Dow lost 14, decliners slightly ahead of advancers & NAZ gained 23. The MLP index declined 1 to the 272s & the REIT index fell 1+ to the 349s. Junk bond funds lost ground & Treasuries were sold. Oil went lower as did gold.
AMJ (Alerian MLP Index tracking fund)
Harvey’s initial blast along the Texas coast as a Category 4 hurricane was bad enough, sending gasoline prices surging & crude futures plunging as refineries shut. Now the storm has returned, making landfall a 2nd time in southwestern Louisiana, which was devastated by Hurricane Katrina in 2005. The storm has brought torrential rain that breached a levee, threatened dams & may be destroying drains. That combination has analysts raising damage estimates by the hour & could easily push the catastrophe above the rank of Superstorm Sandy, the 2nd-costliest weather disaster in US history. Louisiana, including New Orleans, is familiar with apocalyptic storms. Hurricane Katrina killed more than 1800 & caused $160B in damage. Sandy, which slammed into NY & NJ in 2012, claimed 147 lives along its path from the Caribbean, including 72 in the US. The damage was about $70B. The death toll from Harvey had reached 18 & some sources say even more. A nighttime curfew was imposed in Houston as the storm’s center drifted back toward the Gulf of Mexico. The storm made its first landfall between Port Aransas & Port O'Connor in Texas on Fri, stalling out further inland over the weekend. Today it came ashore again near Cameron, Louisiana, as a tropical storm & is expected to reach the Lower Mississippi Valley tomorrow.
Harvey Makes Second Landfall on Battered Gulf Coastline
US Q2 growth was revised upward to the fastest pace in 2 years on stronger household spending & a bigger gain in business investment, putting the economy on a stronger track, Commerce Dept data showed. GDP rose at a 3% annualized rate from prior qtr (est. 2.7%); revised from initial estimate of 2.6%. Consumer spending, biggest part of the economy, grew 3.3% (est. 3%), the most since Q2-2016 & a revised from 2.8%. Nonresidential fixed investment rose 6.9%, revised from initial increase of 5.2%. Corp pretax earnings rose 7% Y/Y; up 1.3% Q/Q. The revisions indicate greater momentum going into H2, as well as showing that growth in GDP may be broadening beyond household spending. The upward revision to consumption reflects spending on wireless-phone services, used cars & electricity & natural gas. American consumers remain in the driver’s seat in the current expansion, backed by a strong job market, contained inflation & low borrowing costs. Business spending got a boost from software, helping intellectual-property investment rise at a 4.9% pace, up from an initially reported 1.4%. Outlays on structures & equipment were also revised upward, suggesting companies are upbeat about rising orders amid steady US demand & the improving outlook for exports. The first look at corp profits for the qtr also bodes well for business investment and for hiring, which has been robust so far this year.
U.S. Second-Quarter Growth Revised Up to 3%
Companies added more workers than forecast in Aug, indicating the US job market remains solid, according to data from ADP Research Institute. Private payrolls rose by 237K (est. 185K), the biggest gain in 5 months, after an upwardly revised 201K gain in Jul. Payrolls in goods-producing industries, which include builders & manufacturers, rose 33K after an 11K rise. Service providers took on 204K workers after 190K. Business demand for workers remains robust & employer dismissals are limited, hovering close to a 3-decade low. Job openings are at a record & suggest strength in the labor market will continue, bolstering the outlook for consumer spending. The ADP data foreshadow another firm reading for total employment when the Labor Department issues its Aug jobs report on Fri. “The job market continues to power forward,” Mark Zandi, chief economist at Moody's Analytics, said. Moody's produces the figures with ADP. “Job creation is strong across nearly all industries, company sizes. Mounting labor shortages are set to get much worse.” Payrolls in trade, transportation & utilities increased by 56K in Aug, the most this year. Hiring in construction increased 18K & factories added 16K workers. Professional & business services boosted their workforce by 39K education & health services added 45K workers. Companies employing 500 or more workers increased staffing by 115K jobs; payrolls rose 74K at medium-sized businesses (50-499 employees) & small companies’ payrolls rose 48K.
