Wednesday, September 24, 2014

Mixed markets on mixed economic data

Dow went up 2, decliners ahead of advancers 3-2 & NAZ inched up 1.  The MLP index continued weak, dropping 4 to the 519s & the REIT index was off fractionally in the 292s.  Junk bond funds drifted lower & Treasuries slid back after buying in the last few days.  Oil & gold were flattish.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM....Crude Oil Jan 15...90.54 Down ...0.02  (0.02%)

GCQ15.CMX...Gold Aug 15....1,223.40 Down ...1.30  (0.1%)

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German business confidence fell more than forecast in Sep as economic & political risks in the euro area increase.  The Ifo institute’s business climate index dropped to 104.7 from 106.3 in Aug.  The forecast called for a decline to 105.8 & the index is at its lowest since Apr 2013.  Europe’s largest economy contracted in Q2 & euro-area growth stalled as intl political tension & stubbornly high unemployment sapped sentiment. The risks prompted the ECB this month to say it’ll be more active in adding stimulus to the euro area by starting asset purchases.  Ifo’s gauge of current conditions slid to 110.5 from 111.1 the previous month.  A measure of business expectations fell to 99.3 from 101.7.  The EU & the US have ramped up sanctions against Russia.  German Chancellor Merkel said yesterday that industry backing of the restrictions has been crucial & a solution to the conflict is “far off.”  Germany is Russia’s biggest EU trading partner.  Other data has pointed to weaker growth.  A gauge of German manufacturing activity expanded at the slowest pace in 15 months in Sep as new orders fell, & the ZEW index of investor confidence dropped for a 9th month.  While factory orders & industrial production gained in Jul, the Bundesbank warned that they were boosted by factors such as the dates of school holidays.

German Business Confidence Drops for Fifth Month

New-home sales in the US surged in Aug to the highest level in more than 6 years, a sign that the housing recovery is making progress.  Sales of new houses jumped 18% to a 504K annualized pace, the most since May 2008, according to the Commerce Dept.  The forecast was for the pace to accelerate to 430K.  The one-month increase was the biggest since Jan 1992.  The housing market is improving in fits & starts this year amid slow wage growth and tight credit conditions.  Sustained improvement in the job market will be needed to push up pay & sustain a stronger recovery.  Sales data is volatile because it’s based on a small sample, which means last month’s figure could be revised over coming months.  The median sales price of a new house climbed 8% from Aug 2013 to $275K.  Purchases climbed in 3 of 4 regions, led by a 50% surge in the West.  The supply of homes at the current sales rate dropped to 4.8 months from 5.6 months in Jul.  There were 203K new houses on the market at the end of Aug.  New-home sales, which last year accounted for almost 8% of the residential market, are tabulated when contracts are signed, making them a timelier barometer than transactions on existing homes.  Existing home sales dropped 1.8% to a 5.05M annual pace last month after reaching a 10-month high of 5.14M in Jul.  Housing starts also slumped in Aug, falling 14.4% to a 956K annualized rate following the Jul revised 1.12M pace that was the strongest since Nov 2007, Commerce Dept data showed.

Sales of New U.S. Homes Surged in August to Six-Year High

Bed Bath & Beyond Shopper
Photo:   Bloomberg

Bed Bath & Beyond rose after topping estimates with its quarterly results & annual forecast.  Q2 EPS amounted to $1.17, exceeding the $1.14 estimate.  Sales climbed 4.3% to $2.94B, ahead of the $2.89B projection.  Same-store sales grew faster than expected, & stock repurchases of $1B last qtr helped improve EPS.  Comparable sales gained 3.4% in the period, compared with the 1.5% rise estimated by Consensus Metrix.  The company forecast full-year EPS of $5-$5.08.  The midpoint of that range, $5.04, tops the analyst estimate of $5.01.  In addition to its flagship Bed Bath & Beyond chain, the  company owns Christmas Tree Shops, Buybuy Baby & Cost Plus World Market.  The stock jumped $4.  If you would like to learn more about BBBY, click on this link:

Bed Bath & Beyond Jumps After Earnings Top Analyst Estimates

Bed Bath & Beyond (BBBY)

Stocks are just marking time, waiting for new developments.  Air strikes against the bad guys in Syria-Iraq don't seem to be accomplishing a lot, but the thought of war discourages investors. The intl economic scene continues to be dreary & data from the US is uneven.  But Dow is only down a smidgen in Sep, the worst month of the year.  Bulls will take that as an encouraging sign. 

Dow Jones Industrials

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