Wednesday, November 25, 2015

Markets fluctuate on mixed economic data

Dow gained 34, advancers over decliners 4-3 & NAZ rose 14.  The MLP index lost 3 to the 299s & the REIT index was fractionally higher to the 321s.  Junk bond funds were mixed & Treasuries traded higher.  Oil gave up some of its recent rally & gold was sold.

AMJ (Alerian MLP Index tracking fund)

CLF16.NYM....Crude Oil Jan 16...42.16 Down ...0.71  (1.7%)

GCX15.CMX...Gold Nov 15....1,069.80 Down ...4.50  (0.4%)

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Household spending rose less than forecast in Oct, showing the biggest part of the US economy was off to a slow start heading into the holiday shopping season.  Purchases increased 0.1% for a 2nd month, according to the Commerce Dept.  The forecast called for a 0.3% advance.  Income gains accelerated & the saving rate jumped to the highest level in almost 3 years.  Consumers last month pocketed most of the savings from the plunge in gasoline prices, pickup in wages & lower heating bills caused by milder-than-usual temperatures, signaling households will remain frugal heading into 2016.  Low inflation & gains in employment indicate Americans have the wherewithal to boost spending should confidence firm.  Wages rose 0.6% in Oct, the biggest gain in 5 months, after being little changed in Sep.  The gain in pay contributed to a 0.4% increase in incomes that was twice as large as the prior month’s advance.  After adjusting for inflation, in order to generate the figures used to calculate GDP, purchases increased 0.1% for a 2nd month.  Household outlays on services were little changed in Oct after adjusting for inflation, probably reflecting a drop in utility use.  The services category, which also includes tourism, legal help, health care & personal care items such as haircuts, is typically difficult for the gov to estimate accurately until more information is available in later months.  Disposable income, or the money remaining after taxes, rose 0.4% from the prior month after adjusting for inflation.  It was up 3.9% over the past year.  The savings rate climbed to 5.6%, the highest since Dec 2012, from 5.3% in Sep.  The personal spending report showed the price index tied to consumer purchases increased 0.1% from the prior month & rose 0.2% from the same time in 2014.  Stripping out the volatile food & energy categories, the price measure was little changed from Sep & rose 1.3% in the 12 months ended in Oct.

Consumer Spending Rises Less Than Forecast

Orders for US business equipment climbed more than forecast in Oct, indicating steady domestic demand is encouraging corporate investment even as global sales waver.  Bookings for non-military capital goods excluding aircraft rose 1.3%, the most in 3 months, after an upwardly revised 0.4% increase in Sep, according to the Commerce Dept.  Orders for all durable goods climbed 3%, almost twice the estimate.  Persistent strength in the US, thanks in part to a consumer who has benefited from a better job market, may be encouraging companies to spend more on new equipment after years of underinvestment.  A pickup in foreign markets would help fatten the order books of American producers, allaying concerns that global growth is faltering.  The forecast was for durable goods orders to rise 1.7%.  Orders for non-defense capital goods excluding aircraft were projected to rise 0.2% after a previously reported 0.1% drop in Sep.  Demand for primary metals, machines, electronics & communications equipment picked up last month.  Shipments of non-military capital goods excluding aircraft decreased 0.4% after rising 0.7% the month before.  Sep was revised from a previously reported 0.5% gain.  Commercial aircraft orders surged 81% after dropping 32.2% a month earlier.  Excluding transportation equipment demand, which is volatile from month to month, bookings increased 0.5%.  Demand for non-defense goods jumped 3.2% after falling 1.6%.  Factories in October made further progress in reducing inventory.  Durable goods stockpiles declined 0.2% after a 0.6% decrease a month earlier.

Orders for Business Equipment in U.S. Rise More Than Forecast

Filings for unemployment benefits fell more than expected last week, drifting back to near 42-year lows as labor market conditions continue to tighten.  Initial claims for state unemployment benefits declined 12K to a seasonally adjusted 260K, according to the Labor Dept.  Claims have now held below the 300K threshold for 38 consecutive weeks, the longest stretch in years, & remain close to levels last seen in the early 1970s.  Claims below this level are usually associated with a healthy jobs market.  Economists had forecast claims dipping to 270K.  The 4-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, was unchanged at 271K.  The report showed the number of people still receiving benefits after an initial week of aid increased 34K to 2.21M  & the 4 week moving average of the continuing claims rose 15K to 2.18M.  The 4 week average of continuing claims rose 9K between the Oct & Nov survey periods, suggesting the unemployment rate will likely hold at a 7½ year low of 5% this month.

Initial Jobless Claims Fell by 12,000 Last Week

With some traders away starting an early holiday, not much is happening in the stock market.  Data is mixed with little to excite the remaining traders one way or the other.  But the intl scene is a mess with no signs of ending soon.  If there are major changes, the markets will react.,

Dow Jones Industrials

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