Thursday, November 20, 2014

Markets edge higher on economic data

Dow inched up 3, advancers over decliners 2-1 & NAZ went up 22.  The MLP index rose 3 to the 517s & the REIT index was flattish in the 316s.  Junk bond funds were lower & Treasuries gained.  Oil found buyers today & gold lost ground.

AMJ (Alerian MLP Index tracking fund)

CLZ14.NYM...Crude Oil Dec 14...74.92 Up ...0.34 (0.5%)

GCX14.CMX...Gold Nov 14....1,191.90 Down ...1.70  (0.1%)

Purchases of previously owned US homes unexpectedly rose in Oct to a one-year high as low borrowing costs helped sustain the recovery in residential real estate.  Existing homes sold at a 5.26M annual pace, the strongest since Sep 2013 & up 1.5% from a revised 5.18M pace in Sep, the National Association of Realtors reported.  It was the 5th consecutive month that the sales pace topped 5M.  Prices also climbed,  Employment growth & mortgage rates near historic lows are helping stir buying interest that will probably underpin the economy.  At the same time, limited wage gains, student debt & stricter lending standards are headwinds for those looking to own for the first time.  Total inventories fell 2.6% to 2.22M, which included a 3% decline in the supply of single-family homes, which stand at 1.96M.   At the current pace, it would take 5.1 months to sell those houses, compared with 5.3 months at the end of Sep.  A year ago, inventory stood at 1.86M.  Single-family sales increased 1.3% to a rate of 4.63M a year.  Multifamily properties including condominiums sold at a 630K annual pace, up 3.3% from Sep.  Cash transactions accounted for 27% of all purchases in Oct, up from 24% a month earlier.  Foreclosures & other distressed property sales accounted for 9% last month, little changed from 10% in Sep.  The share of properties sold to first-time buyers was 29%.  It’s been less than 30% in 18 of the last 19 months.  “I think first-time buyers this year are at the low point and I do anticipate growth going into next year,” NAR chief economist Lawrence Yun said.  There’s “more job creation and I think underwriting standards will be dialed down modestly.”

Previously Owned U.S. Home Sales Increase to One-Year High

The index of US leading indicators increased more than forecast in Oct, as gains in manufacturing & easier credit boosted the economy.  The Conference Board’s index of US leading indicators, a gauge of the outlook for the next 3-6 months, climbed 0.9% last month, the most since Jul, after rising 0.7% in Sep.  The forecast called for an advance of 0.6%.  Growing business investment is giving manufacturing a lift just as an improving job market & falling fuel prices are boosting American consumers.  That bears out Federal Reserve policy makers who, according to minutes of their meeting last month, said the impact on the US from a slowdown overseas would probably be “quite limited.”  8 of the 10 indicators in the leading index contributed to the increase last month, led by the spread between short & long-term interest rates & rising factory orders.  The Conference Board’s index of coincident indicators, a gauge of current economic activity, climbed 0.1% after a 0.3% gain the prior month.  The coincident index tracks payrolls, incomes, sales & production, used by the National Bureau of Economic Research to determine the beginning & end of recessions.  The gauge of lagging indicators decreased 0.1% after a 0.1% gain the prior month.

Leading Economic Indicators in U.S. Rise More Than Forecast

Fewer Americans filed for unemployment benefits last week as the need to retain staff keeps layoffs at the lowest levels in more than a decade.  Jobless claims fell 2K to 291K from an upwardly revised 293K in the prior period, according to the Labor Dept.  The forecast called for a decline to 284K.  It was the 10th straight week the number of claims has been lower than 300K, which hasn’t happened since 2000.  Companies are holding on to more workers to keep pace with demand for domestic goods & services that has held up even as growth in overseas markets cools.  As a result, layoffs have lingered near historically low levels & payrolls are rising, giving households a needed lift as the holidays approach.  The prior week’s claims were revised up from an initial reading of 290K.  The 4-week average of claims climbed to 287K from 285K the week before.  The number continuing to receive jobless benefits dropped 73K to 2.33M in the latest week, the fewest since Dec 2000.  In that same period, the unemployment rate among those eligible for benefits held at 1.8%.

Fewer Than 300,000 in U.S. File Jobless Claims for 10th Week

This is a rather cautious advance.  Markets may be nervous about what Obama will say tonight about allowing millions of illegals to be semi-legal in the US.  This involves a huge constitutional issue & comments are flying all over.  Meanwhile data from the US economy is looking better, although previous signs this year did not have staying power.

Dow Jones Industrials

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