Thursday, March 12, 2015

Markets rise on jobless claims data

Dow shot up 175, advancers over decliners better than 3-1 & NAZ advanced 22.  The MLP index lost another 1+ to the 421s & the REIT index climbed 4+ to 330.  Junk bond funds rose & Treasuries gained.  Oil slid back below 48 & gold inched higher from its depths in the 1100s..

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM.....Crude Oil Apr 15...48.22 Up ...0.05 (0.1%)

GCH15.CMX...Gold Mar 15.....1,155.00 Up ....4.30 (0.4%)

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Record cold in parts of the US chilled retail sales in Feb as the economy began the year on weak footing.  Purchases unexpectedly dropped 0.6%, a 3rd consecutive decline, according to the Commerce Dept.  The forecast called for a 0.3% gain.  The decrease was broad-based, with 9 of 13 major categories retreating.  Frigid temperatures & snow probably contributed to slumping demand at auto dealers, building-material merchants & department stores, opening the possibility for a rebound this month.  Still, sluggish wage increases may also be playing a role by prompting Americans to use the windfall from cheaper gasoline to build up savings or pay down debt.  Bad weather also probably a key issue in depressing sales last month.  The eastern US saw below-normal temperatures in the east.  Sales declined 2.5% at automobile dealers, the most since Jan 2014, when snow also blanketed large swaths of the US.  Retail sales excluding autos decreased 0.1%.  They were projected to rise 0.5%.  Receipts at service stations climbed 1.5%, the first increase since May 2014 & the biggest since Dec 2013, as fuel costs stabilized.  Sales excluding automobiles & service stations decreased 0.2%, short of the projected gain of 0.3%.  The figures used to calculate GDP, which exclude categories such as food services, auto dealers, home-improvement stores & service stations, showed little change in sales after a 0.1% drop in Jan.  The 2.3% drop in purchases at building-material stores was the biggest since May 2012.  One standout last month was non-store retailers, which includes online retailers.  Purchases showed a 2.2% increase in demand, the largest since Mar 2014.  That also points to a weather influence as Americans shopped from the warmth of their homes.

Sales Fall as Record Cold in Parts of U.S. Hurts Retailers

The number of Americans filing for unemployment benefits declined more than forecast last week, returning to a level that’s consistent with an improving labor market.  Initial jobless claims dropped 36K to a 3-week low of 289K from a revised 325K in the prior week, according to the Labor Dept.  The forecast called for 305K new applications.  The slump in claims indicates the elevated readings in previous weeks were probably due to companies temporarily dismissing workers because of inclement winter weather, rather than underlying weakness in the labor market.  Employers in Feb added more workers than forecast & the jobless rate declined to the lowest level in almost 7 years.  The 4-week average, a less-volatile measure than the weekly figure, fell to 302K from 306K the week before.  The number continuing to receive jobless benefits declined 5K to 2.42M, while the unemployment rate among people eligible for benefits held at 1.8%.

Jobless Claims in U.S. Fell Last Week More Than Forecast

The ECB increased the maximum Emergency Liquidity Assistance (ELA) that Greek banks can get from their national central bank by €600M ($637M), according to leakers.  The amount matches the request by the Greek central bank.  The ECB’s Governing Council held a phone conference to set the limit, which policy makers had increased by €500M to €68.8B on last week.  Greek banks didn’t absorb all ELA funds available under the previous ceiling & have about €3.5B in liquidity left, according to another leaker.  Greek banks were cut off from regular funding operations in Feb, forcing them into ELA.  The ECB removed an exemption on the quality of debt it accepts as collateral, which was conditional on the country being on track to complete its aid program.  The gov has argued that the austerity conditions of the program are hampering the economy’s recovery.  Greece’s statistical agency just said that the country’s unemployment rate rose to 26.1% in Q4-2014, from 25.5% in Q3.

ECB Said to Increase Greek ELA Ceiling by 600 Million Euros

The jobless claims data was reassuring to the bulls.  But weak retail sales was more encouraging since that suggests the Fed may have less courage to increase interest rates in the coming months.  The Greek drama plays out, but the ECB can be expected to give in at the last minute & extend the bailout package.  Including today's rise, Dow is down 300+ this month.

Dow Jones Industrials

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