Thursday, August 3, 2017

Markets drift lower awaiting Friday jobs report

Dow lost 1, declners slightly ahead of advancers & NAZ fell 20.  The MLP index lost 2+ to the 296s & the REIT index was fractionally lower to 352.  Junk bond funds hardly budged & Treasuries crawled higher.  Oil prices were about even & gold was off a tad at 1274.

AMJ (Alerian MLP Index tracking fund)

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Germany's economy slowed more than initially estimated at the start of Q3, leaving it trailing the euro region's other large nations.  IHS Markit's German composite Purchasing Managers Index for Jul dropped to 54.7, down from 56.4 in Jun & missing the 55.1 flash reading.  That’s a 10-month low & the first time in more than 12 years that the survey for Germany has lagged France, Italy & Spain.  The figures nevertheless indicate a solid quarterly growth of 0.4-0.5% for the bloc's largest economy.  In the euro area overall, the composite PMI fell to 55.7 in Jul, though the economy remains on track to sustain the speed of its expansion this qtr.  “The surveys indicated a slight cooling in the pace of growth in July, but this is still an encouragingly upbeat picture,” said IHS Markit.  The bloc's economy expanded 0.6% in Q2, with Spain's 0.9% almost double France's 0.5%.  “While all countries continued to see ongoing robust growth as we move into the second half of 2017, the overall slowing in the rate of expansion will add a note of caution to ECB policy making,” IHS Markit addeid.  While the hint of economic convergence in the PMI will be welcome news for the ECB, slower increases in both input & output costs show that self-sustained inflation is still some way off.  The ECB's Governing Council plans to start debating policy normalization as soon as its Sep meeting.
German Economy Lags Euro-Area Peers for First Time in 12 Years

Planned layoffs hit an 8-month low in Jul, according to Challenger, Gray & Christmas.  US companies in Jul announced expected job cuts of 28K positions, the lowest monthly total since Nov. Challenger, an outplacement firm, also noted that employers planned to hire 88K workers, marking the 3rd-highest total in 2017 & the best Jul on record.  Layoffs were down 9% compared to Jun & 37% versus Jul 2016.  “Job cuts have slowed significantly as we reach mid-year,” said CEO John Challenger.  The retail industry, which has faced growing challenges from a shift to online shopping, has announced the most job cuts this year.  Retailers anticipate that 64K jobs will be eliminated, a 46% increase compared to the first 7 months of 2016.  However, retailers have also led the way in hiring, as companies beef up e-commerce operations.

Job cuts hit 8-month low in July: Challenger

Fewer Americans applied for jobless aid last week, keeping the number of people seeking benefits close to historic lows.  The Labor Dept says that weekly unemployment applications fell 5K to a seasonally-adjusted 240K.  The less volatile 4-week average declined 2K to 242K.  Applications closely reflect layoffs.  Jobless claims have come in below 300K for 126 weeks in a row, the longest such stretch since 1970 when the population was much smaller.  Employers have hired this year at a slower pace as the unemployment rate has fallen to a healthy 4.4%.  Economists expect the gov report for Jul, to be issued tomorrow, to show that US employers added 180K jobs.

US weekly jobless claims down 5,000, to 240,000

Stocks are churning while traders wait for the jobs report tomorrow.  Earnings are coming in uneven & the excitement in DC was quieted down, a bit.  At least for the time being.  The bulls are not complaining as the popular averages are inches away from setting new record highs.

Dow Jones Industrials
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