US Stock Market Overview – Stock Rally Following Fed Decision; Pending Home Sales SurgeFed keeps rates unchanged
US stocks moved higher on Wednesday, following the Federal Reserve decision to keep interest rates unchanged. Fed Chair Powell in his testimony said that rates will remain at zero for a considerable period and the Fed will do everything in their power to buoy the US economy. All sectors in the S&P 500 index were higher led by gains in energy, Consumer staples was the worst-performing sector. Pending Home sales rose more than expected and the US Trade Deficit narrowed led by gains in exports.
Pending Home Sale Rise More than Expected
Pending home sales rose more than expected in May increasing by 16.6% and rising 6.3% year over year according to the National Association of Realtors. This beats the expectation for the monthly gain of 12.5%. It’s the second straight month of increases in contract activity. For 2020, existing home sales are expected to decline by only 3%. New home sales are projected to rise by 3%. The previous forecast for existing home sales in 2020 was down 7.7%, with new home sales up 1%.
US Trade Deficit Falls
The United States’ trade deficit fell sharply in June as exports rebounded following several months of decline. The goods trade deficit dropped 6.1% to $70.6 billion last month. Exports of goods accelerated 13.9% to $102.3 billion, eclipsing a 4.8% increase in goods imports to $173.2 billion. Goods imports fell in May to their lowest level since July 2010. The rebound in exports was led by a 144.1% surge in shipments of motor vehicles and parts. Exports of capital goods soared 11.0% and consumer goods jumped 12.6%.
The Fed Kept Rates Unchanged
The Federal Reserve kept interest rates unchanged which were widely expected. Along with keeping rates low, the Fed expressed its commitment to maintaining its bond purchases and the array of lending and liquidity programs. The post-meeting statement labeled the current state of growth as better than it was at the trough but still not up to par.