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20-Sep2017

US markets closed higher ahead of Fed meeting outcome

The US markets closed higher on Tuesday, with all three main US stock indexes ending at all-time highs, as Federal Reserve policy makers began a two-day policy meeting in which they're expected to finalize the details of their plan to begin slowly shrinking the central bank's $4.5 trillion balance sheet. President Donald Trump gave his first address to the United Nations General Assembly, and at one point stated that the US was ready, willing and able to act against North Korea militarily, and that the US would totally destroy the country if necessary. Markets were little impacted by the speech. On the economy front, the US current account deficit jumped to its highest level since 2008 in the second quarter amid a decline in both secondary and primary income. The current account deficit, which measures the flow of goods, services and investments into and out of the country, increased to $123.1 billion from a downwardly revised $113.5 billion in the first quarter. That was the highest level since the fourth quarter of 2008. The second-quarter current account deficit represented 2.6 percent of gross domestic product, the largest since the first quarter of 2016, up from 2.4 percent in the first quarter.

Meanwhile, construction on new houses in August fell slightly, but rising permits point to more building in the months ahead, especially for single-family homes. So-called housing starts slipped 0.8% to an annual rate of 1.18 million from an upwardly revised 1.19 million in July. Although housing starts fell 7.9% in the South, Hurricane Harvey had very little impact. The storm only made landfall at the end of the month. And Hurricane Irma did not batter Florida until September. New construction in the Northeast declined an even sharper 8.7%. Starts surged in the Midwest and rose modestly in the West. The pause in construction in August does not reflecting any dimming in the optimism of home builders, however. Permits to build new homes jumped 5.7% to a 1.3 million rate, matching the level in January and marking the second highest amount since 2007. More Americans can buy a home with unemployment at a 16-year low and households in the best financial shape in years.

Separately, the cost of imported goods surged in August, but it marked only the second increase in the past six months and half of the gain stemmed from higher oil prices. The import price index jumped 0.6% last month to match the biggest increase since January. The increase followed three straight declines. Excluding fuel, import prices rose a much smaller 0.3% last month. Even with the latest gain, the cost of imports has only risen 2.1% in the past 12 months, indicating the US is importing very little inflation.

The Dow Jones Industrial Average added 39.45 points or 0.18 percent to 22,370.80, the Nasdaq gained 6.68 points or 0.10 percent to 6,461.32 and the S&P 500 edged higher by 2.78 points or 0.11 percent to 2,506.65.


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