From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 7/16/2026
U.S. stocks opened mixed this morning, with the Dow Jones Industrial Average up about 0.2%, while the S&P 500 down roughly 0.2% and the Nasdaq Composite slipping about 0.4%. The primary driver was weakness in semiconductor stocks after Taiwan Semiconductor Manufacturing (TSMC) declined despite reporting strong earnings, as investors focused on the company's higher capital spending plans, which weighed on the broader chip sector. At the same time, gains in UnitedHealth, following better-than-expected earnings and an increased outlook, helped support the Dow and offset some broader market weakness.
In economic news this morning, the Labor Department reported that initial jobless claims fell by 8,000 to 208,000 for the week ended July 11, coming in below economists' expectations and signaling that layoffs remain relatively low. The four-week moving average declined to 214,250, while continuing claims, which reflect the number of people already receiving unemployment benefits, decreased by 16,000 to 1.805 million. Overall, the report points to a labor market that remains stable, with hiring and firing activity continuing at a moderate pace despite broader economic uncertainty. Economists generally view claims at these levels as consistent with a "slow hire, slow fire" environment rather than a significant weakening in employment conditions.
U.S. retail sales increased 0.2% in June to $768.6 billion, following an upwardly revised 1.0% gain in May, indicating consumer spending continued to grow, albeit at a slower pace. Sales were 6.7% higher than a year ago, while total retail and food service sales for the second quarter were up 6.4% from the same period in 2025, highlighting solid underlying demand. The report suggests consumers remain resilient despite ongoing economic uncertainties, providing a positive signal for economic growth heading into the second half of the year.
The Philadelphia Fed’s July 2026 Manufacturing Business Outlook Survey showed a sharp acceleration in regional factory activity, with the headline general business activity index jumping to 41.4 from 10.3 in June, its strongest reading since November 2021 and well above economists’ expectations. New orders and shipments also rose to multi-year highs, while employment remained positive for a second straight month, indicating continued expansion in manufacturing demand and hiring. Inflation pressures persisted, with firms reporting elevated input and selling prices, though companies generally continued to pass through higher costs. Looking ahead, manufacturers still expect growth over the next six months, but their optimism moderated somewhat from June’s unusually strong outlook.
The National Association of Realtors reported that pending home sales fell 5.4% in June, a much sharper decline than economists expected, and were down 0.3% from a year earlier. Contract signings decreased across all four major U.S. regions, with the Midwest posting the largest monthly drop. NAR Chief Economist Lawrence Yun attributed the weakness to mortgage rates near their highest level in almost a year and record-high home prices, which continue to challenge affordability, particularly for first-time buyers. Despite the softer housing market, Yun noted that continued job growth could help support future housing demand.
Today's U.S. Business Inventories report showed that total business inventories rose 0.3% in May to $2.736 trillion, following a 0.5% increase in April, while inventories were up 3.1% from a year earlier. At the same time, business sales and manufacturers' shipments jumped 2.1% in May, reaching $2.135 trillion and running 11.9% above year-ago levels. Because sales grew much faster than inventories, the inventory-to-sales ratio fell to 1.28, down from 1.39 in May 2025, indicating businesses are carrying leaner stock relative to demand. Overall, the report suggests that sales momentum remained strong in May while inventory accumulation stayed modest, a combination that points to healthy demand and limited inventory overhangs.
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