Wednesday, September 25, 2013

Markets waver on mixed economic data

Dow went up 17, advancers over decliners better than 3-2 & NAZ rose 11.  The MLP index inched up a fraction to 443 & the REIT index climbed 1 to 271.  Junk bond funds were mixed & Treasuries edged higher.  Oil was flattish while gold is having an up day.

AMJ (Alerain MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...103.20 Up ...0.07 (0.1%)

GCU13.CMX...Gold Sep 13...1,323.30 Up ...7.30 (0.6%)

FILE - In this Thursday, Aug. 1, 2013, file photo, a sidewalk gets shaped in front of new construction in Omaha, Neb._The Commerce Department reports on new-home sales for August on Wednesday, Sept. 25, 2013. (AP Photo/Nati Harnik)

Photo:   Yahoo

Americans stepped up purchases of new homes in Aug after cutting back in Jul, suggesting that higher mortgage rates are not yet slowing the housing recovery.  Sales of new homes increased 7.9% last month to an annual rate of 421K, according to the Commerce Dept.  That comes after sales plunged 14.1% in Jul to a 390K annual rate.  The rebound in sales could ease worries that higher mortgage rates have started to dampen sales.  It coincided with the best month of sales for previously occupied homes in more than 6 years.  And homebuilders remain more confident in the market than they've been in 8 years.  Still, some buyers may be racing to close deals before rates rise further.  The average rate on the 30-year fixed mortgage has risen more than a full percentage point since May.  New-homes sales were 12.6% higher in Aug than a year ago, although the pace remains well below the 700K consistent with a healthy market.  The number of new homes available for sale rose 3.6% from Jul to 175K.  That's still relatively lean.  At the Aug sales pace, it would take 5 months to exhaust the supply.  The median price of a new home sold fell 0.7% from Jul to $255K.  Sales rose in all but one region of the country.  Sales plunged 14.6% in the West, the 2nd straight month of double-digit declines.  The realtors' group cautioned that the Aug pace could represent a temporary peak. The gain reflected closings & largely occurred because many buyers rushed to lock in mortgage rates in Jun & Jul before they increased further.  The Realtors said buyer traffic dropped off noticeably in Aug, likely reflecting the higher rates.

Sales of New U.S. Homes Rose in August Following July Plunge

ATM Orders

Photo:   Bloomberg

Orders for long-lasting US manufactured goods edged higher in Aug & gave a signal that the factory sector gained a step midway thru Q3.  Durable goods orders rose 0.1% during the month, according to the Commerce Dept.  Shipments of non-military capital goods other than aircraft grew 1.3% during the month, snapping 2 straight months of declines.  The reading for these "core" shipments feeds directly into gov estimates for GDP growth, & the increase supports the view that gov austerity is taking only a modest bite from national output.  New orders for core durable goods, which are viewed as a gauge of business spending plans, rose 1.5% in Aug.  That was below expectations & not enough to make up for the 3.3% decline registered in Jul.  Demand for new cars drove the overall gain in new orders of durable goods, which include everything from toasters to tanks.  Expectations were that overall goods orders would be flat.  Excluding transportation, new orders fell 0.1%.

Demand for U.S. Capital Goods Climbs Less Than Forecast

Stocks continue to meander.  Dow is back to where it was at the middle of the month (still up 500 in Sep).  The markets are listless,  The Syrian crisis has quieted down as the fiscal mess in DC is heating up.  Sadly, nobody knows there the DC confiscation will lead.  High yield stocks care & have sold off.  But Dow remains close to its record highs.  That's a significant disconnect.

Dow Jones Industrials

stock chart

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