Thursday, September 26, 2013

Higher markets on improved GDP data

Dow rose 25, advancers ahead of decliners 3-2 & NAZ gained 17.  The MLP index jumped 4 to 448 & the REIT index went up 1 to 272.  Junk bond funds were mixed & Treasuries fell.  Oil had bargain hunting after recent selling & gold pulled back.

AMJ (Alerian MLP Index tracking fund)

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U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...103.05 Up ...0.39  (0.4%)

GCU13.CMX...Gold Sep 13........1,338.30 Up ...2.40 (0.2%)

In this Wednesday, May 8, 2013, file photo, Jeff Caldwell, 29, right, a chassis assembly line supervisor, checks a vehicle on the assembly line at the Chrysler Jefferson North Assembly plant in Detroit. The government issues its third and final estimate of economic growth in the April-June quarter on Thursday, Sept. 26, 2013. (AP Photo/Paul Sancya, File)

Photo:   Yahoo

The US economy grew at a 2.5% annual rate in Q2, an improvement from Q1.  But there are worries that growth may now be slowing.  The Commerce Dept said that its final look at economic growth in the spring was unchanged from a prior estimate made last month.  However, the components of growth were altered slightly.  Businesses added a bit less to their stockpiles & exports did not grow as fast as previously thought.  These downward revisions were balanced by slightly stronger spending by state & local govs.  Many economists believe growth is slowing to a sluggish rate at or below 2% in Q3.  If they are correct that economic activity slowed this summer, it would mark the 3rd qtr in the last 4 that growth rates have been 2% or lower.  Growth in Q4 nearly stalled out at a barely discernible 0.1% rate & then improved slightly to 1.1% in Q1.  The gov initially estimated activity in Q2 at a lackluster 1.7% but a big narrowing of the trade deficit reflecting stronger export sales overseas helped boost growth to 2.5% in the 2nd look.  The 2.5% figure held steady in the 3rd & final look at GDP for the spring.

Economy in U.S. Expanded at a 2.5% Annual Rate Last Quarter


Photo:   Bloomberg

The number of applications for unemployment benefits unexpectedly declined last week, showing further progress in the labor market.  Jobless claims decreased 5K to 305K, according to the Labor Dept.  The forecast called for an increase to 325K.  The 4-week average of initial filings fell to the lowest since Jun 2007.  Fewer dismissals may be a sign employers are optimistic about the demand outlook in the US.  But further gains in employment and improved income growth will be necessary to spur bigger advances in consumer spending, which accounts for about 70% of the economy.  A Labor Dept official said California & Nevada have caught up with a recent backlog of new applications stemming from a computer system changeover that skewed jobless claims data during the month.

Jobless Claims in U.S. Unexpectedly Decline to 305,000

FILE - This Wednesday, Aug. 14, 2013, photo, shows a home with a sale pendingin San Diego. The National Association of Realtors reports on the number of Americans who signed contracts to buy homes in August on Thursday, Sept. 26, 2013. AP Photo/Gregory Bull, File)

Photo:   Yahoo

Fewer Americans signed contracts to buy homes in Aug, the 3rd straight decline.  The drop could mean that higher mortgage rates are starting to deter some buyers.  The National Association of Realtors said that its index for pending home sales declined 1.6% to 107.7 last month.  The index has fallen for 3 straight months after reaching a 6½-year high in May.  The pending home sales index measures signed contracts.  Buyers typically complete sales 1-2 months later.  Signed contracts are still nearly 6% higher than a year earlier.  The Realtors' group forecasts that sales of previously owned homes will reach 5.2M this year, 11% higher than in 2012 & near levels that are considered consistent with a healthy market.  But the group expects sales will likely hold at that level in 2014.  The average rate on a 30-year fixed mortgage fell this week to 4.32%, down from 4.5% the previous week & lowest in 2 months.

Pending Sales of Existing Homes in U.S. Decreased 1.6% in August

Stocks continue to slosh along with uninspiring news.  The DC politicos will probably pass anther bill to keep the gov running (as has become usual).  This is a very sloppy way handle a multi $T budget.  Fraud & spending abuse are all but ignored.  Right behind it is raising the debt ceiling which will be another major battle.  The last time the ceiling was raised (at the last minute), sequester was part of the compromise.  That did little other than bring more economic pain.  Dow continues on its merry ways.

Dow Jones Industrials

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