Markets surge on mixed global trade data

Dow shot up 232, advancers over decliners 4-1 & NAZ added 72.  The MLP index rose 1+ to the 352s & the REIT index gained 2+ to the 293s.  Junk bond funds were higher & Treasuries retreated.  Oil was lower & gold hardly budged.

AMJ (Alerian MLP Index tracking fund)

CLV15.NYM

....Crude Oil Oct 15

...45.27

...0.78

(1.7%)

GCU15.CMX

...Gold Sep 15

.....1,121.10

...0.50

(0.0%)

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Start Using the Leverage of Options and the Power of MarketClub Today!

European shares posted a broad-based rally as China led gains in global equities amid speculation that state support will limit its market turmoil.  All 19 industry groups on the Stoxx Europe 600 Index rose, with carmakers & insurers leading the advance.  The Stoxx Europe 600 Index advanced 1.6% to 360.  Shares rebounded Mon from the previous week’s decline, with miners leading gains, helped by reassurances from China’s central bank governor that stability would return to markets.  Chinese stocks rallied Tues for the first time in 5 days on speculation state-backed funds purchased shares after a weak trade report.

Investors are also awaiting next week's FOMC meeting on interest rates.  Traders are pricing in a 30% chance that officials will raise borrowing costs at the Sep gathering, down from almost even odds before China’s currency devaluation Aug 11.  A report showing the euro-area economy grew more than forecast in Q2 also buoyed sentiment today.

Europe Stocks Climb Second Day on China Support, Led by Autos

US small business confidence rose modestly in Aug, suggesting the economy continued to grow at a steady clip halfway thru Q3.  The National Federation of Independent Business (NFIB) said its Small Business Optimism Index gained half a point to 95.9 last month.  The NFIB said the survey of 656 businesses had not been impacted much by the recent turmoil in global financial markets, which was triggered by concerns over slowing economic growth in China.  "Most of the interviews were completed before the big slide," the NFIB said.  5 of the 10 components increased last month, while 3 declined & 2 were unchanged.  The survey's labor market gauges improved further last month, supporting the view that the Aug job growth slowdown was an aberration.  The Labor Dept had reported that non-farm payrolls increased 173K last month, the smallest gain in 5 months.  Small business owners were slightly optimistic about sales, but did not believe it was a good time to expand.  Owners were pessimistic about business conditions over the next 6 months & were noncommittal regarding capital & inventory investment.  The survey pointed to benign inflation pressures in the near term.  14% of small business owners reported reducing their average selling prices in the past 3 months, up one point from Jul.  A net 15% planned to raise prices, down 2 points from Jul.

U.S. Small Business Confidence Rises

China's imports tumbled in Aug, adding to concerns about the health of the economy & its contribution to global growth.  Imports slumped 13.8% from a year earlier, far more than the dip of 8.2% forecast, & the 10th consecutive monthly drop, reflecting both lower global commodity prices & sluggish demand.  A surprise devaluation in the yuan early last month combined with slowing consumer demand will dent the prospects of imports picking up significantly anytime soon.  Much of China's imports are commodities & other raw materials going into factories that turn them into goods for sale overseas, so the fall could be an ominous sign for exports in the coming months.  Exports fell less than forecast, sliding 5.5%, but analysts were still doubtful that China can now achieve its year-end trade growth target of 6%.  China's foreign exchange reserves posted their biggest ever monthly fall in Aug, reflecting its efforts to stabilize the yuan following its devaluation.  Chinese policymakers have been trying to reassure financial markets that their currency is stable & the recent turbulence in stock markets is easing.  People's Bank of China (PBOC) Governor Zhou Xiaochuan told financial leaders from the world's biggest economies over the weekend that the correction in Chinese equity markets is almost over.  On Mon, the finance ministry dangled incentives to encourage longer-term investments, saying it would remove personal income tax on dividends from shares held for more than a year, & halve it on those held for between a month & a year.

China Imports Slump in August

While stocks are having a good day, the averages have pulled back in the last hour.  Economic news is varied & the bulls are making the best of that.  This rally may not have legs.  Fears about a rate hike at the FOMC next week can end any market rise.

Dow Jones Industrials