The major equity indexes ended the day on a negative note on Thursday as political uncertainty in Washington kept investors cautious ahead of comments on monetary policy from central bankers gathered for their annual meeting in Jackson Hole, Wyoming.
Speeches by Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi on Friday will be scrutinized for hints on the path of monetary policy, but neither of them is expected to give fresh guidance.
The focus on central bankers’ views will be a departure from the past two weeks, when the stock market was roiled by concerns over geopolitics, mayhem in Washington, and President Donald Trump’s controversial comments.
Recent economic data painted a mixed picture. The number of Americans filing for unemployment benefits rose less than expected last week, while home resales unexpectedly fell in July to their lowest monthly level of the year.
Oil prices slipped amid concerns over demand. U.S. Gulf Coast refineries shut operations as Hurricane Harvey was forecast to turn into a major hurricane.
Consumer staples, down 1.3 percent, were the worst performing of the 11 major S&P sectors, led lower by a 9.5 drop in J.M. Smucker after it posted disappointing results and lowered its earnings forecast.
The group also lost ground after Amazon said it plans to complete its $13.7 billion acquisition of Whole Foods on Monday after winning antitrust approval from U.S. regulators. The announcement weighed on grocery store stocks such as Kroger, off 8.10 percent, and Wal-Mart, down 2.03 percent.
Dollar Tree advanced 5.6 as one of the best performers on the S&P 500 after the retailer’s profit and comparable sales beat estimates.
Signet Jewelers chalked up a gain of 16.7 percent after the company issued results and said it would buy an online jeweler.
Approximately 5.27 billion shares changed hands on the major domestic equity exchanges, a number that was below the 6.08 billion sharedaily average over the last 20 sessions.
Existing Home Sales Drop Unexpectedly
Existing home sales fell unexpectedly during July to an 11-month low as a continuing shortage of properties raised prices, the latest sign that the housing market recovery was slowing.
The cooling in housing activity reflects supply constraints rather than ebbing demand, which is being driven by a strong labor market.
The National Association of Realtors reported that existing home sales fell 1.3 percent to a seasonally adjusted annual rate of 5.44 million units last month. That was the lowest level since August 2016. Sales rose 2.1 percent on a year-on-year basis.
The NAR report followed data on Wednesday indicating a 9.4 percent drop in sales of new single-family homes in July and the second weekly fall in applications for home purchase loans.
Data this month also indicated a decline in new home construction and permits during July. Taken together, the reports could be an indicator that housing will remain a drag on economic growth during the third quarter. Housing subtracted nearly three-tenths of a percentage point from gross domestic product in the second quarter.
The PHLX index of housing stocks was little changed as were shares in the nation’s largest homebuilder, D.R. Horton. Shares of Lennar fell 0.4 percent while those of Pultegroup advanced 0.4 percent.
The housing market has experienced an acute shortage of homes for sale for about two years. Builders have been unable to fill the inventory gap, citing a lack of land and skilled labor.
They have also complained of being constrained by expensive building materials. Last month, there were 1.92 million previously owned houses on the market, down 9.0 percent from a year ago.
Housing inventory has fallen for 26 straight months on a year-on-year basis. The median house price was $258,300 in July, a 6.2 percent rise from a year ago. That marked the 65th straight month of year-on-year price increases.
In contrast, annual wage growth has struggled to break above 2.5 percent, locking out many first-time homebuyers from the market. They accounted for a third of transactions last month, well below the 40 percent share that economists and realtors say is needed for a robust housing market.
At July’s sales pace, it would take 4.2 months to clear inventory, down from 4.8 months one year ago. Economists view a six-month supply as a healthy balance between supply and demand.
Sales fell in the Northeast and Midwest but rose in the West and South. Economists say builders have mostly focused on the high end of the market, but that may change if the strengthening labor market, as expected, keeps housing demand elevated.
Unemployment Claims Rise
The Labor Department reported Thursday morning that initial claims for state unemployment benefits increased by 2,000 claims to a seasonally adjusted 234,000 claims for the week ended Aug. 19.
Claims have now been below 300,000, a threshold associated with a robust labor market, for 129 consecutive weeks. That is the longest such stretch since 1970, when the labor market was smaller.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 237,750 last week, the lowest level since May.
Low numbers of layoffs have helped reduce the unemployment rate to a 16-year low of 4.3 percent. The unemployment rate has fallen five-tenths of a percentage point this year.
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