The unexpected defeat of the US House majority leader Eric Cantor by a tea party candidate in a Republican primary raised concerns about increased gridlock in Washington. Also, advances in Iraq by ISIS, a group disowned by Al Qaeda for being too violent, caused a rise in oil prices and shocked the markets. Overall, stocks fell this past week. Treasuries were largely unchanged and oil rose.
- The World Bank cut its forecast of global growth this year from 3.2% to 2.8%. The harsh US winter and the Ukraine crisis were cited as reasons for the reduced forecast.
- Initial claims for unemployment rose to 317,000 in the prior week from a revised 313,000 the week before. This was higher than predictions for 310,000. The four week moving average designed to smooth out weekly fluctuations also rose to 315,250.
- Retail sales rose 0.3% in May. Excluding automotive retail sales rose only 0.1%. Excluding both autos and gasoline, retail sales were flat and worse than expectations. From a year ago May’s sales rose 4.3%. April retail sales were revised up from 0.1% to 0.5%.
- Business inventories in April increased 0.6%.