Markets drift lower on mixed economic data

Dow slipped back 18, decliners over advancers more than 3-1 & NAZ went down 26.  The MLP index fell 4+ to the 456s & the REIT index was down fractionally in the 327s.  Junk bond funds were mixed & Treasuries traded higher.  Oil dropped to the 36s & gold was also lower.

AMJ (Alerian MLP Index tracking fund)

CLJ16.NYM

.....Crude Oil Apr 16

...36.45

.....0.73

(2.0%)

GCH16.CMX

...Gold Mar 16

.....1,231.30

...13.10

(1.1%)

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US retail sales dropped in Feb & the prior month’s gain was revised to a decline, calling into question the narrative that bigger gains in consumer spending would propel economic growth at the start of 2016.  The 0.1% decline in purchases followed a revised 0.4% Jan decrease, according to the Commerce Dept.  Sales excluding gasoline rose 0.2%, reversing the previous month's retreat.  The decrease in purchases, which included auto dealers, department stores & furniture outlets, showed Americans were salting away money saved at the gas pump amid volatile financial markets. The forecast called for a 0.2% drop.

The Jan revision reflected big downward adjustments to sales of electronics & appliances, building materials, personal-care items & department-store merchandise.  8 of 13 major retail categories showed declines, indicating the drop was broad-based.  Purchases at furniture outlets decreased 0.5% & sales at general merchandise stores fell 0.2%.  Core sales, used to calculate GDP & which exclude autos, gasoline stations & building materials, were unchanged after a revised 0.2% increase in Jan.  The prior month had previously been recorded as a 0.6% gain.

Service-station receipts dropped 4.4%, the most since Sep, on lower gasoline costs.  Auto dealers fell 0.2%, matching the drop a month earlier.  Purchases excluding excluding autos & gasoline rose 0.3% after a 0.1% decline.  Households are finding support from still-cheap fuel costs & a strengthening labor market.  Household spending, which makes up about 70% of the economy, may accelerate in Q1.  Consumer purchases should rise at a 2.9% annualized pace in Q1 after a 2% rate in the previous qtr.

Retail Sales in U.S. Decline After January Revised Down

Wholesale prices in the US fell in Feb, held down by lower fuel costs that have kept inflation languishing below the Federal Reserve goal.  The 0.2% decline in PPI matched the forecast & followed a 0.1% rise the prior month, according to the Labor Dept.  Costs were little changed over the past 12 months after falling 0.2% in the year ended Jan.  Low energy prices & the stronger $ indicate wholesale price pressures will remain muted.  Energy prices fell 3.4%, with gasoline decreasing 15.1%.  Food costs fell 0.3%, including a 19% plunge in vegetables that was the biggest in 5 years.  Excluding food & energy, wholesale prices were little changed following a 0.4% advance.  Those costs were up 1.2% from Feb 2015.  Also eliminating trade services, producer costs rose 0.1% in Feb, & were up 0.9% over the past year.

Wholesale Prices in U.S. Decreased in February on Fuel, Food

Confidence among US homebuilders held in Mar at a 9-month low as sales prospects waned, a sign the housing market may be struggling to accelerate as the spring-selling season approaches.  The National Association of Home Builders/Wells Fargo builder sentiment index was 58, matching the Feb reading that was the weakest since May.  Nonetheless, readings greater than 50 mean more respondents reported good market conditions.  While the housing industry has posted steady progress over the past few years, a crimped supply of available of properties, especially for first-time buyers, is limiting further improvement.  While borrowing costs remain low, home-price appreciation has outstripped wage growth for more than three years, making it harder for low-income Americans to make a purchase.  “The single-family market continues to make slow but steady progress,” the NAHB said.  “However, builders continue to report problems regarding a shortage of lots and labor.”  The forecast called for 59.  The gauge reached a 10-year high of 65 in Oct.  The gauge of buyer traffic climbed to 43 from 39 the prior month & the index of current single-family home sales was unchanged at 65.  The measure of the 6-month outlook declined to 61, a one-year low, from 64.  Builder confidence improved in 2 of 4 regions, with the biggest gain coming in the South.  “Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months,” the NAHB said.

Confidence Among U.S. Homebuilders Holds at

The FOMC is meeting & digesting the new economic data being reported.  Dow had one big rally last week, but otherwise has been trading in a limited range during the first half of Mar.  The stock market should remain quiet until Janet decides what to do with interest rates tomorrow.

Dow Jones Industrials