Tuesday, May 31, 2016

Markets fluctuate on mixed economic data

Dow gave up 4, advancers over decliners better than 3-2 & NAZ added 13.  The MLP index rebounded 3+ to the 305s & the REIT index lost 1 to 340.  Junk bond funds were a little higher & Treasuries were weak.  Oil went up to the high 49s & gold hardly changed.

AMJ (Alerian MLP Index tracking fund)

CLN16.NYM....Crude Oil Jul 16...49.54 Up ...0.21 (0.4%)

GCM16.CMX...Gold Jun 16.....1,209.90 Down ...3.90  (0.3%)

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Consumer spending climbed in Apr by the most in almost 7 years, a sign US households are ready to help jump start growth after a Q1 slowdown.  Consumer purchases climbed 1% (versus a 0.7% forecast) after little change in Mar.  Increase in spending was the biggest since Aug 2009.  Personal income climbed 0.4% for a 2nd month.  Fed's preferred measure of inflation (tied to consumer spending) climbed 0.3% from month before, the biggest May 2015 (1.1% from year before).

Households will need to do the heavy lifting if a growth rebound is to materialize this quarter as global demand & corp investment remain sluggish.  Continued increases in payrolls & a gradual pickup in wages should help give consumers the means & the willingness to spend.

Consumer Spending in U.S. Rises Most in Almost Seven Years

Home prices in 20 US cities rose faster than projected in Mar from a year earlier, adding to signs of healthy demand at the onset of the industry's busy selling season, reported by S&P/Case-Shiller.  20-city property values index increased 5.4% from Mar 2015 (forecast was 5.16%) after climbing 5.4% in the year thru Feb.  National home-price gauge rose 5.2% from 12 months earlier. On a monthly basis, seasonally adjusted 20-city measure advanced 0.9% from Feb, the same as the unadjusted gain (the most in 4 months).  The Mar home-price gains follow a round of more timely data that showed purchases of existing & new homes & contract signings on previously owned houses all strengthened more than expected in Apr after the economys sluggish start to the year.  Potential buyers still might be challenged by limited inventories, especially among lower-priced homes, while finding support from steady job gains & cheap borrowing costs.

“The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates,” David Blitzer, chairman of the S&P index committee, said.  “Another factor behind rising home prices is the limited supply of homes on the market.

Home Prices in 20 U.S. Cities Increase Faster Than Forecast

A gauge of US consumer confidence slipped in May, a sign of continued caution that could restrain household spending & broader economic growth.   The Conference Board consumer-confidence index fell to 92.6 from an upwardly revised 94.7 in Apr.  It was the 2nd consecutive monthly decline.   Economists had expected a May reading of 96.0.  "Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April," said Lynn Franco, the group's director of economic indicators.    "Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions."

May Consumer Confidence Dips More Than Expected

Stocks are marking time after uninspiring economic data.  The thought of higher interest rates in a couple of weeks is a drag on thinking for stock buyers.  Month end data will be coming during the rest of the week.

Dow Jones Industrials


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