UPDATE - DOW closes down 420 points.
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This morning's economic numbers were resoundingly and uniformly negative for the U.S. economy. Full rundown of all the data is below.
Inflation
CPI, tracking the rate of inflation at the retail level, increased 0.5% in July, the biggest gain since March, the Labor Department said.
Core prices — which exclude volatile food and energy cost inputs — increased 0.2% on the month, matching expectations of a slight moderation. Core inflation had risen 0.3% in both May and June, raising the eyebrows of investors and economists alike.
July’s core rate was boosted by a 0.3% gain in shelter costs, its largest increase since June 2008. The culprit for higher overall inflation was energy prices, however. Energy prices increased 2.8% last month, the first gain after monthly declines in both May and June.
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Housing
Sales of existing homes fell 3.5% in July to an eight-month low, with a high cancellation rate again taking its toll on an already troubled market, according to data released Thursday.
The National Association of Realtors said sales fell to a seasonally adjusted annual rate of 4.67 million. June’s data were upwardly revised to 4.84 million from an initially reported 4.77 million.
Economists polled by MarketWatch had expected a 4.99 million annual rate. The numbers for the second straight month went against the increase in pending home sales, again showing the difference between agreed and closed transactions.
Sales in July were 21% above the same month of 2010, which represented the cyclical low following the expiration of the home buyer tax credit. Sales have dropped precipitously from the 2005 peak of 7.08 million.
The NAR said 16% of its members reported cancelled transactions in July, the second month it’s been at that level, and the high cancellation rate could be down to appraisals, mortgage financing or customers pulling out, said Lawrence Yun, chief economist of the trade group.
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Philly Fed Manufacturing Shocker
Philly Fed’s factory index in August freefall - Falls to negative 30.7, stunning markets
Factory activity in the Philadelphia region weakened sharply in August to the lowest level seen in more than two years, the Federal Reserve Bank of Philadelphia said Thursday, adding to fears that the economy has ground to a halt.
The Philly Fed’s business outlook survey fell to negative 30.7 in August from 3.2 in July. This is the lowest reading since March 2009.
Readings below zero indicate contraction in the region’s factories.
The size of the decline in the index stunned analysts — economists had expected a reading of 0.5 in August, according to a survey conducted by MarketWatch — and added fuel to Thursday’s rout in the stock market.
The Philly Fed index may have had the greatest impact on investors.
It’s closely watched by economists and traders for clues it might shed about the national manufacturing sector. It is one of the first indicators released for August.
Another early look at manufacturing in August, the New York Fed’s Empire State manufacturing survey, was also weak. The survey fell to a reading of negative 7.7, the third straight negative monthly reading.
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Fed 'very concerned' about liquidity problems for Euro banks
U.S. Federal Reserve and state regulators are intensifying their oversight of the U.S. subsidiaries of Europe's biggest banks to measure how vulnerable the divisions are to increased financial pressures, people familiar with the matter told The Wall Street Journal. The concern is that the euro-zone debt crisis could impair the banks' ability to fund loans and meet other obligations in the U.S., the Journal reported. The Federal Reserve Bank of New York, which oversees a number of the U.S. divisions of European banks, has asked the units for more information about whether they've got access to sufficient funds to operate day to day, the Journal reported on Thursday. And in some cases the regulators asked the banks to make structural changes in their U.S. entities, the people told the Journal.
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Bonds
Treasury prices jumped on Thursday, pushing 10-year yields to a record low under 2%, as weak U.S. economic data added to worries about global growth that sent stock markets around the world plunging and inspired a rush to the relative safety of U.S. bonds.
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Dow dives more than 500 points
U.S. stocks plummeted Thursday, with the benchmark indexes down about 4% or more, on worries about Europe and the global economy. “Market sentiment continues to deteriorate amid concerns about the euro-zone banking sector,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co., wrote in a note.
Morgan Stanley reduced its forecast for global growth, calling Europe’s policy answer to its sovereign debt crisis insufficient.
DailyBail