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.

AMJ (Alerian M LP Index tracking fund)

CLN16.NYM....Light Sweet Crude Oil Futures,J...50.06 Up ...0.50 (1.0%)

GCK16.CMX...Gold Futures,May-2016...........1,230.60 Up ...7.10 (0.6%)

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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.

Orders for U.S. Capital Goods Unexpectedly Fall for Third Month

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.

Pending Sales of U.S. Existing Homes Rise by Most Since 2010

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.

Initial Jobless Claims Fall as U.S. Layoffs Prove Temporary

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.

Dow Jones Industrials


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