Thursday, September 15, 2016

Markets rise led by the rally in Apple stock

Dow shot up 177 (finishing near the highs), advancers over decliners  3-1 & NAZ added 76.  The MLP index lost 1+ to the 298s & the REIT index went up 1+ to the 347s.  Junk bond funds rose with stocks & Treasuries retreated.  Oil climbed a little higher following recent selling & gold was weak.

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Live 24 hours gold chart [Kitco Inc.]

The US current account deficit narrowed in Q2 as exports & income from abroad rose.  The Commerce Dept said the current account deficit, which measures the flow of goods, services & investments into and out of the country, fell to $119.9B from an upwardly revised $131.8B in Q1.  The forecast was for the current account deficit declining to $120.5B from a previously reported $124.7B shortfall.  The Q2 current account deficit represented 2.6% of GDP, down from 2.9% in Q1.  The current account deficit has declined from a record high of 6.3% of GDP in Q4-2005, as rising domestic oil production & lower intl oil prices keep the import bill in check.  In Q2, the surplus on primary income, which includes divs, increased to $42.9B from $34.0B in Q1.  The deficit on secondary income, worker remittances & grants, fell $3.1B to $37.6B.

U.S. current account deficit narrows in the second quarter

The number of Americans filing for unemployment benefits rose less than expected last week, pointing to a further tightening n labor market conditions.  Initial claims for state unemployment benefits edged up 1K to a seasonally adjusted 260K, according to the Labor Dept.  The forecast called for first-time applications for jobless benefits rising to 265K.  It was the 80th straight week that claims remained below the 300K threshold, which is associated with robust labor market conditions.  That is the longest stretch since 1970, when the labor market was much smaller.  The 4-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, was essentially even at 261K last week.  Claims likely have little room for decline further as the labor market nears full employment.  The claims report also showed the number still receiving benefits after an initial week of aid rose 1K to 2.14M & the 4-week average of continuing claims fell 8K to 2.15M.

U.S. jobless claims rise less than expected as labor market firms

Manufacturing activity across the mid-Atlantic picked up sharply in Sep, as new orders indicated expansion& hiring forecasts remained promising.  The Federal Reserve Bank of Philadelphia said its index of general business activity covering the regional factory sector rose to 12.8 from 2.0 in Aug, for the 2nd consecutive positive reading for the first time since Aug of last year.  In Jul, the gauge stood at -2.9.  The flat line separates expansion from contraction.   The reading surged above expectations, which was for a reading of 0.0.  The Philadelphia Fed's report is one in a monthly string of factory surveys conducted by regional Fed banks, meant to provide snapshots of the manufacturing sector's health ahead of the Institute for Supply Management's national reading.   Across the Philadelphia region, demand picked up markedly this month & sent a gauge of new orders up to 1.4 from -7.2 in Aug.  Meanwhile, firms continued to cut payrolls. The survey's employment index remained negative for a ninth consecutive month, though improved to -5.3 from -20.0 in Aug, the lowest this year.  The Fed bank said more factories reporting a decrease in employees in Sep (17%) exceeded those reporting an increase, 12%.  But the survey suggests producers predict currently soft conditions won't linger.  An index of future business prospects fell to 37.5 in Sep from 45.8 in Aug, but remains slightly above its average reading over the past 12 months, & nearly 50% of the firms expect increases in activity over the next 6 months.  More than ½ of firms expect increases in new order & nearly 34% said they anticipate to expand employment over the next 6 months while 9% expect to reduce it.

Mid-Atlantic Manufacturing Activity Jumps in September

Apple (AAPL), a Dow stock, is up an amazing 12 in the last 3 days on reports that demand is strong for the new iPhone.  That rise in stock price is a big help for the Dow & NAZ.  Trump made a major economic speech today.  He's calling for GDP annual growth of at least 4% which should bring more jobs to the economy.  Stocks had a good day, helped by optimism that Janet will leave interest rates alone next week.  However the chart below shows that Dow is a little closer to its recent lows than highs.  It's also up a meager 1% since Apr.  Markets can be expected to churn until Janet speaks next week.

Dow Jones Industrials


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