Friday, February 27, 2015

Markets tread water on mixed economic data

Dow fell 14, advancers over decliners almost 3-2 & NAZ lost 1.  The MLP index inched up pennies to 444 & the REIT index rose 1 to the 334s.  Junk bond funds were mixed & Treasuries advanced.  Oil climbed back to the 49s & gold also saw buying.

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM....Crude Oil Apr 15...49.23 Up ...1.06 (2.2%)

GCH15.CMX...Gold Mar 15....1,215.20 Up ...5.60 (0.5%)

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The economy in the US expanded at a slower pace in Q4 than previously reported, restrained by a smaller gain in stockpiles & widening trade gap, even as consumers continued to provide support.  GDP rose at a 2.2% annualized rate, down from an initial estimate of 2.6%,  according to the Commerce Dept. The forecast called for a 2% pace.  While overall growth was revised down, consumer spending climbed by the most in 4 years, underscoring the fundamental strength of the expansion.  An improving job market & cheaper fuel costs will probably keep supporting households this year, which will help the US overcome a slowdown in exports as the dollar climbs & foreign economies struggle.  For all of 2014, the economy grew 2.4% from the year before, following a 2.2% advance in 2013.  Consumer spending rose 2.5%, the most since 2006.  Household consumption grew at a 4.2% annualized rate in Q4, the most since Q4-2010.  It was previously estimated at 4.3%.  Purchases added 2.8 percentage points to growth.  A smaller gain in spending on goods than previously calculated was almost fully offset by a bigger advance in purchases of services, which grew at a 4.1% pace, the most since 2000.  Inventories contributed less to growth than earlier reported.  Stockpiles grew at a $88B annualized rate, down from a prior estimate of $113B.  Following the $82B increase in Q3, the smaller gain added 0.1 percentage point to growth, compared with a previously reported 0.8 point.  The trade gap weighed on growth more than previously estimated.  The difference between exports & imports shaved 1.15 percentage point from growth, compared with a 1.02 percentage point reduction previously estimated.

U.S. GDP Grew Less Than Previously Estimated

More Americans signed contracts to purchase previously owned homes in Jan, rounding out a week of housing data that depicted an uneven recovery.  The index of pending sales climbed 1.7% after a 1.5% drop the prior month that was smaller than initially estimated, according to the National Association of Realtors (NAR).  The forecast called for a 2% rise.  Employment gains & near record-low mortgage rates will help to underpin demand.  A lack of properties for sale, higher prices & still-tight credit are hurdles for some customers as first-time buyers remain reluctant to enter the market.  “All indications point to modest sales gains as we head into the spring buying season,” the NAR said.  “However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices.”  The group revised Dec data from a previously reported 3.7% decrease.  3 of 4 regions saw an increase, led by 3.2% in the South.  Compared with a year earlier, the index increased 6.5% on an unadjusted basis & was projected to climb 8.7%.  The pending sales gauge was 104.2 on a seasonally adjusted basis, the highest since Aug 2013.  A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic.

Pending Sales of Existing U.S. Homes Rise to Highest Since 2013

US consumer sentiment fell from an 11-year high in Feb according to the University of Michigan.  It's final Feb reading on the overall index on consumer sentiment was 95.4, higher than the initial reading of 93.6 & the market forecast for a reading of 94.  However, the final sentiment index was lower than the final reading of 98.1 in Jan.

Consumer Sentiment Rises in Late February

Stocks aren't doing much today with uninspiring news. Oil recovered some of the losses from yesterday & is back to where it was in the first week of Jan.  The Feb rally brought  the Dow into the black YTD, up 370.  PM trading should be quiet.

Dow Jones Industrials

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