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Thursday, June 23, 2016
Markets rise as polls show Britain will stay in the EU
Dow gained 129, advancers over decliners a big 5-1 & NAZ gained 37. The MLP index went up 1+ to the 317s & the REIT index added 1+ to 351, closing in on its record high. Junk bond funds rose & Treasuries retreated. Oil joined in the rally for commodities while safe haven gold pulled back.
Stocks gained & the £ strengthened to its highest level this
year as the last 2 polls showed a lead for the
campaign to keep Britain in the EU. Euro shares
rose to the highest level in more than 2 weeks in above-average
trading with voting underway in the UK's referendum. The S&P 500
climbed within 1½% of its all-time high. Gold & the ¥ declined, while perceived corp
credit risk fell for a 5th day. In 2 opinion polls conducted
Jun 21-22, the “Remain” camp was shown to be in front.
Fewer Americans than forecast filed for unemployment benefits last
week, adding to evidence that the labor market is healthy & stable. Jobless
claims dropped by 18K to 259K, according to the
Labor Dept. It was the biggest decrease
since the early Feb. The forecast called for a decline to 270K.
Hiring
managers are finding little reason to pare staff amid a dwindling pool
of available workers. Sustained low levels of jobless claims have helped
to reassure the Federal Reserve that the recent slowdown in
payroll gains will dissipate. Filings
have been below 300K for 68 straight weeks, the longest stretch
since 1973, & a level consistent with a
healthy labor market. The 4-week average of claims, a less-volatile measure than the weekly
figure, fell to 267K from 269K in the prior week. Last week
included the 12th of the month, which coincides with the period the
Labor Dept surveys employers to calculate monthly payroll data.
The average is lower than the 278K during the comparable period in
May. The number continuing to receive jobless benefits
decreased 20K to 2.14M & the
unemployment rate among people eligible for benefits held at 1.6%.
Purchases of new homes declined in May from an 8-year high as the
housing market continued to display the choppy progress that’s been a
hallmark of the recovery. Sales fell 6% to a 551K
annualized pace following a 586K rate in Apr that was slower than
previously estimated, from the Commerce Dept. The estimate was for a 560K. While
the report showed demand retrenched last month, the volatile data are
showing gradual improvement on the back of steady job gains & low
mortgage rates. Stronger wage growth & a greater availability of
cheaper properties would help lure more first-time buyers & provide an
additional push for the housing recovery. Because new-home sales figures for the 3 previous
months were revised lower, the May data should also be considered
preliminary. Over the last 3 months, purchases have averaged a
553K pace, the best in 8 years.
New-home
purchases were 8.6% higher in May from a year earlier on an
unadjusted basis. 201K homes sold in May weren't yet started by builders, the most
since Jun 2007, indicating construction starts may firm up in the
months ahead, & help drive economic growth. Purchases fell in 3 of 4 regions, led by a 33.3% decrease in the
Northeast (the smallest market for new homes). The supply of homes at the current sales rate increased to
5.3 months from 4.9 months in Apr. There were 244K new houses on
the market at the end of last month, up from 241K & the most since
Sep 2009. The median price of a new home increased 1% last month from a year ago to $290K.
Stocks are in rally mode as indications are that Britain will remain in the EU. When that matter is settled, markets will watch fundamentals. This week oil has bounced back from recent selling, but it continues to be highly volatile.
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