Thursday, September 3, 2015

Higher markets on US service industry data

Dow  went up 136, advancers over decliners 4-1 & NAZ increased 33.  The MLP index rose 4 to the 357s & the REIT index added 1+ to the 297s.  Junk bond funds gained & Treasuries were flattish.  Oil climbed to the 47s & gold drifted lower again.

AMJ (Alerian MLP Index tracking fund)

CLV15.NYM...Crude Oil Oct 15...46.37 Up ...0.12 (0.3%)

GCU15.CMX...Gold Sep 15.....1,126.60 Down ...5.90  (0.5%)

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Filings for unemployment benefits rose more than forecast to an 8-week high, representing a pause in a trend of more muted layoffs.  Jobless claims increased 12K to 282K, according to the Labor Dept.  The forecast called for 275K new applications.  The start of a new school year, which differs from state to state, may introduce a period of volatility in the data as such calendar events are difficult to seasonally adjust.  Since the beginning of Mar claims have held below 300K, indicating employers are optimistic in their outlook for domestic sales even as global markets show signs of stress.  The 4-week average, a less-volatile measure than the weekly figure, climbed to 275K from 272K in the prior week.  The number continuing to receive jobless benefits fell 9K to 2.26M & the unemployment rate among people eligible for benefits held at 1.7%.

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

Growth at service industries from retailers to restaurants hovered in Aug near the strongest in a decade, a sign US demand was buoyant in the face of financial-market turmoil.  While the Institute for Supply Management’s non-manufacturing index eased to 59 from 60.3 the prior month, it was higher than projected & marked the 2nd-highest reading since 2005.  Figures above 50 signal expansion, & the forecast called for 58.2.  Orders, backlogs, output & employment in the industries that account for almost 90% of the economy were running at faster rates in Aug than in the first 7 months of the year on average.  While a housing rebound & persistent consumer spending have bolstered demand for services, concerns about the global economy threaten to temper corporate expansion plans.  The new orders measure cooled to 63.4 in Aug from a 10-year high of 63.8 a month earlier, while a gauge of backlogs jumped to the highest since 2007.  The business activity index, which parallels the ISM’s factory production gauge, eased by 1 point to 63.9.  The measure of employment decreased to 56 in Aug from 59.6, while the index of prices paid fell to a 4-month low.  The non-manufacturing survey covers industries including utilities, retail, health care, construction & agriculture.  These are relatively less directly influenced by the global economic weakness that’s holding back American factories.  Housing, which is included in the services industries, is rebounding as buyers take advantage of historically low mortgage rates.  Purchases of new homes & previously-owned dwellings each climbed in Jul.

Growth at U.S. Service Providers Hovers Near Strongest in Decade

The ECB left interest rates at record lows, shifting the focus to pres Mario Draghi’s press conference for clues on whether he sees a need to step up stimulus.  The Governing Council kept the main refinancing rate at 0.05% as predicted.  The deposit rate & the marginal lending rate stayed at minus 0.2%, & 0.3%, respectively.  6 months after the ECB started a €1.1T ($1.2T) QE program, weaker commodity prices, a rout in global equities & China’s slowdown are stoking concerns it’ll struggle to revive consumer prices.  With market-based measures of medium-term inflation falling,  Draghi is likely to say the ECB has downgraded its economic forecasts, raising the question of whether more action is needed.

ECB Leaves Rates On Hold as Investors Look to Draghi for QE Hint

Going into a long week & with the Aug jobs report tomorrow, there is not a lot happening in today's market.  But there is a strong upward bias, largely because the world did not come to an end yesterday.  Fundamental macro economic problems are not going away anytime soon.  Dow remains in the red for Sep, down 30.

Dow Jones Industrials

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