From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 7/17/2026
U.S. stocks opened lower this morning, with the selloff led by technology and semiconductor companies. At the opening bell, the Dow Jones Industrial Average fell about 0.24%, the S&P 500 dropped 1.14%, and the Nasdaq Composite slid 1.81%. The weakness was driven by a deepening reassessment of AI-related spending that extended the recent chip-stock rout, pressuring major semiconductor names and the broader tech sector. Ongoing U.S.-Iran tensions are also contributing to market uncertainty.
In economic news this morning, the Bureau of Labor Statistics reported today that U.S. import prices rose 0.3% in June, following a sharp 1.7% increase in May, as higher nonfuel import prices more than offset a decline in fuel prices. Over the past 12 months, import prices are up 7.1%, the strongest year-over-year increase since 2022, reflecting broad-based gains in nonfuel goods. Meanwhile, export prices fell 0.6% in June after rising 1.2% in May, although export prices remained 10.2% higher than a year ago. Import fuel prices declined 0.4% during the month, but were still up 44.1% from a year earlier, while nonfuel import prices increased 0.4%, signaling continued underlying goods inflation.
June U.S. housing starts jumped 19.0% to an annualized rate of 1.427 million units, well above expectations and the highest level in three months, driven almost entirely by a 76.3% surge in multifamily construction. Single-family starts, however, slipped 0.2% to 895,000 units, highlighting continued weakness in the core owner-occupied housing market amid elevated mortgage rates and a large inventory of unsold new homes. Building permits, a leading indicator of future construction activity, fell 3.0% to 1.367 million units, with single-family permits down 2.4% and multifamily permits down 4.9%.
The Federal Reserve reported that U.S. industrial production edged up 0.1% in June, marking a modest increase after stronger gains earlier in the spring. Manufacturing output was unchanged for the month, while both mining and utilities production increased 0.4%, providing a lift to overall industrial activity. Total industrial production was 1.1% higher than a year ago, and output grew at a solid 4.0% annual rate during the second quarter, suggesting the sector maintained positive momentum despite a flat month for factories. Meanwhile, capacity utilization held steady at 76.1%, remaining well below its long-run historical average, indicating that significant spare capacity persists across the industrial sector.
The University of Michigan’s preliminary July Consumer Sentiment Index rose to 54.4, up from 49.5 in June and above economists’ expectations, marking a second consecutive monthly improvement and the highest reading since February. The gain was driven largely by lower gasoline prices, with all five survey components improving, including particularly strong increases in consumers’ views on buying durable goods and business conditions over the next year. Sentiment improved across demographic and political groups, although overall confidence remains about 12% below year-ago levels, reflecting continued frustration with elevated prices. Inflation expectations also eased, with consumers expecting 4.2% inflation over the next year, down from 4.6% in June, while long-run inflation expectations held steady at 3.3%.
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