Thursday, June 27, 2013

Markets advance on improving economic data

Dow shot up 153, advancers over decliners 7-1 & NAZ rose 33.  The MLP index jumped another 5+ to the 455s (up 23 in just 3 days) & the REIT index went up 4 to the 278s.  Junk bond funds rose 1% & Treasuries edged higher.  Oil rose & gold has a tiny gain.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLQ13.NYM...Crude Oil Aug 13...95.99 Up ...0.49 (0.5%)

GCN13.CMX...Gold Jul 13.......1,232.60 Up ...3.00 (0.2%)

Jobless Claims in U.S. Decreased 9,000 Last Week to 346,000

Photo:   Bloomberg

Fewer Americans filed unemployment claims last week, indicating employers are slowing the pace of layoffs as the economic outlook improves.  Jobless claims decreased 9K to 346K from a revised 355K the week prior, according to the Labor Dept.  The estimate called for 345K claims.  Smaller reductions in headcounts indicate employers are confident enough that demand will be sustained as the housing market improves & consumers grow more optimistic.  Bigger gains in sales may encourage companies to step up hiring to help reduce an unemployment rate the Federal Reserve says “remains elevated.”  The 4 week moving average dropped to 346K last week from 348K.  The number of people continuing to receive jobless benefits was little changed at 2.97M.  That continuing claims figure doesn’t include those receiving extended benefits under federal programs.  The number of job seekers who have exhausted traditional benefits & are relying on emergency & federal extended aid rose by 23K to 1.7M.  The unemployment rate among people eligible for benefits held at 2.3%.

Jobless Claims in U.S. Declined 9,000 Last Week to 346,000

Consumer Spending in U.S. Rebounded in May as Incomes Rose

Photo:   Bloomberg

Consumer spending in the US rebounded in May following the largest drop in more than 3 years, a sign the biggest part of the economy will underpin growth in Q2.  Household purchases rose 0.3% after a 0.3% decline the prior month (the biggest since Sep 2009), according to the Commerce Dept.  Income advanced 0.5%, more than projected.  The report may help ease concern about the outlook for the economic expansion after data yesterday showed household purchases rose at a slower pace than previously estimated in Q1.  Rising home prices & an improving job market, combined with faster income gains, may help to accelerate spending in H2.

Consumer Spending in U.S. Rebounds as Incomes Increase

A single family home is shown with a sale pending in Encinitas, California May 22, 2013. REUTERS/Mike Blake

Photo:   Yahoo

Contracts to purchase previously owned US homes rose in May to the highest level in more than 6 years as buyers rushed to the market to lock in deals before interest rates climb higher.  The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, increased 6.7% to 112.3, the highest level since Dec 2006 (the "good old days")..  Expectations were for a rise of only 1.0%, following a 0.5% drop in Apr (previously reported as a 0.3% gain).  Compared to last year, contracts were up 12.1%.  "Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher," said NAR chief economist Lawrence Yun.  Rates on home mortgages surged to the highest level in almost 2 years after the Federal Reserve laid out a plan to wind-down its stimulus program.  But the spike in mortgage rakes may not be sufficient to derail the housing market recovery, which has become a bright spot in the economy with soaring home prices & tight supply. 

Stocks are having their 3rd good day in a row.  Buyers are returning because of improved economic data.  Of course that same data is telling the Federal Reserve that it's time to slow down the bond buying program.  Dow has risen 400 in the last 3 days, erasing any oversold condition that it had. The rest of the week should bring more gains with money managers eager to boost the value or their portfolios.

Dow Jones Industrials

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