Thursday, November 5, 2015

Lower markets after a rise in jobless claims

Dow dropped 73, decliners over advancers almost 2-1 & NAZ fell 37.  The MLP index fell 3+ to the 328s & the REIT index lost 1+ to the 324s.  Junk bond funds were mixed & Treasuries retreated.  Oil was a little lower & gold hardly budged.

AMJ (Alerian MLP Index tracking fund)

CLZ15.NYM....Crude Oil Dec 15...45.98 Down ...0.34  (0.7%)

GCX15.CMX...Gold Nov 15.....1,107.10 Up ...0.60 (0.1%)

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The number of Americans filing for unemployment benefits climbed to the highest level in 5 weeks, representing a pause in the recent progress that left claims at their lowest level since 1973.  Applications increased 16K to 276K, according to the Labor Dept.  It marked the biggest advance since the end of Feb, while the level exceeded the median estimate of 262K.  The 4-week average of claims climbed from the lowest in 4 decades.  Employers intent on ensuring skilled workers remain on their payrolls have been holding the line on dismissals, making adjustments to hiring plans instead in response to the slowdown in overseas economies.  The 4-week average of jobless claims, a less-volatile measure than the weekly figure, rose to 262K from 259K the week before, which was the lowest since 1973.  The number continuing to receive jobless benefits increased 17K to 2.16M in the latest week.  In that same period, the unemployment rate among people eligible for benefits held at 1.6%, where it’s been since mid-Sep.

First-Time Jobless Claims in U.S. Advance to a Five-Week High

Worker productivity unexpectedly grew in Q3, reflecting a slump in the number of hours worked by self-employed Americans.  The measure of employee output per hour increased at a 1.6% annualized rate, exceeding all estimates.  The total number of hours worked in Jul-Sep dropped by the most in 6 years, dragged down by an annualized 18% plunge among those working for themselves.  Productivity has struggled to develop a sustained pickup since the US emerged from a recession in 2009, in part because of sluggish business spending & subdued returns on investment in new technology such as computers.  Weak efficiency, in addition to crimping corp profits, limits how fast the economy can expand without generating inflation.  The unexpected advance from the previous quarter notwithstanding, productivity was up just 0.4% from Q3 of last year.  By comparison, efficiency gains from 2000-2013 averaged 2.1%, including annual slowdowns that began in 2011.  The forecast called for a 0.3% drop in productivity from Q2.

Productivity in U.S. Rises as Self-Employed Work Fewer Hours

The European Commission cut its euro-area growth & inflation outlook for next year, citing more challenging global conditions & fading impetus from lower oil prices & a weaker €.  GDP in the bloc is set to grow 1.8% in 2016, down from a previous projection of 1.9% in May.  Inflation is seen accelerating to 1.6% in 2017 from 0.1% this year.  The economic recovery is resting on unprecedented stimulus by the ECB.  With a slowdown in emerging markets weighing on global trade, risks have increased that growth won’t be strong enough to sustain the decline in unemployment & bring inflation back in line with the ECB’s goal of just below 2%.  “Today’s economic forecast shows the euro-area economy continuing its moderate recovery,” the European Commission said.  “Sustaining and strengthening the recovery requires taking advantage of” temporary tailwinds including “low oil prices, a weaker euro exchange rate and the ECB’s accommodative monetary policy,” it said.  While noting that the recovery has proved to be resilient to external shocks so far, uncertainty surrounding the economic outlook shows few signs of abating.  Risks include a larger-than-anticipated slowdown in China & financial-market volatility triggered by a normalization of US monetary policy.  The Commission upgraded its euro-area growth forecast for this year to 1.6%, from a previous estimate of 1.5% & output should accelerate to 1.9% in 2017.

EU Cuts Growth and Inflation Outlook as ECB Decision Looms

Stocks are taking it easy.  There is a lot to digest after the stellar gain over the last one month plus.  Traders could be reviewing earnings releases which have not been unimpressive.  Tomorrow brings the jobs data for Oct.  Today the markets are nervous about what that report will say.

Dow Jones Industrials

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