Moody’s Economy.com also believes the housing crash is nearly over. And we all know mortgage rates won’t stay at their current levels indefinitely. In other words, this could be one of the best times to buy a home in decades.

 UP AND DOWN… The stock market indexes were up nicely through Wednesday, continuing last week’s rally, then slipped slightly on Thursday before plunging more than 261 points Friday. For the week, the declines hovered around 1%, not too bad considering the volatile atmosphere of the proceedings on Wall Street.  Nonetheless, negative feelings prevailed, so for the week, the Dow ended down 1.0%, to 10097.90; the S&P 500 was down 1.2%, to 1064.88; and the Nasdaq was down 0.8%, to 2179.05.

The problems Friday centered on a drop in the University of Michigan Consumer Sentiment number and soft top-line Q2 revenues from Bank of America, Citigroup, and GE, even though bottom-line earnings from these behemoths beat expectations. The big disappointment came from Google, which missed earnings estimates even though revenue grew a faster than expected 25% for the quarter. But Google was the ONLY major company reporting last week that did not BEAT earnings forecasts.

We also heard complaints about some of the economic data. The trade deficit increased in May, but exports are UP 21.0% in the past year. Yes, May retail sales were off half a percent, but the annual growth rate for retail in the last nine months remains a respectable 6.7%. The Producer Price Index (PPI) and Consumer Price Index (CPI) showed wholesale and consumer inflation down a tad in June. This got analysts fretting about deflation, but both PPI and CPI are actually up from a year ago.

Snoqualmie Pass Real Estate, Mortgage, and Economy 7/12/10

Here is the Snoqualmie Pass Real Estate Report for July 12, 2010.

Last week I reported that on Friday, the President signed into law a bill that extends to September 30 the closing deadline for claiming the federal homebuyer tax credit. We want to add he signed a second bill that retroactively reinstates the National Flood Insurance program, which expired May 31, until September 30. This news is important for home buyers who are shopping in areas where flood insurance is necessary to get a mortgage. It would obviously behoove these buyers to close before September 30.

National average mortgage rates hit new lows again last week, as reported in Freddie Mac’s weekly Primary Mortgage Market Survey. However, the Mortgage Bankers Association revealed that it was refinancing homeowners who were principally taking advantage of these rates, making up the lion’s share of last week’s loan applications. Incidentally, with these heightened levels of refi activity, the effective rate of all outstanding mortgages was just under 6% in the first quarter of 2010, the lowest on record since 1977.

 DOUBLE DIP DOUBLE TALK… Lately it’s been hard to ignore all the talk about threats of a “double-dip” recession. So last week it was refreshing to see The Wall Street Journal identify all this talk as “exaggerated fears of a double-dip recession.” They pointed out: “Growth may be slowing from its first-quarter peak…but most indicators point to continued global growth.” Investors quickly came to their senses, stopping the recent stock market slide and sending all major indexes up for the week by 5% and more!   For the week, the Dow ended UP 5.3%, to 10198.03; the S&P 500 was UP 5.4%, to 1077.96; and the Nasdaq was UP 5.0%, to 2196.45.

There certainly was adequate support for a more positive economic outlook. The “continued global growth” the Journal mentioned was backed by the latest forecast from the International Monetary Fund. The IMF increased its estimate of 2010 GDP growth from 4.2% to 4.6%. Some fretted that the ISM Services Index dropped a tad from its May reading. But levels above 50 signal expansion, so June’s 53.8 shows our non-manufacturing sectors are still experiencing healthy economic growth.

Initial jobless claims came in better than expected for the week, dropping by 21,000. Retailers reported June same store sales, which weren’t the debacle some had predicted, with Macy’s and Nordstrom actually coming in with some pretty good numbers. Finally, the Q2 corporate earnings season begins this week and first estimates are that profits will be up 34% overall vs. last year. Does any of this sound like a dip to you?

Snoqualmie Pass Real Estate, Mortgage, and Economy 7/5/2010

Here is the Snoqualmie Pass Real Estate report for July 5, 2010.

Last Thursday pending home sales, a measure of contracts signed for existing homes, were reported off 30% in May compared to the prior month. This of course was simply the result of the end of the homebuyer tax credit, which required a signed contract by April 30. Common sense tells us many of those April contracts would have happened in May or even later if it weren’t for the pressure to qualify for the tax credit.

