Tuesday, May 27, 2014

Markets rise amid economic data

Dow jumped 75, advancers over decliners more than 2-1 & NAZ added 37.  The MLP index slid 1+ to 490 & the REIT index was up a fraction in the 299s.  Junk bond funds were mixed & Treasuries dropped.  Oil pulled back on inventory worries & gold dropped.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...95.90 Down ....0.45  (0.5%)

GCK14.CMX...Gold May 14....1,277.40 Down ...14.20  (1.1%)

The Conference Board’s index of US consumer confidence increased to 83 in May from 81.7 a month earlier.  The forecast called for a reading of 83 & estimates ranged from 71.5 to 85.1.  Americans’ expectations for the economy deteriorated to a 7-month low in May, a sign that the rebound from weakness earlier this year may be limited by still-cautious consumers.  An expectations gauge that tracks where the economy is heading declined to 42.5 in May from 48 in the month prior.

Consumer Confidence Index in U.S. Increased to 83 in May

  • Ukraine
Photo:   Bloomberg

Ukraine’s gov said it inflicted “significant” losses on pro-Russian rebels in the east & retook Donetsk airport a day after Pres-elect Petro Poroshenko vowed to wipe out the separatists.  Troops killed “dozens” of rebels without suffering any losses, Interior Minister Arsen Avakov said, while the mayor’s office in Donetsk said 40 died & 31 were wounded.  Gunmen also broke thru the border from Russia after a firefight with gov forces overnight, & the self-proclaimed Donetsk People’s Republic asked Russian pres Putin for humanitarian & military help, according to separatist leader Denis Pushilin.  “The anti-terrorist operation is in an active phase now,” First Deputy Prime Minister Vitaliy Yarema told reporters.  “We’ll continue this operation until there are no terrorists on Ukraine’s territory.”  The violence highlights Poroshenko’s difficult task in uniting Ukraine after his May 25 presidential election victory.  He must stabilize a shrinking economy & confront separatists who’ve captured large swaths of the Donetsk & Luhansk regions.  They’ve declared the areas independent & are fighting to join Russia, which annexed Ukraine’s Crimea peninsula in Mar.  Poroshenko vowed yesterday to intensify operations to defeat the separatists, saying “they won’t last two or three months; they’ll last a few hours.”  That drew a warning from Russian Foreign Minister Lavrov that any escalation would be a “colossal mistake.”  Putin said the gov in Kiev must halt its military operation.

Ukrainian Forces Inflict Rebel Losses After Poroshenko Win

Orders for durable goods unexpectedly climbed for a 3rd month in Apr, a sign US factories will help the economy strengthen.  Bookings for goods meant to last at least 3 years rose 0.8% after a 3.6% gain in the prior month that was stronger than previously reported, according to the Commerce Dept.  The forecast called for a 0.7% drop.  Orders for military hardware surged by the most since Dec 2012.  Excluding transportation equipment demand, orders increased just 0.1% after a 2.9% gain that was stronger than previously estimated.  The Apr figures reflected a 7% gain in demand for computers & a 3.4% increase in orders for fabricated metals.  The figures also reflected a 4.1% drop in bookings for commercial aircraft.  Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines & communications gear, decreased 1.2% after a 4.7% surge the previous month that was the strongest since Nov.  Shipments of those goods, used in calculating GDP, fell 0.4% after rising 2.1%, also more than previously estimated.  The value of capital goods shipments excluding military hardware & commercial aircraft was $68.1B, up from a $67.3B average from Jan-Mar, indicating business investment will contribute to Q2 growth.

Durable Goods Orders in U.S. Unexpectedly Increased in April

Stocks began the week with buyers returning.  The economic news was favorable although the consumer confidence data was mixed & the Ukraine situation remains fluid.  The gain for NAZ shows oversold tech stocks are coming back into favor.  Yield stocks have been flattish in May following gains earlier in 2014.

Dow Jones Industrials

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