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Thursday, June 9, 2016
Lower markets on profit taking
Dow fell 54, decliners over advancers 5-2 & NAZ was off 16. The MLP index lost 3+ to the 314s & the REIT index climbed 2+ to the 345s. Junk bond funds inched higher & Treasuries advanced. Oil dropped on profit taking & gold went higher.
First-time jobless claims unexpectedly fell last week & the number
of Americans already receiving benefits tumbled to an almost 16-year
low, consistent with a healthy labor market. Applications for unemployment insurance dropped 4K to 264K, according to the Labor Dept. The
forecast called for 270K. Continuing claims
decreased to 2.1M in the previous week, the lowest since 2000.
The
report indicates companies remain reluctant to reduce headcounts even
after figures last week showed May was the worst month for hiring in
almost 6 years. Janet Yellen, who called the
payrolls slowdown “concerning,” nonetheless pointed to claims as one of
the more positive & timely indicators of the labor market. The 4-week moving average decreased to 269K last week from 277K. Filings
have been below 300K for 66 consecutive weeks, the longest stretch
since 1973 & a level consistent with a
healthy labor market. The number continuing to receive
jobless benefits dropped 77K & the
unemployment rate among people eligible for benefits decreased to a
record-low 1.5%.
Oil prices fell as traders took profits after 3
sessions of gains, though prices remained close to their highest this
year thanks to a fall in US crude inventories & supply disruptions. A rebounding $ also weighed on prices. A fall in the $ to a 5-week low yesterday boosted oil prices, but the index
recovered today. A weaker $ makes oil cheaper for holders of other currencies. Oil prices also gained ground after data yesterday from the
Energy Information Administration (EIA) showed US crude stocks
last week fell 3.23M barrels, while inventories of gasoline & middle distillates rose.
ECB pres Mario Draghi warned of "lasting economic consequences" of years of weak output. "A too-slow return of output to potential is far from innocuous,"
Draghi said. "On the contrary, it has lasting
economic consequences, since it can ultimately lead to potential being
eroded as well." Every effort needed to be devoted to
ensuring that output was returned to potential before subpar growth
causes lasting damage, he added. "For the ECB,
this means that we do not let inflation undershoot our objective for
longer than is avoidable given the nature of the shocks we face." The ECB has already announced a slew of measures to tackle fragile
growth & deflation, including cutting the deposit rate into negative
territory & buying corp bonds. "The euro area faces
a twin policy challenge: to get more firms in each sector to the
productivity frontier, and to get more labor and capital to those
productive firms," he said.
Stocks are resting as traders take profits, getting ready to enjoy the weekend. The goings on in the presidential race are more exciting today. Dow is back below 18k, a tough nut to crack.
...0.71 
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