Tuesday, September 26, 2017

Markets recover as tech stocks bounce back

Dow recovered 40, advancers over decliners about 3-2 & NAZ went up 20.  The MLP index gave back 1+ to the 283s & the REIT index was flat in the 351s.  Junk bond funds crawled higher & Treasuries were off a tad.  Oil retreated to under 51 on profit taking & gold fell 6 to 1304 as stocks rallied.

AMJ (Alerian MLP Index tracking fund)


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US stocks were higher with tech shares shaking off yesterday's slide.  The € extended its decline in the wake of the German election, lending support to a dollar rally as investors digest a raft of catalysts from North Korea to central-bank policy.  The NAZ 100 Index climbed at the open, taking back some of yesterday’s 1% decline.  Emerging-market stocks headed for only their 2nd 4-day retreat this year, while equities in Europe were directionless as America continued to pursue a diplomatic solution to the crisis in North Korea.  The € fell to a 5-week low following the steepest drop of the year yesterday, while the $ hit its highest level since Aug.  The Swiss franc & the ¥ pared some of the previous day's gains, which followed North Korea's declaration it could shoot down US warplanes.  WTI crude declined, though was still close to a 5-month high after Turkey threatened to shut down Kurdish crude shipments.  Markets seem to have been oscillating between risk-on & risk-off stances since early Aug as tensions simmer on the Korean Peninsula.  Equities have edged away from recent record highs as the US & North Korea trade threats & now an assortment of global political risks look set to further cloud the outlook, not least the worry that gains for far-right parties in Germany's vote signal a new populist bent in Europe.  Italy is dues to go to the polls next year.
U.S. Stocks Higher as Tech Shares Reverse Decline: Markets Wrap

American consumers feel a bit less confident this month, their spirits pulled down by Hurricanes Harvey & Irma.  The Conference Board says its consumer confidence index fell to 119.8 in Sep from 120.4 in Aug.  The reading still suggests that US consumers are in a mostly sunny mood.  But Conference Board economist Lynn Franco says that confidence "decreased considerably" in hurricane-hit Florida & Texas.  The index takes into account Americans' views of current economic conditions & their expectations for the next six months.  Their view of today's economy slipped from Aug when the assessment was the sunniest in 16 years.  Their outlook rose slightly in Sep.  Economists pay close attention to the numbers because consumer spending accounts for about 70% of US economic activity.

US consumer confidence takes a hit from hurricanes

The Commerce Dept said that sales of new homes dropped to a seasonally adjusted annual rate of 560K.  This followed a 5.5 % decline in Jul.  Still, sales gains earlier this year mean that sales are running 7.5 % higher YTD than in 2016.  Sales could worsen in coming months as parts of Texas & Florida, both hit by Hurricanes Harvey & Irma, find that new construction gets delayed as the focus turns to rebuilding properties that were flooded or damaged by the fierce winds & rainstorms.  But the Aug drop also points to the limits of the rebound from the recession & the housing bust that triggered the downturn a decade ago.  Home values have climbed at a much faster pace than incomes, meaning that many buyers had to strain their budgets to purchase a house. Low mortgage rates reduced the financial crunch somewhat, but then sales listings began to dwindle & many would-be buyers have found themselves outbid on existing homes & priced out of new housing developments.  A shortage of homes for sale coupled with rising prices has turned affordability into a challenge for many would-be buyers.  Fewer new homes priced below $200K are coming onto the market.  New homes at these relatively affordable prices were 14% of sales in Aug, down from 17% in 2016 & 19% in 2015.  The median sales price increased 3.7% in the past 12 months to $368K.  New-home sales in Aug fell in the Northeast, South & West, while staying unchanged in the Midwest.  The sales decline over the past 2 months was so significant that the months' supply of new houses on the market ballooned to 6.1 months.  That figure had been hovering around 5.3 months in Jun, raising a question of whether builders will wait to sell off some of their inventory before breaking ground on more new houses.  The pace of new-home construction dropped 0.8% in Aug, but that was largely because of fewer apartment buildings being started.

Sales of new US homes fell 3.4 percent in August


Bargain hunters returned after yesterday's selloff & tech stocks are leading the charge higher today.  The Dow is within 100 of its recent high, but the so called rally today is not impressive as the month closes.

Dow Jones Industrials


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