Dow gained 76, advancers over decliners better than 2-1 & NAZ went up 4. The MLP index added 1 to 281 & the REIT index rose 2+ to the 357s. Junk bond funds inched higher & Treasuries were about even. Oil is up to the 49s & gold slid back 1.
AMJ (Alerian MLP Index tracking fund)
Stocks opened higher, even as as North Korean tensions continued to simmer, another hurricane tore thru the Caribbean & the American debt ceiling loomed. The S&P 500 resumed its rally after a one-day setback as Treasuries edged lower following dovish comments from Federal Reserve officials sparked a surge. West Texas Intermediate crude traded above $49 a barrel for the first time in a month. European stocks followed Asian peers lower before erasing the drop, the $ swung & oil jumped. Automakers helped spur a recovery for the Stoxx Europe 600 Index after equities slid from Hong Kong to Sydney as traders girded for a potential intercontinental ballistic missile launch by Pyongyang. The € shrugged off an unexpected decline in German factory orders to rise for a 3rd day. The case for a continued risk-off tone was supported by a lack of consensus among the US, Russia & China on how to pressure Kim Jong Un to abandon his nuclear ambitions. Russian Pres Putin rejected US calls for more sanctions, echoing China's resistance to more punitive measures. For traders looking past North Korea, there's a raft of central bankers & economic decisions & data still on the schedule this week. Chief among them is Mario Draghi, who may give more clarity on winding down the ECB's bond-buying program when he speaks on Thurs. US unemployment claims & the release of the Fed's Beige Book are also on the way. Federal Reserve speakers so far have continued to urge caution on tightening policy.
The US trade deficit widened less than forecast in Jul as rising energy & aircraft exports helped offset drops in shipments of autos & household goods, Commerce Department data showed. The gap increased 0.3% to $43.7B (est. $44.7B). Exports fell 0.3% to $194.4B, led by drops in passenger cars & consumer goods. Imports declined 0.2% to $238B on crude oil, passenger cars & pharmaceutical preparations. The merchandise-trade deficit was little changed at $63.9B; preliminary Jul figures had shown $65.1B. The report may represent the clearest picture of intl trade before Hurricane Harvey, & potentially Hurricane Irma, distort data from Aug . Jul figures showed drops in exports & imports of passenger cars as the industry grapples with a sales slowdown, while exports of consumer goods fell to the lowest since May 2016. At the same time, energy shipments rose, with petroleum exports at the highest in more than 2 years & at a record on an inflation-adjusted basis. Exports of civilian aircraft, which can be volatile from month to month, jumped by $1.1B to $5.4B. The figures indicate trade was on track to contribute to Q3 after net exports added about 0.2 percentage point to the annual pace of expansion in the previous period. While the storm may disrupt some shipments, improving global demand & a weaker $ have the potential to drive demand for American-made products. Trade & inventories are the 2 volatile components that feed into the gov's calculation of GDP.
U.S. Trade Gap Widened by Less Than Forecast Ahead of Harvey
The expansion in service industries in Aug indicates the biggest part of the U.S. economy regained its footing after a soft month, a survey from the Institute for Supply Management showed. The index rose to 55.3 (est. 55.6) from 11-month low of 53.9 in Jul (readings above 50 indicate growth). The measure of new orders advanced to 57.1 from 55.1 & the employment gauge climbed to 56.2 from 53.6. While the main gauge was slightly below its average for this year, the results show the abrupt slowdown in Jul was temporary & underscore sustained demand for services that account for about 90% of the economy, spanning industries such as utilities, retailing, health care & construction. The outlook remains one of modest but steady economic growth backed by a resilient job market, healthier household finances & low borrowing costs. The services data from ISM also are consistent with a pickup at factories. The group's manufacturing index, released last week, surged to the highest level since 2011. The index of business activity, which parallels the ISM's factory production index, increased to 57.5 from 55.9. The gauge of order backlogs rose to 53.5 from 52 & export orders measure advanced to 55 from 53. Prices-paid index rose to 57.9 from 55.7.
