Thursday, September 22, 2016

Higher markets cheer Fed rate decision

Dow soared 140, advancers over decliners 7-1 & NAZ gained 34.  The MLP index added 4 to the 313s & the REIT index shot up 6 to 360.  Junk bond funds were higher & Treasuries also found buyers.  Oil went up to the 46s & gold has a good gain, into the mid 1300s.

AMJ (Alerian MLP Index tracking fund)

Crude Oil Nov 16

Gold Dec 16

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Filings for unemployment benefits dropped last week to match the lowest level since Apr, a sign the labor market remains healthy even as hiring moderates.  Jobless claims declined 8K to 252K, according to the Labor Dept.  It was the largest drop since early Jul.  The estimate called for 261K.  Last week also coincided with the period that the government surveys businesses & households to calculate payrolls and the jobless rate for Sep.

Applications for unemployment insurance are close to a 4-decade low as companies focus more on filling available positions than on trimming staff.  Fed officials projected the labor market would “strengthen somewhat further” in announcing a decision to hold off on raising interest rates while signaling an increase is still likely by year-end.  Filings have been below 300K for 81 straight weeks -- the longest streak since 1970 & a level typical for a healthy labor market.  The 4-week average of claims, a less-volatile measure than the weekly figure, dropped to 258K from 260K in the prior week.  The number continuing to receive jobless benefits declined 36K to 2.11M, the lowest level since May.  The unemployment rate among people eligible for benefits fell

Sales of previously owned US homes unexpectedly declined to a 6-month low in Aug, signaling buyers are getting discouraged by a limited selection of properties that's kept prices high, as report by the National Association of Realtors.  Contract closings fell 0.9% to a 5.33M annual rate (forecast was 5.45M).  Sales rose 7.3% from Aug 2015 before seasonal adjustment.  The median price of an existing home increased 5.1% from Aug 2015 to $240K.  Inventory of available properties fell 10.1% from a year earlier to 2.04M, the fewest homes since Mar.  A shortage of available properties for sale continues to hinder the market, the report showed, with inventories on a year-over-year basis falling for a 15th straight month in Aug.  Even with the moderation in purchase activity last month, the repeat sales market is expected to grow this year amid steady hiring & borrowing costs that are still near record lows.  Faster wage growth along with more listings & construction of entry-level properties would help provide a bigger boost to the housing recovery.

Sales of Existing U.S. Homes Unexpectedly Declined in August

China stocks posted solid gains as the Federal Reserve's decision to keep interest rates unchanged eased investor anxiety.  The rally came after robust overnight gains in NY, & followed a week of extremely low volatility in mainland stocks.  The blue-chip CSI300 index rose 0.7%, to 3291, while the Shanghai Composite Index gained 0.5% to 3042.  All main sectors rose, with listed developers leading the charge.  An index tracking the sector jumped nearly 5%.

China Shares Rise After Fed Leaves Rates Unchanged

Traders are happy with the Fed decision on leaving interest rates alone.  Of course, there was also an important signal that they will take a hard look in Dec.  A 2nd interest rate hike is long overdue.  Treasuries & gold, negative bets of stocks, also rose.  In the meantime, the bulls have taken command of the stock market, although the Dow is still struggling to reach a new record..

Dow Jones Industrials

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