Tuesday, October 27, 2015

Lower markets on weak economic data

Dow dropped 25, decliners over advancers 3-1 & NAZ was off 10.  The MLP index sank 7+ to the 309s & the REIT index was down fractionally to 325.  Junk bond funds were mixed & Treasuries rose.  Oil is back in the 42s while gold inched higher.

AMJ (Alerian MLP Index tracking fund)

CLZ15.NYM....Crude Oil Dec 15...42.85Down ....1.13  (2.6%)

GCV15.CMX...Gold Oct 15......1,164.50 Down ...2.50  (0.2%)

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Orders for business equipment unexpectedly declined in Sep as tepid global markets gave American companies little reason to expand.  Bookings for non-military capital goods excluding aircraft dropped 0.3% after a 1.6% Aug decrease that was twice as large as previously estimated, according to the Commerce Dept.  Demand for all durable goods, meant to last at least 3 years, fell 1.2%.  Corp investment may be slow to pick up until inventories are worked off & a pickup in foreign economies revives demand for commodities & US-made goods. While weaker overseas sales have taken a toll on industrial companies, stronger motor vehicle purchases have been supporting manufacturing.  The estimate for orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines & communications gear, called for a 0.2% gain.  Shipments of those goods, used in calculating GD, rose 0.5% after a 0.8% drop in Aug that was twice as much as previously estimated.  Bookings for machinery, transportation equipment & computers fell in Sep.  The forecast for all durable goods orders was a 1.5% decrease.  Aug bookings declined 3%, revised from a previously reported 2.3% decrease.  The data reflected a 35.7% slump in bookings for commercial aircraft after an 11.2% in Aug.  Excluding transportation equipment, orders dropped 0.4% after a 0.9% decrease a month earlier.  They were projected to be little changed.  Durable goods stockpiles fell 0.3% in Sep, while unfilled orders dropped 0.6%.

Orders for Business Equipment in U.S. Unexpectedly Decline

US shoppers darkened their outlook in Oct, suggesting a bumpy road ahead for an economy largely reliant on consumer spending.  The Conference Board said its index of consumer confidence fell to 97.6 in Oct from a revised 102.6 in Sep.  The initial Sep reading was 103.0.   Economists surveyed had expected a reading of 102.8.  "Despite the decline, consumers still rate current conditions favorably, but they do not anticipate the economy strengthening much in the near-term," said Lynn Franco, director of economic indicators at the board.

Consumer Confidence Retreats in October

Home price growth was strong in Aug, underscoring that the market has momentum going into the final months of the year.   The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.7% in the 12 months ended in Aug, slightly greater than a 4.6% increase in Jul.   The 10-city index gained 4.7% from a year earlier, compared with a 4.5% increase in Jul.  The 20-city index gained 5.1% year-over-year compared with 4.9% a month earlier & mat8ching the expected increase.  18 of 20 cities across the country reported increases in prices month-over-month before seasonal adjustment.  The hottest markets in the country continued to show sharp price gains during the final month of the summer selling season, with San Francisco & Denver recording the only double-digit increases in prices in the year ended in Aug.  They were followed by Portland, Ore., where prices rose 9.4% over the year.  Month-over-month price gains remained modest.  Not seasonally adjusted, the index rose 0.3% from Jul to Aug.  The 10-city index & 20-city index rose 0.3% & 0.4% respectively over the month.  After seasonal adjustment the national index was up 0.4%.  The 10-city & 20-city composite were both 0.1% over the month.   Case-Shiller offers a delayed picture of how the housing market is faring. More recent indicators of the health of the housing market largely have been strong, with some notable weak spots. Sales of previously owned homes increased sharply in Sep, climbing 4.7% to a seasonally adjusted annual rate of 5.55M.  But yesterday, the Commerce Dept said that new home sales tumbled 11.5% from Aug to Sep.  Given the low inflation rate in the economy overall, the fact that home prices are growing by nearly 5% is an even more telling indicator of the housing market's strength, said David Blitzer, managing director & chairman of the Index Committee for S&P Dow Jones Indices.  "The rebound from the recent lows was faster than the 1997-2005 housing boom, and also much less driven by inflation," Mr. Blitzer said.

U.S. Home Price Growth Gains Strength in August

Traders are  largely worried about what Janet will have to say tomorrow.  In the meantime, the economic data was not helpful.  Earnings keep coming & they are giving mixed signals at best.  Dow is still having an excellent month, despite recent sluggishness, up 1300.

Dow Jones Industrials

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