Thursday, June 13, 2013

Markets fluctuate on mixed economic data

Dow climbed 23, advancers ahead of decliners 3-2 & NAZ went up 7.  The MLP index lost 3+, going below 440, & the REIT index rebounded 3+ to the 277s.  Junk bond funds continued selling off & Treasuries rose.  Oil & gold were also weak.

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...95.58 Down ...0.30  (0.3%)

GCN13.CMX...Gold Jul 13.....1,383.30 Down ...8.80  (0.6%)

A job seeker (C) talks to an exhibitor at the Colorado Hospital Association health care career fair in Denver April 9, 2013. REUTERS/Rick Wilking

Photo:   Yahoo

The number filing new claims for jobless benefits fell last week, nearing its lowest level in 5 years.  Initial claims for state unemployment benefits declined 12K to 334K, according to the Labor Dept.  That was the smallest number applications since early May & near levels last seen the early days of the 2007-09 recession.  Growing confidence in America's economic recovery has led US employers to exit a long cycle of elevated layoffs.  Moreover, it has been difficult to discern any increase in layoffs due to federal budget cuts this year.  At the same time, firms have been shy to step up the pace of hiring & the country's unemployment rate is expected to end this year above 7%.  The jobless claims reading beat the expectations for a decline of 1K.  The 4-week moving average for new claims dropped 7K to 345K.  The labor market is being closely watched for clues to when the Federal Reserve might start scaling back its expansive monetary stimulus.

Jobless Claims Fall; Labor Market Healing Ongoing

Retail Sales in U.S. Increased More Than Forecast in May

Photo:   Bloomberg

US retail sales rose more than forecast in May, showing job gains & lower borrowing costs are encouraging consumers to spend.  The 0.6% increase was the biggest in 3 months & followed a 0.1% gain in Apr, according to the Commerce Dept.  The forecast called for a 0.4% increase.  The figures used to calculate economic growth, which exclude categories such as automobiles, climbed 0.3%.  Interest rates held down by the Federal Reserve’s record monetary stimulus are bolstering car sales in the face of higher taxes & limited income growth.  Higher stock & home prices are shoring up confidence, driving orders at retailers.  8 of 13 major categories showed gains last month, led by the biggest increase in purchases at auto dealerships in 6 months.  Receipts at general merchandise stores climbed by the most since Aug.  Sales at motor vehicle dealers increased 1.8% in May, more than twice the 0.7% gain a month earlier.  Cars & light trucks sold at a 15.2M annualized rate in May, making it the 6th month out of the last 7 to exceed the 15M mark, a level that previously hadn’t been reached since Feb 2008.

Retail Sales in U.S. Increased More Than Forecast in May

US mortgage rates rose for a 6th week, extending a surge in interest costs spurred by speculation that the Federal Reserve will scale back stimulus efforts.  The average rate for a 30-year fixed mortgage climbed to 3.98%, a 14-month high, from 3.91% last week, according to Freddie Mac.  The average 15-year rate increased to 3.1% from 3.03%.  Borrowing costs have jumped in past month, pushing buyers to lock in deals before rates climb even further.  Home-loan applications increased for the first time in 5 weeks, the Mortgage Bankers Association said yesterday, & its refinancing index gained 5% in the period ended Jun 7, while the purchase gauge advanced 4.7%.  Mortgage rates have been following a surge in 10-year Treasury yields, which touched an almost 14-month high Tues amid concern that the central bank may slow purchases of gov debt as the economy improves.  The record rate for a 30-year loan is 3.31%, reached in Nov, according to Freddie Mac.  The 15-year average fell to a record-low 2.56% last month.

U.S. Mortgage Rates Rise for a Sixth Straight Week

Stocks continue to meander looking for direction.,  There probably will be little to inspire buyers or sellers until next week's FOMC meeting.  As has been the case for more than a month, higher yielding sectors are leading the way lower.  The MLP index is off 29 from its peak last month.  It was overbought, so a retreat had to be expected.  But when it comes, all investors feel its effects in their portfolios.  The stock market will continue weak until the Federal Reserve spells out its intentions next week.

Dow Jones Industrials

stock chart

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