Stocks Rangebound Ahead Of Fed, ECB, July 2012 Jobs; Case Shiller Home Prices Up 2.2 Percent May:
U.S. equities didn’t do much today and traded in a tight range ahead of the ECB meeting, the FOMC meeting and the July 2012 unemployment numbers due out this Friday. Traders are also waiting for data from ADP about payrolls but last month there was no convergence between the ADP employment data and the government reported number. ADP came out with 176,000 private sector jobs last month while the government data was 80,000.
Housing Has Turned The Corner But Isn’t Out Of The Woods Yet
S&P/Case-Shiller reported data today that showed the housing market is still suffering from upward price pressures. Home prices from the top twenty housing markets in the U.S. increased in the month of May 2012. Home prices rose 2.2 percent from the prior month of April 2012 but was up down on a year over year basis. This was bad news for housing bulls hoping for a turnaround and the last few reports from the housing sector have been negative.
We are cautious on U.S. equities in the short run and believe the market needs a new catalyst to run higher. Slow unemployment growth could increase the likelihood the Fed may make a move on QE3 but if only a statement about low interest rates is proffered this week, it might not be enough for stocks to re-rally. Without a strong statement from both the ECB, Bank of England and the Fed – unemployment would have to trend at the same levels for investors to expect more action from the Fed.