Dow went up 12, decliners ahead of advancers 5-4 & NAZ gained 33. The MLP index lost 2+ to the 282s & the REIT index declined 3 to 348. Junk bond funds were mixed & Treasuries fell. Oil crawled up to 52 & gold dropped 13 to 1288.
AMJ (Alerian MLP Index tracking fund)
Stocks advanced as Pres Trump prepares to lay out his tax-cut plan, while the $ extended gains & bonds fell after Fed Chair Janet Yellen boosted expectations for an interest-rate rise in Dec. The S&P 500 was near record levels in early trading. The $ index headed for a 6-week peak & Treasury yields jumped to the highest in 2 months as traders digested Yellen's warning against tightening “too gradually.” The $'s resurgence pressured the €, giving a lift to stocks in Europe, with almost all major country benchmarks in the green. Emerging-market stocks headed for a 5th day of declines, the longest streak since May 2016. WTI crude rose to its highest level since Apr after data showed US stockpiles dwindled last week. Safe havens including gold, the ¥ & the Swiss franc extended declines as North Korea dropped off the radar for the time being. While the market may not be fully convinced of the Fed's willingness to raise rates again in Dec, the possibility & the prospect of corp tax cuts is something traders can't ignore. Though Trump's tax plan marks only the start of what could be a brutal fight in Congress, stocks were cheered by a proposal that may allow companies to write off capital expenditure for 5 years. The$ received an extra leg up from the prospect of capital inflows as companies take advantage of a proposed one-off repatriation tax.
US orders for business equipment increased more than forecast in Aug, indicating solid demand is continuing in Q3, Commerce Dept figures showed. Non-military capital goods orders excluding aircraft rose 0.9% (est. 0.3% gain) after climbing 1.1% the prior month & shipments of those goods, which are used to calculate GDP, increased 0.7% (est. 0.1% rise) after a revised 1.1% advance. Bookings for all durable goods climbed 1.7% (est. 1% advance) following a 6.8% decrease. Excluding transportation-equipment demand, which is volatile, orders rose 0.2% after rising 0.8%. The underlying trend in core capital goods shipments & orders has been improving the past few months. Orders for non-defense capital goods excluding aircraft increased an annualized 6.4% in the 3 months ended in Aug, while shipments were up at a 7.5% pace. Both measures marked an acceleration from the end of Q2. The effects on supply chains from hurricanes Harvey & Irma may make it hard to interpret the next few reports. The gov said in a special statement that it couldn't isolate the effects of the storms. At the same time, rebuilding efforts could contribute to a pickup in durables orders into 2018. The latest strengthening of the equipment numbers that feed into GDP calculations bodes well for growth, which has been driven mainly by household spending in this expansion. A better outlook for overseas markets & a weaker $ may also spur export-related activity.
Gain in U.S. Capital Goods Orders Shows Solid Investment
Contract signings for the purchase of previously owned US homes fell in Aug by the most in 7 months, reflecting limited inventory, the National Association of Realtors said. The group's revised forecast for the year calls for sales to weaken from 2016 in the wake of 2 hurricanes. The index dropped 2.6% (est. 0.5% decline) after a 0.8% decline & the gauge fell 3.1% from Aug 2016 on unadjusted basis. Contract signings in the South were affected by Harvey, NAR says. A limited number of properties for sale fueled declines in contract signings for the 5th time in 6 months, a trend that will be made worse in the aftermath of hurricanes Harvey & Irma. Lean inventory is keeping prices climbing more than wages, creating a more challenging purchasing climate for first-time homebuyers. The Realtors group projects 5.44M homes will be sold this year, down from last month's estimate of 5.49M & lower than the 5.45M sold in 2016. The NAR sees the median selling price increasing 6% this year, compared with the 5.1% gain in 2016. “August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” Lawrence Yun, NAR’s chief economist, said. “Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead.”
