Lower markets as oil falls to under $39

Dow dropped 73, decliners over advancers  better than 2-1 & NAZ lost 6.  The MLP index lost 2+ o the 259s & the REIT index was off 2+ to 328.  Junk bond funds eased back & Treasuries inched higher.  Oil sank to the 38s & gold was a tad lower.

AMJ (Alerian MLP Index tracking fund)

CL.NYM

...Crude Oil May 16

...38.48

...1.31

(3.3%)

GC.CMX

...Gold Apr 16

......1,220.20

...3.80

(0.3%)

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Filings for unemployment benefits last week rose less than forecast as the number of dismissals stayed consistent with a firm labor market.  Initial jobless claims increased 6K to 265, according to the Labor Dept.  The forecast called for 269K.  Hiring managers are demonstrating a preference to maintain & build staff as domestic demand continues to hold up.  Tighter employment conditions are helping to buoy the economic outlook in the face of sluggish overseas growth.  Initial filings have been below 300K for 55 weeks, the longest stretch since 1973, a level consistent with a healthy labor market.

The 4 -week average of claims, a less-volatile measure than the weekly figure, was little changed at 259K.  The number continuing to receive jobless benefits declined 39K to 2.18M & the unemployment rate among people eligible for benefits held at 1.6%.

Jobless Claims in U.S. Climbed Less Than Forecast Last Week

Orders for durable goods fell in Feb for the 3rd time in 4 months, reflecting a broad-based slowdown that underscores lingering softness in US capital investment.  Bookings for goods & materials meant to last at least 3 years declined 2.8% after a 4.2% gain that was less the previously reported, according to the Commerce Dept.  Bookings for non-military capital goods excluding aircraft dropped 1.8%, more than estimated.  Limited progress by companies in bringing inventories more in line with sales has led to thinner order books at the factories.  Tepid global markets, the $ advance & a slump in commodity prices also have led overseas customers to pare bookings as manufacturing remains a weak spot of the economy.  The forecast called for a 3% decrease in overall bookings.  The decline in orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items such as computers, engines & communications gear, exceeded the forecast for a 0.5% decrease.  Shipments of those goods, used in calculating GDP, unexpectedly declined 1.1% after a revised 1.3% drop the previous month.  Jan sales were previously reported as down 0.4%.

There was a 27% decrease in bookings for commercial aircraft.  Orders also weakened for fabricated metals, machinery & communications gear.  Only bookings for motor vehicles & computers rose in Feb.  Demand for durables excluding transportation equipment orders that are volatile on a month-to-month basis, fell 1%.  They were projected to fall 0.3%.  Weakness persists in the oil patch & the global economy remains sluggish.  Energy exploration & production firms are curtailing investment, while other industries are reconsidering expansion as overseas markets struggle to improve.

Orders for U.S. Durable Goods Decline in Broad-Based Slowdown

Another US interest rate hike "may not be far off" after the Federal Reserve stood pat last week & made only minor downgrades to economic forecasts, St Louis Fed pres James Bullard said.  Bullard, who voted to support the Mar policy decision, noted that the labor market had improved since Dec.  "As it turns out, the decision to pause seems to have put more weight on the global and U.S. growth downgrade," he said.  After having raised rates from near zero in Dec, the Fed last week cited a slowdown overseas & early-year market turmoil as reasons to hold steady on rates.  "The relatively minor downgrades... suggest that the next rate increase may not be far off provided that the economy evolves as expected," said Bullard.  In recent weeks, Bullard has taken on more hawkish tones after having last month warned that falling inflation expectations suggested the Fed needed to pause policy tightening.  Those market-based inflation measures have rebounded in recent weeks.

Fed's Bullard: Another U.S. Rate Hike May Be Around Corner

The durable goods data shows that the US continues to sputter along with only meager growth.  GDP this year is expected to be a sub par 2%+, nothing to write home about but good enough to support higher interest rates from the Fed.  The bull market in oil has been faltering in the last 3 weeks weeks.  Glum reports about mounting oil inventories around the world are weighing on oil traders.  With today's decline, the Dow is about even YTD.

Dow Jones Industrials