The macro economic data looks good but Harvey will be a major setback on the Q3 data. The threat of North Korea remains in the news, so stocks continue to meander. This is also a vacation kind of week for much of the country. Rebuilding in Texas is a whopper size task. It will take some time just to get good estimates on how much needs to be done. After Labor Day next week, better information will be available. Meanwhile Dow is hanging in reasonably well.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 46.07 | -0.37 | -0.8% |
| GC=F | Gold | 1,312.30 | -6.60 | -0.5% |
Harvey’s initial blast along the Texas coast as a Category 4 hurricane was bad enough, sending gasoline prices surging & crude futures plunging as refineries shut. Now the storm has returned, making landfall a 2nd time in southwestern Louisiana, which was devastated by Hurricane Katrina in 2005. The storm has brought torrential rain that breached a levee, threatened dams & may be destroying drains. That combination has analysts raising damage estimates by the hour & could easily push the catastrophe above the rank of Superstorm Sandy, the 2nd-costliest weather disaster in US history. Louisiana, including New Orleans, is familiar with apocalyptic storms. Hurricane Katrina killed more than 1800 & caused $160B in damage. Sandy, which slammed into NY & NJ in 2012, claimed 147 lives along its path from the Caribbean, including 72 in the US. The damage was about $70B. The death toll from Harvey had reached 18 & some sources say even more. A nighttime curfew was imposed in Houston as the storm’s center drifted back toward the Gulf of Mexico. The storm made its first landfall between Port Aransas & Port O'Connor in Texas on Fri, stalling out further inland over the weekend. Today it came ashore again near Cameron, Louisiana, as a tropical storm & is expected to reach the Lower Mississippi Valley tomorrow.
Harvey Makes Second Landfall on Battered Gulf Coastline
US Q2 growth was revised upward to the fastest pace in 2 years on stronger household spending & a bigger gain in business investment, putting the economy on a stronger track, Commerce Dept data showed. GDP rose at a 3% annualized rate from prior qtr (est. 2.7%); revised from initial estimate of 2.6%. Consumer spending, biggest part of the economy, grew 3.3% (est. 3%), the most since Q2-2016 & a revised from 2.8%. Nonresidential fixed investment rose 6.9%, revised from initial increase of 5.2%. Corp pretax earnings rose 7% Y/Y; up 1.3% Q/Q. The revisions indicate greater momentum going into H2, as well as showing that growth in GDP may be broadening beyond household spending. The upward revision to consumption reflects spending on wireless-phone services, used cars & electricity & natural gas. American consumers remain in the driver’s seat in the current expansion, backed by a strong job market, contained inflation & low borrowing costs. Business spending got a boost from software, helping intellectual-property investment rise at a 4.9% pace, up from an initially reported 1.4%. Outlays on structures & equipment were also revised upward, suggesting companies are upbeat about rising orders amid steady US demand & the improving outlook for exports. The first look at corp profits for the qtr also bodes well for business investment and for hiring, which has been robust so far this year.
U.S. Second-Quarter Growth Revised Up to 3%
Companies added more workers than forecast in Aug, indicating the US job market remains solid, according to data from ADP Research Institute. Private payrolls rose by 237K (est. 185K), the biggest gain in 5 months, after an upwardly revised 201K gain in Jul. Payrolls in goods-producing industries, which include builders & manufacturers, rose 33K after an 11K rise. Service providers took on 204K workers after 190K. Business demand for workers remains robust & employer dismissals are limited, hovering close to a 3-decade low. Job openings are at a record & suggest strength in the labor market will continue, bolstering the outlook for consumer spending. The ADP data foreshadow another firm reading for total employment when the Labor Department issues its Aug jobs report on Fri. “The job market continues to power forward,” Mark Zandi, chief economist at Moody's Analytics, said. Moody's produces the figures with ADP. “Job creation is strong across nearly all industries, company sizes. Mounting labor shortages are set to get much worse.” Payrolls in trade, transportation & utilities increased by 56K in Aug, the most this year. Hiring in construction increased 18K & factories added 16K workers. Professional & business services boosted their workforce by 39K education & health services added 45K workers. Companies employing 500 or more workers increased staffing by 115K jobs; payrolls rose 74K at medium-sized businesses (50-499 employees) & small companies’ payrolls rose 48K.
Companies in U.S. Add More Jobs Than Forecast, ADP Data Show
The macro economic data looks good but Harvey will be a major setback on the Q3 data. The threat of North Korea remains in the news, so stocks continue to meander. This is also a vacation kind of week for much of the country. Rebuilding in Texas is a whopper size task. It will take some time just to get good estimates on how much needs to be done. After Labor Day next week, better information will be available. Meanwhile Dow is hanging in reasonably well.
Dow Jones Industrials
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