Housing starts offered good news on the housing sector, jumping 17 percent and showing a 4 percent gain for permits. Single-family homes, the core of the housing sector, rose strongly for a second month. But industrial production data were a disappointment, showing a 1.1 percent fall with capacity utilization falling deeper into record lows, now at 68.3 percent. Weakness was centered in mining, utilities, and autos with ex-auto manufacturing showing less weakness -- an important positive pointing to non-accelerating rates of contraction. But contraction in the auto sector is unfortunately accelerating, underscored by comments during the session from General Motors that it's aggressively cutting production. Producer prices showed a rare decline at the core level but also signs of pressure in earlier stages of production, pressure tied to rising energy prices. Rounding out the day's data was more weakness in weekly chain-store reports that point, so far, to a big disappointment for June retail sales.
But the international scene was as important to Tuesday's session as economic data. Pulling the dollar down was a reversal by Russia which again is calling for a new reserve currency, this time at the first meeting of the BRIC (Brazil, Russia, India, China). The dollar index fell 0.6 percent to 80.71 with gold, which benefits from uncertainty in the dollar, firming to $935. Unrest in Iran has yet to hit the market with oil ending above $70 at $70.50. The mixed economic data along with international uncertainty didn't help the stock market where the S&P 500 fell 1.3 percent to end just over 910. Demand for Treasuries firmed with the 10-year yield down 6 basis points to 3.65 percent.