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Thursday, May 26, 2016
Markets fluctuate on mixed economic data
Dow slid back 13, advancers ahead of decliners 5-4 & NAZ gained 4. The MLP index was off fractionally in the 303s & the REIT index added a fraction to the 339s Junk bond funds were mixed & Treasuries rose a tad. Oil is up again, flirting with 50, & gold inched higher.
Orders for business equipment unexpectedly declined in Apr for a 3rd straight month, indicating American manufacturers continue to pull
back, according to the Commerce Dept. Orders
for non-defense capital goods excluding aircraft fell 0.8%
(forecast was for 0.3% gain) to 5-year low of $62.4B. Shipments of such business equipment rose 0.3%, erasing the decline in Mar. Total durable goods orders climbed 3.4% (forecast was 0.5%) after 1.9% advance. Some
companies are paring investment plans as they assess the demand outlook
in wake of weaker Q1 growth & earnings, raising doubts
about how quickly manufacturing can pull out of its slump. Global
economies are struggling to improve, the oil industry has retrenched &
factory customers are also bringing inventories more in line with
sales.
Contracts to purchase previously owned US homes climbed in Apr by
the most since Oct 2010, adding to signs that the industry’s busy
selling season was off to a good start, according to data from the National Association of Realtors. Index of pending home resales increased 5.1% (forecast was 0.7%) after a revised 1.6% gain in Mar. Measure increased 2.9% from Apr 2015 on an unadjusted basis (forecast was 0.2%). 3 of 4 regions increased, including a 11.4% surge in the West that was the biggest in records back to 2001. Sales
gauge rose to a decade-high of 116.3 on a seasonally adjusted basis,
with 100 indicating “historically healthy” buying activity, according to
NAR. The boost in contract signings is a
good sign that robust home-buying activity will continue during the
spring-selling season, following reports that existing-home purchases
jumped to a 3-month high in Apr & new-home sales surged to the
strongest in 8 years. While would-be buyers are deterred by limited
inventories especially among lower-priced homes, a steady jobs market & cheap borrowing costs are helping to fuel demand.
Jobless claims fell for a 2nd week, indicating the surge at the start of May reflected temporary dismissals. Initial
applications for unemployment benefits dropped 10K to 268K, according to the Labor Dept. The forecast
projected 275K claims.
Sustained
declines in claims from the more than one-year high at the start of the
month signals those increase were due to transitory events such as the
spring break holiday at schools in NY & auto plant shutdowns in Mich. That shows employers remain
intent on retaining experienced workers amid prospects demand will start
to firm after the economy stumbled in Q1. The 4-week moving average of claims, a less volatile measure than the weekly figures, increased to 278K from 275K. The
number of claims is receding after jumping to 294K in the first week
of May, a more than one-year high. The number continuing to receive jobless benefits
rose 10K to 2.16 & the
unemployment rate among people eligible for benefits held at 1.6%, where it’s been since mid-Feb.
Markets are quiet following a big advance earlier in the week. There is a lot to digest as they weigh the Fed's move next month on interest rates. Oil topped $50 briefly which is seen as a bullish sign, even though the huge energy industry has to to cope with serious problems.
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