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Thursday, October 6, 2016
Markets decline ahead of jobs report
Dow dropped 80, decliners over advancers 5-2 & NAZ gave back 20. The MLP index lost 3+ to the 306s & the REIT index was fractionally lower in the 336s. Junk bond funds were off a tad & Treasuries were also a little lower. Oil rose over 50 (see below) & gold fell to the mid 1200s (100 below recent highs).
Filings
for US unemployment benefits fell last week to the 2nd-lowest
level since 1973, as employers show scant willingness to dismiss workers
amid a tightening labor market. Jobless claims dropped 5K to
249K, according to the Labor Dept. The forecast called
for 256K. Continuing claims declined to the lowest level since 2000. Filings
were just a hair above the 4-decade low of 248K from Apr, a
sign of minimal layoffs ahead of the monthly employment report tomorrow.
Companies are going head-to-head in finding skilled applicants amid
record job openings, indications of a healthy labor market that may
encourage Federal Reserve officials to raise the benchmark interest rate
before the end of the year.
Filings
have been below 300K for 83 straight weeks, the longest streak
since 1970 & a level typical for a healthy labor
market. The 4-week average of claims dropped to 253K, the lowest since 1973, from 256K
in the prior week. The number continuing to receive
jobless benefits declined 6K to 2.06M & the unemployment rate among people eligible for benefits held
at 1.5%.
Oil climbed above $50 a barrel for the first time since
Jun as declines in US crude inventories & OPEC's pledge to reduce
supply lifted hopes the global glut may clear. Futures rose as
much as 1.4%. US crude stockpiles shrank below 500M
barrels last week for the first time since Jan. OPEC pledged in Algiers on last week to reduce the group's output
to 32.5-33M barrels a day in a bid to shrink the
world's bloated oil supplies & boost prices. However the market is set to
remain oversupplied in 2017.
West Texas Intermediate for Nov delivery rose 61¢ (1.2%) to $50.44 a barrel & prices reached $50.51, the highest since Jun 22. US crude stockpiles
dropped 2.98M barrels for a 5th weekly decline, the Energy
Information Administration reported. Crude production declined for a 2nd week to
8.5M barrels a day.
German factory orders jumped more than expected in Aug
on broad-based domestic demand, according to figures released by the
Economy Ministry. Orders, adjusted for seasonal swings & inflation, rose 1% from Jul, when they climbed a revised 0.3%. The increase is biggest since Mar & the forecast was for 0.3% gain. Orders were up 2.1% from a year earlier.
The report comes after German business sentiment surged to the highest
level in more than 2 years in Sep, a sign that corp
concerns over the consequences of Britain's decision to leave the
EU are easing. Still, the number of Germans unemployed
unexpectedly rose last month for the first time in more than a year &
the Bundesbank toned down its outlook, pointing to slower growth in Q3.
Stocks keep churning, looking for direction. The big banks have been under fire, a dark cloud that traders have to deal with. Oil continues its rally, but the outlook is not as bright as the bulls suggest. Crude inventories remain at very high levels & US production is starting to climb once again. In addition, the production cut by OPEC is from a record level & may not mean be significant in reducing bloated oil supplies.
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