Recapping the day's news and newsmakers through the lens of CNBC.
Home sales dip in June
Whoops! The housing recovery has been shoring up the economy in the past few months. Now, just as it looked like a stronger housing market was something you could count on, the National Association of Realtors reports a hiccup. After two straight months of hefty gains, home sales fell 1.2 percent in June to an annual rate of 5.08 million units.
Still, bumps in the road are common in any recovery, and the long-term view of housing looks positive. Despite the June drop, sales were the second highest since November 2009, and they were up 15.2 percent from the year-ago level. Prices of previously owned homes soared 13.5 percent from a year ago, to $214,000, the highest in five years.
So what caused the sales dip? Buyers may have been put off by the rise in mortgage rates, with the average 30-year, fixed-rate loan up 0.53 percentage point between May and June, to 4.07 percent. That's still low, and buyers may rush into the market to beat future rate increases.
"We do not believe that the weaker sales are indicative of a broad-based slowdown in the housing recovery caused by the recent rise in mortgage rates."—TD Securities economist Gennadiy Goldberg
"Distressed sales are at the lowest point now since the Realtors began tracking them at the end of 2008, so distressed sales are now making up just 15 percent of all home sales."—CNBC's Diana Olick
McDonald's sales hurt by Asia and Europe
Despite adding menu items and improving sales in the U.S., McDonald's disappointed Wall Street Monday with lower-than-expected earnings of $1.38 per share, up from $1.32 a year earlier. Analysts had expected $1.40. Revenue increased to $7.10 billion, from $6.92 billion, matching expectations. McDonald's shares dipped after the announcement.
Flat sales in Europe, Asia, the Middle East and Africa were to blame. Analysts say McDonald's, like many fast-food chains, is struggling to grow while trying to meet customers' demands for healthier menu items.
"While our consolidated results this quarter were positive, global comparable sales for July are expected to be relatively flat. Based on recent sales trends, our results for the remainder of the year are expected to remain challenged."—McDonald's CEO Don Thompson
"The industry is still struggling. The market in total is probably growing at a very, very low single-digit rate, if at all.... Europe, France and Germany have been weak for McDonald's for probably a year now."—Peter Saleh, senior research analyst at Telsey Advisory Group
Optimism boosts hiring
Thinking of building up your workforce? Go ahead, you'll have plenty of company.
Nearly a third of corporate economists surveyed by the National Association for Business Economics said their company added jobs in the April to June quarter. That's the highest number to report hiring in nearly two years. And 40 percent said they expected more hiring over the next six months.
Growing optimism appears to be the cause. About three out of four of the economists expected the economy to grow by at least 2.1 percent over the next 12 months. In April's survey, it was just two out of three.
Of course, hiring has a long way to go to, as high unemployment continues to be a drag on the economy. Fresh college graduates are having a hard time finding the kind of work they need to pay off hefty student loans. And the economy could suffer if too many young people decide college is not worth the cost.
"These tuitions and prices get so far out of hand, these kids get totally discouraged, they can never meet it."—Bill Bennett, former education secretary
Proper tapering technique
OK, just how do you taper, anyway?
The Federal Reserve coined the term to emphasize that it will take a gradual approach to ending the program to keep interests rates low. With the Fed scheduled to meet next week, it's fair to ask just how a tapering might be accomplished.
CNBC's Senior Economics Reporter Steve Liesman says the Fed could reduce its massive bond-buying program in various ways, and is likely to discuss not just how much to taper, but how often and, most importantly, how to communicate about what it is doing. The goal will be to find a technique that doesn't roil the markets.
The Fed, which has been buying $85 billion in bonds a month, could decide to reduce those purchases by $10 billion to $20 billion a month starting as early as September. To pull back gently, it could taper every other month instead of every month, and it could adjust the tapering figure as fresh data arrive.
"It's the cumulative effect, or market expectations, that matter—how much the market believes the Fed will reduce its purchasing over time. So the Fed is going to think hard about the signals sent by the amount of tapering and the frequency."—CNBC's Steve Liesman
—By Jeff Brown, Special to CNBC.com.