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Thursday, December 17, 2015
Lower markets as oil falls below 35
Dow sank 132, decliners over advancers 3-2 & NAZ lost 31. The MLP index pulled back 8+ to the 252s (still near lows from more than a decade ago) & the REIT index was off a fraction to the 323s. Junk bond funds were mixed & Treasuries rallied as stocks were sold. Oil plunged below 35 (not shown below), a key support level, & gold also has a big drop.
Fewer Americans than forecast filed applications for unemployment
benefits last week, a sign of persistent strength in the job market. Jobless
claims fell 11K to 271K, according to the Labor Dept. The forecast called for 275K. Last week coincided with the period
that the gov surveys businesses & households to calculate
payrolls & the jobless rate for Dec. Steady demand has
encouraged employers hold the line on dismissals, keeping claims within a
historically low range. The 4-week moving average was little changed at 271K last week. matching the average of 271K during the comparable
employment survey period for Nov. The economy added 211K workers
last month, more than projected, & the unemployment rate held at 5%.
The
number continuing to receive jobless benefits was also little
changed, at 2.24M & the unemployment
rate among people eligible for benefits held at 1.7%.
The index of US leading economic indicators increased in Nov,
buoyed by more home construction permits & higher stock prices. The
Conference Board’s measure of the economic outlook for the next 3-6 months rose 0.4% after climbing 0.6% in Oct. The forecast called for a 0.1% increase. 5
of the 10 indicators of the composite gauge advanced. They also
included a favorable interest-rate spread and pickup in consumer goods
orders. “Although the
six-month growth rate of the LEI has moderated, the economic outlook for
the final quarter of the year and into the new year remains positive,”
the Conference Board said. The
coincident economic index, a measure of current
economic activity, rose 0.1% in Nov after a 0.2%
increase the prior month. The gauge is determined by growth in
industrial production, sales, payrolls & incomes, the measures used
by the National Bureau of Economic Research to determine the beginning & end of recessions. The gauge of lagging indicators increased 0.3% after a 0.2% advance the month before.
German business confidence unexpectedly slipped in Dec in a sign
that companies are concerned about the risks facing Europe's largest
economy. The Ifo institute’s business climate index dropped to
108.7 from 109.0 in Nov. The estimate was for an unchanged reading. The Bundesbank kept
its 2016 growth projection unchanged at 1.8% this month, arguing
that the economy is benefiting from “lively” domestic spending even as
the export-oriented manufacturing sector suffers from uncertainty in
emerging markets. With a renewed drop in oil prices undermining efforts
by the ECB to boost inflation in the euro area & a
refugee crisis testing the region’s political resolve, risks to the
outlook have increased.
Sentiment in manufacturing rose
to the highest level since May, with companies revising their
production plans higher. A
Purchasing Managers’ Index for German manufacturing & services
indicated the country’s private sector rounded off its best qtr in 1½ years. German investor confidence improved for a 2nd consecutive
month in anticipation of more stimulus by the ECB &
unemployment unexpectedly fell to 6.3%, the lowest
since German reunification.
Excitement over the rate hike with limited increases next year faded fast today. Oil below 35 is very worrisome to the stock market with indications of more selling. The oil bear market is a major drag for stocks because of the negative implications for business around the globe. Stocks are back to just puttering along.
1.15 (2.84%)
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