Stocks Sell Off, Finish Near Lows
"Consumers were more positive in their assessment of current conditions, in particular the job market, and considerably more optimistic about the short-term outlook for business conditions, employment and their financial situation," Lynn Franco, director of economic indicators at The Conference Board said in a press release. "Despite continuing economic uncertainty, consumers are slightly more optimistic than they have been in several months."
"Thanks to the continued rally in equity prices, the Conference Board measure of U.S. consumer confidence shot up to a seven-month high," said Amna Asaf, an economist at Capital Economics.
Asaf further noted that the decline in the balance of households saying that jobs are hard to find compared with those saying that jobs are plentiful suggests that there is scope for the unemployment rate to fall slightly.
At the same time, the economist cautioned that while the sharp rebound is overall very encouraging, it remains at a relatively depressed level compared with the historical average of 92.3, suggesting that consumption growth is likely to be a little better in the third quarter, "but hardly spectacular."Wall Street was also parsing more evidence of the housing market recovery as the S&P/Case-Shiller 20-city home price index showed an annual return of 1.2% in July, marking the fastest pace of annual home price appreciation since August 2010 and beating the consensus of 1% and prior return of 0.6%. "The tone and broad-based strength of this report are quite encouraging as they suggest that the housing market is continuing to sustain the recovery even at a time when the pace of jobs growth has remained weak," said Millan Mulraine, an economic strategist at TD Securities. The read on the composite index was followed by the Federal Housing Finance Agency House Price Index, which showed that U.S. house prices rose 0.2% on a seasonally adjusted basis in July from June, after a downwardly-revised 0.6% increase. In Berlin, European Central Bank President Mario Draghi and German Chancellor Angela Merkel met and talked about the creation of an independent European banking sector watchdog and next month's European Union summit, and agreed that there needs to be more willingness at both the individual state level and within the euro zone as a whole to carry out reforms; after which Draghi defended the ECB's latest bond-buying program.
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