Monday, June 3, 2013

Markets fluctuate after mixed data from Europe and China

Dow added 41, decliners over advancers 4-3 & NAZ lost 17. The MLP index slipped a fraction to the 442s & the REIT index rebounded 2+ to the 288s.  Junk bond funds slid back & Treasuries were mixed with a little buying for the 10 year Treasury.  Oil rose & gold pushed back over 1400.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN13.NYM...Crude Oil Jul 13...92.67 Up ...0.70 (0.8%)

GCN13.CMX...Gold Jul 13.....1,400.00 Up ...7.20 (0.5%)

Chrysler U.S. Sales Rise as Ram Leads Surge in Pickup Deliveries

Photo:   Bloomberg

US sales for Chrysler rose 11% in May, a sign that auto sales rebounded from a slight dip in Apr & will continue to boost the US economy.  The company sold almost 167K cars & trucks last month.  It was the best May since 2007 & its 38th straight year-over-year monthly sales gain.  The performance surprised some analysts who expected a decline for the month.  Ram pickup truck sales were strong, up 22% over a year ago to almost 32K.  This data supports predictions of a strong May for the auto industry.  Memorial Day sales & price cuts from Nissan were expected to draw customers back into dealerships after a slower-than-expected Apr.  Analysts predict that sales will rise 7% over May 2012 to around 1.4M vehicles, putting the industry back on pace for full-year sales of more than 15M.  In Apr, the annualized rate dropped below 15M for the first time in 6 months, causing some concern that the industry's recovery could be slowing.  Chrysler even predicted that total US sales in May would hit an annual rate of 15.5M.

Chrysler U.S. Sales Rise in May, Helped by Ram Pickups

U.K. Factory Index Rises to 14-Month High in May on New Orders

Photo:   Bloomberg

Euro-area manufacturing output contracted less than initially estimated in May & a UK factory index surged, supporting theview that the European economy is stabilizing.  A gauge of manufacturing in the 17-nation euro area increased to 48.3 last month from 46.7 in Apr, according to London-based Markit Economics.  That’s above an initial estimate of 47.8 on May 23.  The gauge has been below 50, indicating contraction, since Jul 2011.  In the UK, a separate report by Markit & the Chartered Institute of Purchasing & Supply showed a factory index climbed to a 14-month high of 51.3 from a revised 50.2 in Apr.  ECB President Draghi said today that while the economic outlook in the euro area is challenging, he still expects a recovery this year & that “there are a few signs of a possible stabilization.”  That assessment was paralleled by Bank of England Governor Mervyn King, who said that there are signs the UK economy is recovering, though output is not expanding “as fast as we’d like it to.”

European Manufacturing Gauges Climb as Outlook Improves

China Growth Limited by Struggling Small Manufacturers

Photo:    Yahoo

China's factory activity shrank for the first time in 7 months in May & growth in the services sector cooled, evidence that the world's 2nd-largest economy is losing further momentum in Q2.  The HSBC/Markit Purchasing Managers' Index (PMI) for May dropped to 49.2, the lowest level since Oct 2012 & down from 50.4 in Apr, as domestic & overseas demand fell.  The figure was slightly lower than a preliminary reading of 49.6 released on May 23.  Fifty divides expansion from contraction compared with the month before.  In the HSBC manufacturing PMI, compiled by Markit Group, the sub-index for total new orders dipped to 48.7, the first time it has retreated below 50 since last Sep & the new export orders sub index was below 50 for the 2nd consecutive month.  The indices suggested falling demand from both domestic & overseas firms.  China's official manufacturing PMI, released on Sat, rose but remained close to 50. It ticked up to 50.8 in May from April's 50.6, although it also pointed to falling orders from export markets.  The gov official PMI for the non-manufacturing sector, released earlier on Mon, also pointed to a loss of growth.  It fell to 54.3 in May from 54.5 in Apr, the lowest since last Sep.  The figures add to evidence China's economy is struggling for momentum, buffeted by weak exports demand & overcapacity in some industrial sectors.

China Growth Limited by Struggling Small Manufacturers

The new month brings data for May results from automakers & overseas.  Dow was up before the opening in NY, but that enthusiasm did not last.  Of the 30 Dow stocks, only 7 are higher & its rise is due to Merck (MRK) & Intel (INTC).  Markets are floundering presently, looking for direction.  Manufacturing data is coming & Fri is the big jobs report for May.  The high yield sectors remain under pressure although there were a few buyers for REITs today.

Dow Jones Industrials

stock chart

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