Friday, November 4, 2016

Markets crawl higher, trying to end 8 day losing streak

Dow inched up 9, advancers over decliners 3-2 & NAZ added 11.  The MLP index fell 2+ to the 286s (another low shown in the chart below) & the REIT index was off a fraction in the 321s.  Junk bond funds slid lower & Treasuries had a modest advance in price.  Oil dropped to the 44s (more below) & gold was little changed above 1300.

AMJ (Alerian MLP Index tracking fund)

Crude Oil Jan 17

Gold Futures,Dec-2016

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US jobs continued to rise at a steady pace in Oct & wage gains accelerated, signs that the labor market & economy made steady progress at the start of Q4.  Payrolls climbed 161K following a 191K gain in Sep (larger than previously estimated), according to the Labor Dept.  The forecast called for 173K.  The jobless rate fell to 4.9%, while wages rose from a year earlier by the most since 2009.  The figures are likely to keep the Fed on track to raise borrowing costs next month.  Underlying the steady gains in employment is a balance between hiring managers’ need to keep up with stable domestic demand and the struggle to match more limited labor to skilled-job vacancies.

Workers have been in short supply for 13 straight months, according to the Institute for Supply Management survey of service-industry companies.  The forecast called for a 173K advance in payrolls after a previously reported 156K Sep increase.  Revisions added a total of 44K jobs to payrolls in the previous 2 months.  While economists & policy makers largely agree that the economy is close to full employment, blemishes remain, with the ranks of part-time workers & long-term jobless still higher than before the last recession.  The labor force participation rate, which indicates the share of working-age people who are employed or looking for work, slipped to 62.8% from 62.9%, as the number of people in the labor force declined.  The underemployment rate dropped to 9.5% from 9.7%, while the number of people working part-time for economic reasons was little changed.  5.89M employees were in part-time jobs but wanted full-time work.  Wage gains picked up, with average hourly earnings rising 0.4% from a month earlier to $25.92.  The year-over-year increase was 2.8%, compared with 2.7% in the year ended in Sep.

Payrolls in U.S. Rose by 161,000 in October, Wages Accelerate

Oil headed for its biggest weekly loss in almost 10 months as hopes faded that OPEC will be able to implement a promised deal to cut production & ease global oversupplies.  Futures dropped over 2% after falling 10% the previous 5 sessions.  Prices closed yesterday at the lowest level since OPEC reached a preliminary agreement in Algiers for the cuts, & extended losses today after a report that Saudi Arabia threatened to raise output if other members didn't agree to cuts.  US inventories increased by a record last week.

West Texas Intermediate for Dec delivery dropped 82¢ (1.8%) to $43.84 a barrel after touching $43.79, the lowest since Sep 20.  Total volume was 51% above the 100-day average.  Prices are down about 10% this week, the most since the period ending Jan 15.

Oil Heads for Biggest Weekly Drop Since January as Gains Erased

China stocks edged down on today but notched up its 4th straight week of gains as signs of a stabilizing Chinese economy offset lingering worries over the looming US election outcome.  The blue-chip CSI300 index fell 0.3%, to 3354, while the Shanghai Composite Index dipped 0.1% to 3125.  For the week, CSI300 rose 0.4%, while SSEC added 0.7%, both up for the 4th week in a row.  Comforted by recent upbeat manufacturing & service data, Chinese investors are turning their attention to a flurry of fresh economic data in the coming weeks that is widely expected to reinforce views that the economy is stabilizing.  Another help at times of anxiety is the country's rigid capital controls which may help act as a cushion against potential overseas shocks.  Most sectors dipped, dragged in particular by property & transport stocks, as well as massive profit-taking in speculative stocks.  This dampened investors' risk appetite in a market where retail investors remain a dominant force.

China Shares Up For 4th Week

Stocks are trying to end a long losing streak.  But the jobs news was no help.  It was only routine, not impressive.  Uneven economic fundamentals continue & the latest bets are that the Fed will hike rates next month.  The bulls would like to take the Dow back over 18K, but that may have to wait as earnings from retailers will be reported.

Dow Jones Industrials


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