Anxiety on the Street
Fretting about the actual strength of the recovery, Wall Street pulled back on June 15-17, with the S&P 500 losing 3.8% in two days following a 40%-plus rise over the past three months. It's easy to see why investors may be perplexed. Housing starts in May leaped a surprising 17% from April's all-time low, but output of U.S. factories and mines continued to shrink as overall industrial production declined 1.1% in May. Manufacturing fell 1.0%, with motor vehicles accounting for about a third of the decrease. Meanwhile, May inflation numbers came in well under expectation, with wholesale prices up 0.2% for the month and consumer prices up just 0.1%. The overall cost of living in May was down 1.3% from a year ago, the biggest drop in 60 years.