More good news on the price front, as the Case-Shiller home price index was UP 0.4% in April, seasonally-adjusted, and up a comfortable 3.8% versus a year ago. Case-Shiller tracks home prices in the 20 largest metro areas. This follows the prior week’s FHFA home price index, which was UP 0.8%  for April for homes financed with conforming mortgages. Buyers take note.

Friday, the President signed into law a bill that extends the closing deadline for claiming the federal homebuyer tax credit to September 30. The National Association of Realtors estimated that up to 180,000 homebuyers in contract by April 30 could have missed the June 30 closing because of processing delays due to the huge volume of buyers seeking the tax credit.

 OFF AGAIN… Investors were back in worry mode last week, still concerned about European debt and the speed (or lack thereof) of our own economic recovery. At the Group of Twenty meeting in Toronto, the financial leaders of the world’s largest economies didn’t say or do much to raise spirits on Wall Street. So, stocks slid another week, as investors sold off their equity holdings and sought safer places to put their money.

For the week, the Dow ended down 4.5%, to 9686.48; the S&P 500 was down 5.0%, to 1022.58; and the Nasdaq was down 5.9%, to 2091.79.

The week began with May personal income UP 0.4% and personal spending UP 0.2%. For the last six months, personal income is UP 4.6% annually and spending UP 3.8% annually. Overall PCE (consumer inflation) was flat for May, up only 0.9% annually for the last six months. Thursday brought the pending home sales data covered above. This was followed by the ISM index showing manufacturing still grew strongly in June, though slightly below May’s reading.

Friday’s employment numbers showed a drop of 125,000 jobs for June but April/May revisions added 25,000, so the net loss was 100,000. Furthermore, as the President himself pointed out that morning, the report “…reflected the planned phase out of 225,000 temporary Census jobs, but it also showed the sixth straight month of job growth in the private sector. All told, our economy has created nearly 600,000 private sector jobs this year.” Finally, the unemployment rate, expected to edge up a tad, dropped from 9.7% in May to 9.5% for June.

Snoqualmie Pass Real Estate, Mortgage, and Economy 6/21/10

Here is the Snoqualmie Pass Real Estate Report for June 21, 2010.

The big news of the week revealed housing starts down 10.0% in May to an annual rate of 593,000 units. Closer inspection of the report reveals that all the drop came from the South. In fact, housing starts were actually UP in all other regions of the country. The South suffered in May with the Gulf oil spill disaster and major flooding. It’s understandable that these unfortunate occurrences would make everyone, including home builders, more risk averse than usual. In any case, starts are UP 24.3% above their low a year ago April, with single-family starts UP 15.3% in the last year.

A little more worrisome was the 5.9% decline in building permits, which was seen nationwide. Of course, any slowdown in building will help speed up the reduction in new homes inventory. Nonetheless, permits are UP 4.4% overall and UP 3.1% for single-family units from a year ago.

Wednesday, Fannie Mae announced “Special Relief Measures” for borrowers whose properties or income are negatively impacted by the Gulf oil spill. Servicers may suspend or reduce these borrowers’ mortgage payments up to 90 days to determine the impact of the disaster on the property or the borrower’s financial condition. If you know someone who may qualify for this relief, please forward them this link: http://www.fanniemae.com/newsreleases/2010/5062.jhtml?p=Media&s=News+Releases

>> Review of Last Week

ONWARD AND UPWARD… Investors appeared to calm down a bit last week, responding more reasonably to the economic situation in Europe and sending stock prices up nicely. All three indexes are now back again in positive territory for the year. The big spike for stocks came Tuesday after European markets and the Euro rallied when Spain and Ireland did well with their debt offerings.

There were a few less than stellar economic reports during the week. The declines in housing starts and building permits for May were disappointing to many, although starts were not as worrisome as they first appeared, as reported above. Also, initial weekly unemployment claims were up by 12,000, while continuing claims edged up 88,000 after the prior week’s 234,000 decline.

But inflation appears under control. At the wholesale level, the Producer Price Index was down 0.3% for May, falling for the second month in a row. The more significant Consumer Price Index was also down, by an expected 0.2%. There was more evidence of strong recovery in the manufacturing sector, with industrial production UP 1.2% in May and UP 8.0% annually for the last six months. Capacity utilization moved up to 74.7% in May, rising 6.4% from last June, the fastest 11-month hike since 1983-84. Supporting these figures, the Empire State Index of manufacturing in the New York region went to 19.6 for June from 19.1 in May.

For the week, the Dow ended UP 2.3%, to 10450.64; the S&P 500 was UP 2.4%, to 1117.51; and the Nasdaq was UP 3.0%, to 2309.80.