Weekly Market Outlook – An Ugly Win Is Still A Win, But Can It Last?

Stocks logged a second consecutive winning week, and a second straight record weekly close, though the bulls ended the week with anything but enthusiasm.

Then again, they didn’t need to finish the trading week on a high note to do some real damage. Last week’s last trade for the S&P 500 was almost 0.9% better than the previous week’s close… not bad given the time of year, and how overextended the market is at this point.

We’ll weigh the odds of more upside in our usual analysis below, right after a review of last week’s economic news and a preview of this week’s announcements.

Economic Data

This week’s biggie was a look at August’s housing starts and building permits. The data was, in sum, just ok. Starts were up a bit and much better than expected, while permits fell quite a bit and rolled in much lower than expected. This sliver of the market just couldn’t afford another so-so reading though. Construction has been a soft spot for a while, and it seems to be worsening.

Housing Starts and Building Permits Charts

Source: Thomson Reuters

So far the lull hasn’t been infectious. Home prices are still firm, and rising, and it’s not as if consumers aren’t spending in all other ways. For whatever reason though, homes aren’t of as much interest. Real estate may have priced itself out of the market, or it could be that consumers are simply content where they are.

This week’s new-home sales data will tell us more about that, but if last week’s existing-home sales report is any indication, investors can’t hold their breath waiting on clarity. Existing home sales were transacted at an annual pace of 5.34 million last month, matching July’s pace.

New and Existing Home Sales Charts