Traders are twiddling their thumbs ahead of the official announcement shortly of Trump's tax plan. After much has been leaked, there should not be major surprises & traders are ready to take stocks higher, while safe haven gold is being sold. With the Dow close to its record high, a solid advance will bring another record.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 52.10 | +0.22 | +0.4% |
| GC=F | Gold | 1,287.20 | -14.50 | -1.1% |
Stocks advanced as Pres Trump prepares to lay out his tax-cut plan, while the $ extended gains & bonds fell after Fed Chair Janet Yellen boosted expectations for an interest-rate rise in Dec. The S&P 500 was near record levels in early trading. The $ index headed for a 6-week peak & Treasury yields jumped to the highest in 2 months as traders digested Yellen's warning against tightening “too gradually.” The $'s resurgence pressured the €, giving a lift to stocks in Europe, with almost all major country benchmarks in the green. Emerging-market stocks headed for a 5th day of declines, the longest streak since May 2016. WTI crude rose to its highest level since Apr after data showed US stockpiles dwindled last week. Safe havens including gold, the ¥ & the Swiss franc extended declines as North Korea dropped off the radar for the time being. While the market may not be fully convinced of the Fed's willingness to raise rates again in Dec, the possibility & the prospect of corp tax cuts is something traders can't ignore. Though Trump's tax plan marks only the start of what could be a brutal fight in Congress, stocks were cheered by a proposal that may allow companies to write off capital expenditure for 5 years. The$ received an extra leg up from the prospect of capital inflows as companies take advantage of a proposed one-off repatriation tax.
Stocks, Dollar Rise on Fed, Tax Plans; Bonds Fall: Markets Wrap
US orders for business equipment increased more than forecast in Aug, indicating solid demand is continuing in Q3, Commerce Dept figures showed. Non-military capital goods orders excluding aircraft rose 0.9% (est. 0.3% gain) after climbing 1.1% the prior month & shipments of those goods, which are used to calculate GDP, increased 0.7% (est. 0.1% rise) after a revised 1.1% advance. Bookings for all durable goods climbed 1.7% (est. 1% advance) following a 6.8% decrease. Excluding transportation-equipment demand, which is volatile, orders rose 0.2% after rising 0.8%. The underlying trend in core capital goods shipments & orders has been improving the past few months. Orders for non-defense capital goods excluding aircraft increased an annualized 6.4% in the 3 months ended in Aug, while shipments were up at a 7.5% pace. Both measures marked an acceleration from the end of Q2. The effects on supply chains from hurricanes Harvey & Irma may make it hard to interpret the next few reports. The gov said in a special statement that it couldn't isolate the effects of the storms. At the same time, rebuilding efforts could contribute to a pickup in durables orders into 2018. The latest strengthening of the equipment numbers that feed into GDP calculations bodes well for growth, which has been driven mainly by household spending in this expansion. A better outlook for overseas markets & a weaker $ may also spur export-related activity.
Gain in U.S. Capital Goods Orders Shows Solid Investment
Contract signings for the purchase of previously owned US homes fell in Aug by the most in 7 months, reflecting limited inventory, the National Association of Realtors said. The group's revised forecast for the year calls for sales to weaken from 2016 in the wake of 2 hurricanes. The index dropped 2.6% (est. 0.5% decline) after a 0.8% decline & the gauge fell 3.1% from Aug 2016 on unadjusted basis. Contract signings in the South were affected by Harvey, NAR says. A limited number of properties for sale fueled declines in contract signings for the 5th time in 6 months, a trend that will be made worse in the aftermath of hurricanes Harvey & Irma. Lean inventory is keeping prices climbing more than wages, creating a more challenging purchasing climate for first-time homebuyers. The Realtors group projects 5.44M homes will be sold this year, down from last month's estimate of 5.49M & lower than the 5.45M sold in 2016. The NAR sees the median selling price increasing 6% this year, compared with the 5.1% gain in 2016. “August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” Lawrence Yun, NAR’s chief economist, said. “Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead.”
Pending Home Sales in U.S. Decline by Most Since January
Traders are twiddling their thumbs ahead of the official announcement shortly of Trump's tax plan. After much has been leaked, there should not be major surprises & traders are ready to take stocks higher, while safe haven gold is being sold. With the Dow close to its record high, a solid advance will bring another record.
Dow Jones Industrials
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