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The American economy continues to face muddy waters and unsure futures. Coronavirus new cases have started to grow again with 40,000 new cases on Thursday alone. States like Texas have begun to pull back their reopening plans after seeing an 80% increase in total cases.
Consumer spending increased by 8.2% in May, as people purchased long-lasting items such as cars, air conditioners, and homes. The “cheap money” that the Fed has created through lowering the benchmark interest rate to near-zero has caused the cost of borrowing for large items to drop. This is bound to lose momentum as stimulus money and enhanced jobless benefits begin to wear off.
The DOW, S&P, and Nasdaq all posted losses this week. The market is in a free-fall state right now, as eyes are all on seeing whether a recovery is happening or if a dangerous slip is ahead.
Mortgage applications dropped 8.7 percent this week (despite the mortgage rate remaining constant at 3.3%), further signifying the slow rehabilitation they will face.
Banks have taken hard hits as Goldman Sachs Group fell $17.91, or 8.7%, to $189.19. Wells Fargo dropped $2.03, or 7.4% to $25.34. Banks and financial companies were some of the worst performers as the Fed capped their Q3 dividends to preserve capital.
Tensions between the US and China have begun to rise again. Beijing told the US that if they continued to push for things it deemed off limits, China would pull back purchases of farm goods under Phase One of the trade deal.
