Wednesday, October 1, 2014

Markets tumble on weak economic data

Dow dropped 139, decliners over advancers 2-1 & NAZ fell 42.  The MLP index was up fractionally in the 531s & the REIT index which has been weak in recent weeks rose a fraction to the 293s.  Junk bond funds were little changed & Treasuries saw buying.  Oil climbed higher after recent selling & gold keeps losing ground.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM....Crude Oil Jan 15...90.47 Up ...0.71 (0.8%)

GCQ15.CMX...Gold Aug 15....1,211.80 Down ...2.50  (0.2%)

Companies hired 213K workers in Sep as the labor market continued to strengthen, based on a private report.  The gains in employment last month followed a revised 202K increase in Aug, according to the ADP Research Institute.  The forecast called for an advance of 205K.  Stronger demand for goods & services is prompting companies to hold the line on layoffs & expand headcount.  Continued progress in the labor market will be needed to boost aggregate income & drive consumer spending.  The Aug figure was revised from a previously reported 204K.  Goods-producing industries, which include manufacturers & construction companies, increased headcount by 58K in Sep.  Construction employment rose by 20K & factory payrolls climbed 35K while payrolls at service providers increased 155K (typically lower paying jobs).  Companies employing 500 or more workers added 77K jobs.  Employment at businesses with 50-499 employees increased 48K & the smallest companies boosted payrolls by 88K, the report showed.

Private Payrolls in U.S. Increased by 213,000 in September

Manufacturing cooled in Sep following the strongest rate of growth in 3 years as US factories settled into a more sustainable expansion that will spur the economy.  While the Institute for Supply Management index dropped to 56.6 from 59 in Aug, the gauge’s average over the past 3 months was the highest since early 2011.  The forecast called for a decline to 58.5.  Rising sales at automakers & growing corp orders for equipment are keeping the nation’s assembly lines busy.  Improving consumer & business spending are bolstering American factories at a time global markets from China to Europe show few signs of gaining traction.  The new orders gauge declined to 60 last month from a 66.7 reading that was the highest since 2004.  The ISM measure of production advanced to 64.6, the highest since May 2010, from 64.5 the prior month.  The index for orders waiting to be filled decreased to 47 from 52.5.  Measures of factory & customer inventories fell from a month, while an index of prices paid climbed.

Manufacturing in U.S. Cools From Strongest Pace in Three Years

China’s manufacturing stayed subdued last month as an official gauge was unchanged, with the economy weighed down by a property slump.  The gov Purchasing Managers' Index was at 51.1 in Sep, the same as the Aug reading & compared with the 51 estimate.  Readings above 50 signal expansion.  A pullback in manufacturing, declining industrial profits, & factory-output growth at a 5-year low point to a deepening economic slowdown.  Authorities have been reluctant to use broader stimulus to prop up growth as they seek to curb debt risks, instead taking targeted steps such as yesterday’s easing of mortgage policies to aid the housing market.  Another PMI from HSBC Holdings & Markit Economics for Sep was at 50.2, according to a release yesterday (unchanged from Aug).  The official measure typically registers a higher reading than the HSBC survey, which is based on responses from purchasing managers at more than 420 businesses.  China's economy may expand 7.3% this year, according to a recent survey.  Economists reduced their forecasts after Aug registered the slowest industrial-output expansion since the global financial crisis.

China Factory Gauge Unchanged as Manufacturing Subdued

The new month/qtr started off on the wrong foot.  Initial economic data was not encouraging & foreign unrest is not helping matters.  The Ukraine & Iraq conflicts drag on, seemingly going from bad to worse.  Now Hong Kong is seeing more unrest, not a plus for the Chinese economy which is not doing as well as in the past.  More data is coming in the next few days, highlighted by the Sep jobs report on Fri.  Dow is dragging its feet, back to where it was in Jun & earnings season begins next week.

Dow Jones Industrials

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