Tuesday, November 25, 2014

Markets fluctuate on mixed economic data

Dow slid 15, decliners ahead of advancers 5-4 & NAZ lost pocket change.  The MLP index was fractionally higher in the 511s after yesterday's big drop & the REIT index was also up fractionally above 320.  Junk bond funds did little & Treasuries gained today.  Oil & gold climbed higher.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYM...Crude Oil May 15...76.66 Up ....0.49 (0.6%)

GCX14.CMX...Gold Nov 14......1,196.50 Up ....1.00 (0.1%)

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Consumer confidence unexpectedly declined in Nov from a 7-year high as Americans became less upbeat about the economy & labor market.  The Conference Board’s index fell to 88.7 this month from an Oct reading of 94.1 that was the strongest since Oct 2007.  The figure last month was weaker than the most pessimistic estimate.  The decline this month interrupts a steady pickup in sentiment since the middle of the year & shows attitudes about the economy would benefit from faster wage growth.  At the same time, further confidence will probably be underpinned as stocks rally to a record, the labor market closes in on its best year since 1999 & gas prices drop to levels unseen since late 2010.  The index of consumer expectations for the next 6 months decreased to 87 this month from 93.8.  The gauge of present conditions dropped to a 4-month low of 91.3 from 94.4 & the share of Americans who said business conditions were good decreased to 24%, the lowest in 3 months.  The data showed Americans’ assessments of current & future labor-market conditions weakened.  The share of Americans who said jobs were currently plentiful fell to 16% from 16.5% but the share that said jobs were hard to get was little changed at 29.2% after 29% in Oct.  A smaller number of consumers expected more jobs to become available in the next 6 months as the share fell to 15% from 16%.  The share of respondents who said they expected their incomes to rise in the next half year also decreased, to 16.3% this month from 16.7% in Oct.  “Consumers were somewhat less positive about current business conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned,” Lynn Franco, director of economic indicators at the Conference Board, said.  “However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.”

Consumer Confidence in U.S. Unexpectedly Dropped in November

Photo:   Bloomberg

The US economy expanded more than previously estimated in Q3, reflecting bigger gains in consumer spending & business investment & capping the strongest 6 months of growth in a decade.  GDP rose at a 3.9% annualized rate, up from an initial estimate of 3.5%, according to the Commerce Dept.  The forecast called for a 3.3% gain.  Companies are seeing the benefits of the steadily improving economy as a strengthening labor market & gains in sentiment underpin consumer spending.  The report wasn’t universally positive.  Revised data for Q2 showed the previously estimated increase in wages & salaries was cut almost in half & corp profits in Q3 rose less than in the prior qtr.  Consumer spending, which accounts for about 70% of the economy, grew at a 2.2% annualized rate in Q3 compared with the previously estimated 1.8%.  The improvement was spread across durable & non-durable goods.  Cheap gas has emboldened many consumers to step up auto purchases, with the industry poised for an unprecedented 6th straight annual sales increase next year.  Deliveries of new cars & light trucks in 2015 will probably total 16.7M.  That bodes well for factory production.  Today’s report also included revisions to Q2 personal income.  Wages & salaries rose $51.9B, revised down from an initially reported $102.5B gain.  Preliminary data showed they climbed by $66B in Q3.

Economy in U.S. Expands 3.9%, More Than Previously Estimated

Home prices in 20 US cities advanced at a slower pace in the 12 months thru Sep as the housing market continued to make gradual progress.  The S&P/Case-Shiller index of property values increased 4.9% from Sep 2013, the smallest gain since Oct 2012, after rising 5.6% in the year ended in Aug.  Nationwide, prices rose 4.8% after a 5.1% year-to-year increase a month earlier.  Housing prices have cooled this year as more properties are put up for sale & investors retreat to the market’s sidelines.  Slower appreciation will probably help foster a pickup in homeownership, particularly among first-time buyers & people having trouble obtaining credit, once wage growth becomes more pronounced.  Seasonally adjusted, prices in 20 cities increased 0.3% in Sep, matching the estimate, after falling 0.1% the prior month.  Unadjusted prices were little changed.  All 20 cities in the index showed a year-over-year gain, led by a 10.3%% rise in Miami & a 9.1% advance in Las Vegas.  “With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better,” David Blitzer, chairman of the S&P index committee, said.

Home Prices in 20 U.S. Cities Increase at a Slower Pace

Markets are treading water.  The consumer confidence data was discouraging & the revision to GDP data is yesterday's news.  Markets are more concerned with oil prices & actions OPEC will take on Thurs.  In the meantime, Dow is hovering near its record highs, making the bulls happy.

Dow Jones Industrials

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