Markets creep higher on mixed economic data

Dow rose 84, advancers over decliners 5-4 & NAZ added 23 (going back over 5K).  The MLP index lost 1 to the 314s & the REIT index went up 1 to the 314s.  Junk bond funds crawled higher after recent selling & Treasuries ran into more selling.  Oil pulled back after yesterday's gain & gold was weak.

AMJ (Alerian MLP Index tracking fund)

CLZ15.NYM

....Crude Oil Dec 15

...40.98

...0.76

(1.8%)

GCX15.CMX

...Gold Nov 15

.....1,085.40

...1.70

(0.2%)

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Factory output increased in Oct for the first time in 3 months as producers turned out more construction materials & motor vehicles.  The 0.4% advance at manufacturers exceeded the forecast & followed a 0.1% drop in Sep, according to the Federal Reserve. Total industrial production unexpectedly dropped 0.2% for a 2nd month as warm weather reduced electricity demand & the oil industry continued to cut back.  Demand for autos & other big-ticket items have been bright spots for factories, & additional evidence of wage growth may help households feel confident enough to boost spending even further.  The forecast called for manufacturing, which makes up about 75% of total production, to increase 0.2%.  Compared with Oct of last year, factory output was up 1.9%, less than the 2.4% average since the start of 2014.

The pace of factory output has slowed since the start of the year

Total industrial production was projected to rise 0.1%.  Capacity utilization, which measures the amount of a plant that is in use, eased to 77.5% last month from 77.7%.  Factory capacity picked up to 76.4%.  Mining production, including oil drilling, dropped 1.5% last month after a 2.4% decrease in Sep.  Oil & gas-well drilling declined 5% after a 4% retreat a month earlier.  Utility output fell 2.5%, the most since Apr, after rising 1.2%.  Last month was the warmest Oct since 1963, with 14 states experiencing temperatures much above average.

Manufacturing in U.S. Climbs for First Time in Three Months

The cost of living excluding food & fuel rose again in Oct after picking up the prior month, showing inflation edging closer toward the Federal Reserve’s goal.  The core consumer-price index increased 0.2% for a 2nd month as rents continued to climb & health-care costs rebounded, according to the Labor Dept.  It was the strongest back-to-back readings since May & Apr.  Including the volatile food & fuel categories, the index also advanced 0.2%, the first gain in 3 months.  While weak global growth & a strong dollar have held down the cost of commodities such as fuel, Americans are paying more for services including rents & medical care.  Fed officials are looking for signs that labor-market progress will help boost inflation to around 2%.  Last month’s readings matched the forecast. Core prices were also projected to rise 0.2%.  Consumer prices climbed 0.2% in the 12 months ended in Oct after being little changed in the year thru Sep.  Core costs were up 1.9%, matching the Sep year-to-year change.

Price gains in services offset declining goods costs

Energy costs increased 0.3% in Oct, the first gain in 3 months, after dropping 4.7% a month earlier.  Food costs increased 0.1%, the smallest advance since May.  The gain in the core index reflected a 0.3% increase in rents & a 0.7% advance in health care, the biggest since Apr.  Airline fares also rose following 3 straight declines.  Services excluding energy rose 0.3% for a 2nd month, the biggest back-to-back gains since Apr-May 2014.  Costs were up 2.8% over the past 12 months, the most since Nov 2008.

Services excluding energy climb by most since 2008

Energy prices remain a restraint on inflation, helping to boost consumer spending power.

Consumer Prices in U.S. Pick Up Excluding Food, Energy

Confidence among US. homebuilders eased in Nov from a decade-high, indicating a cooling in the housing market.  The National Association of Builders/Wells Fargo sentiment gauge unexpectedly fell to 62 this month from a revised 65 in Oct, the highest level since 2005.  Readings above 50 mean more respondents said conditions were good.  The housing market may be plateauing at a robust pace as high rental costs & mortgage rates at historic lows push more Americans to purchase a home.  Powered by an improving job market, consumers are keeping the US economy on track as they continue to spend on big-ticket items such as cars & homes, indicating little risk of recent global uncertainty translating into the housing sector.  Sustained readings greater than 60 are “a sign that the single-family housing market is making long-term headway,” NAHB said.  “However, our members continue to voice concerns about the availability of lots and labor.”  The homebuilder index for Oct was revised up from a previously reported 64 & the forecast called for the gauge to maintain that level in Nov.  Confidence fell in 2 of the 4 regions, with builders in the South showing the biggest setback.  The gauge of current single-family sales declined to 67 from 70 the month before, while the measure of the 6-month sales outlook fell to 70 from 75, the highest level since 2005.  A gauge of prospective buyer traffic climbed to 48 from 47 the month prior.

U.S. Homebuilder Confidence Eased in November From

Stocks are resting & digesting yesterday's gain.  Economic data was not particularly helpful & there may be more concern about increasing conflict around the world.  Dow remains in the red for Nov.

Dow Jones Industrials