Tuesday, August 4, 2015

Markets fluctuate after factory orders

Dow lost 8, advancers over decliners almost 2-1 & NAZ also slid 8.  The MLP fell 1+ to 371 & the REIT index rose 1+ to the 321s.  Junk bond funds crawled higher & Treasuries ran into selling.  Oil is back in the 46s while gold is flattish under 1100.

AMJ (Alerian MLP Index tracking fund)

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CLV15.NYM....Crude Oil Oct 15...46.44 Up ...0.88  (1.9%)

GCQ15.CMX...Gold Aug 15.....1,091.60 Up ...2.20  (0.2%)

Stocks in Athens trimmed a decline after their biggest slump in decades as the exchange reopened from a 5-week shutdown.  The ASE Index lost 9 to 659, paring a retreat of as much as 4.9%.  Lenders led the drop, with Piraeus Bank slumping 30%, the daily maximum allowed.  National Bank of Greece, Eurobank Ergasias & Alpha Bank also tumbled 25%, helping send a gauge tracking the nation’s lenders to a record low.  Trading is hampered because of emergency curbs put in place amid capital controls.  Stocks with extreme volatility are suspended sooner than normal, while would-be buyers have to raise money from places other than their bank accounts.  58 companies were halted or paused yesterday & fewer than 31M shares changed hands, the least since Nov.  Greek stocks have lost more than 85% of their value since 2007.  The nation’s benchmark gauge closed at its lowest level since Sep 2012 yesterday.

Greek Stocks Fall for 2nd Day, Extending Biggest Rout in Decades

New orders for US factory goods rebounded strongly in Jun on strong demand for transportation equipment & other goods, a hopeful sign for the struggling manufacturing sector.  The Commerce Dept said new orders for manufactured goods increased 1.8% after a revised 1.1% decline in May.  The increase was in line with expectations.  May factory orders were previously reported to have dropped 1.0%.  Factory activity has been stymied by a strong dollar & spending cuts in the energy sector after last year's sharp plunge in crude oil prices.  Tepid global demand also has weighed on manufacturing, which accounts for about 12% of the domestic economy.  Those factors have eroded the profits of multinational companies.  Orders for transportation equipment surged 9.3%, reflecting strong demand for aircraft.  There also were increases in orders for machinery & electrical equipment, appliances & components.  The department also said orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence & spending plans, increased 0.7% instead of the 0.9% rise reported last month.  Shipments of these core capital goods, which are used to calculate business equipment spending in the GDP report, increased 0.3%.  Shipments were previously reported to have dipped 0.1%.  The upward revisions to core capital goods shipments, combined with a report showing stronger construction spending in May than previously reported, suggest Q2 GDP could be revised higher when the gov publishes its 2nd estimate. 

Factory Orders Rebound in June

China's central bank promised to "stabilize financial market expectations," saying it will head off risks in the latest show of official resolve to keep the economy on an even keel.  Without referring to the shakeout in China's stock market which has slumped about 25% since early Jun, the People's Bank of China (PBOC) said it would improve its warning system for risk.  Authorities would "pay attention to stabilizing financial market expectations," the central bank said in an online statement.  The comment follows the slump in the market & drastic measures to stop the sell-off.  The central bank would use various policy tools flexibly to sustain appropriate growth in liquidity & credit and keep policy "prudent."  The PBOC would also aim to lower borrowing costs for firms & support key areas & vulnerable sectors, while keeping the yuan "basically stable" as it tries to refine the exchange rate system.  To halt the stampede out of the market, authorities took measures that included barring some investors from selling their shares, & mobilizing the country's top 21 brokerages to buy stocks.  The moves drew criticism that China was endangering its plans to reform the economy, though the official newspaper of the Communist Party has defended the measures as necessary.

China Central Bank Vows to Stabilize Market Expectations

Stocks are waiting for more Jul data, highlighted by the jobs numbers on Fri.  The Greek stock market is trying to get settled & Chinese officials have to a lot to do in their volatile stock markets.  In the US, the slide in oil & energy securities is bleeding thru to the overall market, including tech stocks which are generally having a good year.

Dow Jones Industrials

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