Thursday, January 5, 2017

Markets fluctuate on economic data

Dow fell 33, decliners slightly ahead of advancers & NAZ added 10.  The MLP index rose 2+ to the 322s & the REIT index was fractionally lower in the 345s.  Junk bond funds were a little higher & Treasuries were purchased, bringing the yield on the 10 year Treasury down to 2.4%.  Oil went up in the 54s & gold had a good gain, taking it up to 1180.

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Light Sweet Crude Oil Futures,F

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America's service providers expanded more than forecast last month, spurred by an upturn in orders that coincided with stepped-up demand at the nation’s factories  The Institute for Supply Management said that its non-manufacturing index held at 57.2 in Dec, the highest level since Oct 2015.  The forecast called for 56.8.  Readings above 50 signal growth in the industries that make up nearly 90% of the economy.  Bookings at service producers were the strongest since Aug 2015, helping explain a pickup in business sentiment about the economy since the presidential election.  The measure of service-related business activity, which parallels manufacturing output, was near the highest in more than a year.  Earlier this week, the supply management group said that its index of manufacturing reached a 2-year high last month, powered by the biggest monthly increase in orders growth since Aug 2009.  Together, the reports indicate the economy will gain momentum in 2017 after a projected soft Q4 as American industry prepares for a change in gov leadership.  Trump has said he aims to boost economic growth & increase hiring by taxing less & reducing regulations.  The ISM services survey covers a range of industries, including retail, health care, agriculture & construction. The Dec figure exceeds the 54.8 average of Jan-Nov 2016 & matches the average for all of 2015.  The measure of orders at services providers increased to 61.6 in Dec from 57 a month earlier & the business activity index was little changed at 61.4 after 61.7.  A measure of services employment cooled to 53.8 in Dec from a 13-month high of 58.2.

Service Industries in U.S. Expand at Faster Pace Than Forecast

Filings for US unemployment benefits declined to the lowest level in 8 weeks, showing volatility typical around the holiday period.  Jobless claims dropped 28K to 235K, according to the Labor Dept.  The projection called for 260K.  While the figures usually show swings around the year-end holidays, firms have generally avoided firings as the job market tightens & the supply of available workers shrinks.  Employers probably continued to add staffers at a solid pace last month.  Filings have remained below 300K for 96 consecutive weeks, the longest streak since 1970 & a threshold indicative of a healthy labor market.  An average 263K Americans filed for benefits each week in 2016, down from 278K in 2015.  The number continuing to receive jobless benefits rose 16K to 2.11M, the highest since early Sep.  The unemployment rate among people eligible for benefits held at 1.5   The 4-week average of claims, a less-volatile measure than the weekly figure, decreased to 256K from 262K in the prior week.

Jobless Claims in U.S. Fall to Eight-Week Low Amid Holidays

Companies added fewer jobs than forecast in Dec, data from the ADP Research Institute data showed.  Private payrolls climbed 153K (forecast was 175K) after a revised 215K gain in Nov.  Goods-producing industries, which include manufacturers & builders, reduced headcounts by 16K.  Service providers boosted payrolls by 169K.  Businesses continue to add workers to meet sales, helping to sustain the progress that has put the job market at or near the Fed's maximum-employment objective.  The slower pace of hiring underscores the challenge for companies in finding skilled workers as the labor market tightens, one reason wage growth may accelerate.  “Job growth remains strong but is slowing,” Mark Zandi, chief economist at Moody's Analytics, said.  Moody's produces the figures with ADP.  “Smaller companies are struggling to maintain payrolls while large companies are expanding at a healthy pace.”

ADP Says Companies in U.S. Added 153,000 Employees in December

Once again, the Dow was turned back in its attempt to top 20K.  News is mediocre & bulls are unable to make the case for advancing the stock market further.  The Dec jobs report will be out tomorrow & that will probably prove to be indecisive.  Meanwhile the goings on DC are getting more attention.  And that situation is confusing, not good for stocks.

Dow Jones Industrials

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