FOMC Comments Highlighting Full Plate of Economic Data for Week of June 17

After closing down four out of five days last week for a weekly loss of 1.2 percent, the Dow Jones Industrial Average has landed in the red in three out of four weeks.  That’s the first time that has happened since a four-week downward run late in October into early November last year.  To start this week, all eyes are already looking forward to Wednesday when Federal Reserve Chairman Ben Bernanke is expected to try and calm anxiety over the central bank’s plans to taper economic stimulus.

Outside of commentary from the Federal Open Market Committee, other key economic data this week will include:

Tuesday

Consumer Price Index for May – In April, the CPI dropped 0.4 percent, following a 0.2 percent slide in March.  Excluding the volatile food and energy components, “core” CPI rose 0.1 percent in April, the same amount as the month earlier.  Investors and economists watch the CPI closely as it represents the inflation rate, which is a factor in how and when the Fed will modify its easing efforts.  For May, economists are expecting CPI to rise by 0.2 percent and core CPI to rise 0.2 percent as well.

Housing Starts for May – Last month, the Commerce Department reported that groundbreaking on new homes plunged 16.5 percent in April compared to March.  In March, housing starts had topped the one million annualized rate for the first time since 2008, but the deceleration in April pulled the rate back to 853,000.  Economists are expected May’s rate to pick-up again, calling for an annualized rate of about 948,000.

Wednesday

At 2 PM EDT, the Federal Open Market Committee will announce the results of their latest meeting, held June 18 – 19.  Economists expect the benchmark interest rate to remain unchanged.  As mentioned above, investors will be looking for any dialogue about how and when the Fed will be making changes to their easing policy of ultra-low interest rates and $85-billion-per-month in Treasury and mortgage-backed security purchases.  At 2:30, Fed Chairman Bernanke gives a press conference.

Thursday

Initial Jobless Claims for the Week Ended June 15 – For the week ended June 8, first-time filings for unemployment benefits, a gauge of weekly lay-offs, dropped by 12,000 to 334,000.  The four-week average of claims, regarded by most as a better barometer of the labor market because it eliminates weekly volatility, fell by 7,250 to 345,250.  In the comparable week of 2012, the one-month average was about 5,000 claims lower.  In this week’s report, economists are expecting claims to creep back upward to 339,000.

Existing Home Sales for May – The National Association of Realtors reported that sales of existing homes, which are completed transactions of single-family homes, townhouses, condominiums and co-ops, rose in April by 0.6 percent compared to March to a seasonally adjusted annual rate of 4.97 million units.  That was the highest rate since November 2009.  Compared to April 2012, sales were ahead by 9.7 percent, the 22nd-straight month of year-over-year improvement.  For May the consensus is for the annual rate to climb to 5.0 million.

Philadelphia Fed Survey for June – The Philadelphia Federal Reserve Bank reported in May that that its index of business activity in the Mid-Atlantic region fell to negative 5.2 from negative 1.3 in April with the index of new orders diving to near one-year lows.  Readings below zero indicate contraction in manufacturing activity in the region.  Economists are expecting the index to again hold in negative territory, but improve some from May to a negative 1.0 mark.

Outside of these “market moving” pieces of data this week, investors will also be watching for a few other statistics to judge the health of the nation’s economy, including the Empire State Manufacturing Survey and Home Builders’ Index on Monday; and Markit “Flash” PMI on Thursday.