What a mess! Greece’s debt issues have spread like wildfire to stock markets all over the globe as the country remains without any realistic resolution to make its June payments. Creditors continue to dispute the country’s pension system, while Greece is in opposition to austerity measures such as value-added tax increases. The country has until the end of the month to pay the International Monetary Fund (IMF) as well as the European Central Bank (ECB), and with only 15 days left, the odds of a resolution aren’t looking too good. Domestically the major equity indices have pulled back even further today, with the Dow Jones Industrial Average now in negative territory for 2015, year to date (YTD).

Aside from the Greek woes, the domestic economic data was not at all helpful in moving the markets higher. Firstly, according to the Empire State manufacturing survey, there was no bounce from last month’s weakness; the headline reading sank to -1.98, which was well below the low-end forecast for a reading of +4.00. This is the second negative reading in the last three months, has pulled the second quarter average into negative territory at -0.03. Oddly enough, the readings were better with the special factors and severe winter weather of the first quarter, where the reading averaged at +8.21. New orders in particular, point to some troubling times ahead at a reading of -2.12 for the third negative reading in the last four months. Shipments have stayed strong, at +12.01 in June, but given the weakness in new orders, we don’t expect this component to stay strong much longer. The six-month outlook also reflects this concern, dropping nearly 4 points to a reading of 25.84. This is the lowest reading since February 2015 and is the second-lowest reading in the last two and a half years. Employment remains in the positive column at +8.65, up from +5.21 in May, but much weaker than the peak reading in March at +18.56. Pricing levels continue to be at multi-year lows and the month-over-month difference is little changed. There are no special factors noted in Q2-2015 so far that can be blamed for the loss of momentum in the New York manufacturing sector, and this is highly discouraging to the market.

Additionally, while the hawks in the Federal Reserve appeared to have some pretty good ammo this week, they won’t have anything convincing to say on the manufacturing sector. Instead of rebounding from a weak Q1-2015, it appears to be slowing even further in Q2-2015. All of the primary numbers in the May Industrial Production report are below the low-end of consensus estimates, with the headline reading at -0.2% and April’s reading revised 20 basis points lower to -0.5%. May marks the fourth negative reading in the last six months, with the other readings showing no change. Additionally, capacity utilization declined by 20 basis points to 78.1% for the lowest utilization rate since January 2014. May’s manufacturing component reading also fell by 0.2% for the third negative reading in the last five months. This weakness was concentrated in consumer goods and construction supplies, the latter of which is a disappointing indication for the housing sector, although the recent housing data seems to contradict this. The mining component at -0.3% has really been hit hard by weakness in the energy sector, but fortunately the contractions appears to be slowing. Vehicle manufacturing was actually very positive with its third consecutive monthly gain. This reflects strong consumer demand for both cars and trucks, and underscores the fact that vehicle sales are at the strongest levels in the last 10 years. Excluding vehicles, the overall May manufacturing number slips another 10 basis points to -0.3%. Aside from a small gain in durable goods, this report is very weak, and echoes the weakness in the aforementioned Empire State report for June. The softness appears to be pulling down the manufacturing sector and all related stocks.

On a positive note, it’s becoming more apparent that the new home market is becoming the economy’s leading sector, which was underscored by the recent jump in new home sales, the surge in starts and permits, and a major 5-point jump in the June reading of the NAHB/Wells Fargo Housing Market Index to 59. This reading is well outside the high-end forecast and matches that of last September as the strongest reading for the recovery. The jump was led by strong readings for future sales, with the component increasing by 6 points to a reading of 69, as well as a gain in the present sales component which increased by 7 points to a reading of 65. The traffic component continues to lag at a reading up 44; however it actually increased by 5 points in June. Weakness in traffic is indicative of a lack in first-time homebuyers, though the improvement here is a major positive for the overall housing outlook in June. The South continues to show the strongest growth for news homes, while the other regions posted modest gains. A stronger jobs market seems to be the catalyst behind the gains this month since mortgage rates are increasing, yet the demand for homes is not slowing.