Monday, April 29, 2013

Markets rise on pending home sales data

Dow gained 64, adavncers over decliners 3-1 & NAZ was up 26.  The MLP index rose 1+ to the 455s & the REIT index was up 1+ to go over 300.  Junk bond funds were higher & Treasuries were bid up.  Oil & gold are rebounding after recent selling.

AMJ (Alerian MLP Index tracking fund)

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CLM13.NYM...Crude Oil Jun 13...93.69 Up ...0.69 (0.7%)

GCK13.CMX...Gold May 13...1,466.40 Up ...12.80 (0.9%)

A real estate sales sign sits outside of a house for sale in Phoenix, Arizona June 2, 2009. REUTERS/Joshua Lott

Photo:   Yahoo

Contracts to purchase previously owned homes rose in Mar, as the housing market continues to accelerate this year.  The National Association of Realtors said its Pending Sales Index, based on contracts signed last month, rose 1.5% to 105.7.  Activity in recent months has shown modest improvements, & contracts last month reached the highest level in 3 years.   The forecast was for sales to rise 1.0% after a previously reported 0.4% slip in Feb.  The housing upturn is expected to add support to the economy this year although there have been signs of weakness lately.  The inventory of homes for sale remains low, leading to a rise in home prices in most markets.  The market appears to be leveling off due to the supply shortage which has pushed up home values, putting a solid foundation under the housing recovery.  "Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply. Little movement is expected in near-term sale closings, but they should edge up modestly as the year progresses," said NAR chief economist Lawrence Yun.  Pending home sales were up 7.0% compared to Mar last year.

Pending Sales of Existing Homes in U.S. Climbed 1.5% in March

Consumer Spending in U.S. Climbs More Than Forecast on Services

Photo:   Bloomberg

US Consumer spending rose more than projected in Mar, reflecting a jump in outlays for services that is unlikely to be repeated as the biggest part of the economy softens.  Household purchases, which account for about 70% of the economy, climbed 0.2% after a 0.7% gain the prior month, according to the Commerce Dept.  The estimate called for spending to be little changed.   Incomes increased less than forecast & inflation cooled to the lowest level in more than 3 years.  Cooler-than-normal temperatures last month may have temporarily boosted spending on utilities, just as the increase in the payroll tax that took effect in Jan is starting to inflict more damage.  A slower pace of growth & less inflation means Federal Reserve policy makers will probably confirm they’ll keep pumping money into financial markets after they meet this week.

Consumer Spending Climbs More Than Forecast on U.S. Services

Chrysler Quarterly Profit Falls on New Product Costs, Volume

Photo:   Bloomberg

Chrysler Group, grappling with declining shipments & higher product costs, said Q1 net income fell 65% to $166M from a year earlier & revenue decreased 6% to $15.4B.  Adjusted operating profit fell 41% to $435M.  CEO Sergio Marchinonne is relying on Chrysler & its 36 straight monthly US sales gains, to offset losses at Fiat’s mass-market brands in Europe.  Chrysler’s share of the US market has risen for 3 straight years, reaching 11.4% in 2012, according to Autodata Corp.  Chrysler’s 2012 sales in its home market climbed 21% to 1.65M.  Marchionne said in Jan that shipment volume would be hurt by introductions of the Jeep Compass & the Ram Heavy Duty pickup as well as preparation for the bringing out the new Jeep Cherokee, which caused production of the predecessor Liberty to end last year.

 Chrysler Quarterly Profit Tumbles 65% on New-Product Costs, Shipment Drop

Stocks are doing well as buyers returned from their long weekend.  But fundamentals remain in place.  The Federal Reserve (FED) & the ECB have meetings this week.  The FED will probably stand pat while the ECB is expected to lower its lending rate by ¼ percentage point to a ½% annual rate.  Earnings season is winding down, but important ones are coming this week after the weak performance by Chrysler (which had been outperforming its industry).  Dow is within 100 of a new record, following a tough time during earnings season.

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