The economic data is looking reasonable, but all is not well in DC. Already it looks like there will be a major fight over combining funding for Harvey & raising the debt ceiling. Ryan calls the plan by the Dems as "ridiculous & unworkable." That's an ominous signal for the rest of the month when so much legislation is needed. Some is a must by month's end, only 24 days away. Meanwhile gold, the king of safe haven investments, is close to its one year high & poised to go even higher. This will be a highly volatile month for stocks in what is traditionally its worst month of the year!!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 49.16 | +0.50 | +1.0% |
| GC=F | Gold | 1,343.90 | -0.60 | -0.0% |
Stocks opened higher, even as as North Korean tensions continued to simmer, another hurricane tore thru the Caribbean & the American debt ceiling loomed. The S&P 500 resumed its rally after a one-day setback as Treasuries edged lower following dovish comments from Federal Reserve officials sparked a surge. West Texas Intermediate crude traded above $49 a barrel for the first time in a month. European stocks followed Asian peers lower before erasing the drop, the $ swung & oil jumped. Automakers helped spur a recovery for the Stoxx Europe 600 Index after equities slid from Hong Kong to Sydney as traders girded for a potential intercontinental ballistic missile launch by Pyongyang. The € shrugged off an unexpected decline in German factory orders to rise for a 3rd day. The case for a continued risk-off tone was supported by a lack of consensus among the US, Russia & China on how to pressure Kim Jong Un to abandon his nuclear ambitions. Russian Pres Putin rejected US calls for more sanctions, echoing China's resistance to more punitive measures. For traders looking past North Korea, there's a raft of central bankers & economic decisions & data still on the schedule this week. Chief among them is Mario Draghi, who may give more clarity on winding down the ECB's bond-buying program when he speaks on Thurs. US unemployment claims & the release of the Fed's Beige Book are also on the way. Federal Reserve speakers so far have continued to urge caution on tightening policy.
U.S. Stocks Resume Rally Even as Storm Threatens: Markets Wrap
The US trade deficit widened less than forecast in Jul as rising energy & aircraft exports helped offset drops in shipments of autos & household goods, Commerce Department data showed. The gap increased 0.3% to $43.7B (est. $44.7B). Exports fell 0.3% to $194.4B, led by drops in passenger cars & consumer goods. Imports declined 0.2% to $238B on crude oil, passenger cars & pharmaceutical preparations. The merchandise-trade deficit was little changed at $63.9B; preliminary Jul figures had shown $65.1B. The report may represent the clearest picture of intl trade before Hurricane Harvey, & potentially Hurricane Irma, distort data from Aug . Jul figures showed drops in exports & imports of passenger cars as the industry grapples with a sales slowdown, while exports of consumer goods fell to the lowest since May 2016. At the same time, energy shipments rose, with petroleum exports at the highest in more than 2 years & at a record on an inflation-adjusted basis. Exports of civilian aircraft, which can be volatile from month to month, jumped by $1.1B to $5.4B. The figures indicate trade was on track to contribute to Q3 after net exports added about 0.2 percentage point to the annual pace of expansion in the previous period. While the storm may disrupt some shipments, improving global demand & a weaker $ have the potential to drive demand for American-made products. Trade & inventories are the 2 volatile components that feed into the gov's calculation of GDP.
U.S. Trade Gap Widened by Less Than Forecast Ahead of Harvey
The expansion in service industries in Aug indicates the biggest part of the U.S. economy regained its footing after a soft month, a survey from the Institute for Supply Management showed. The index rose to 55.3 (est. 55.6) from 11-month low of 53.9 in Jul (readings above 50 indicate growth). The measure of new orders advanced to 57.1 from 55.1 & the employment gauge climbed to 56.2 from 53.6. While the main gauge was slightly below its average for this year, the results show the abrupt slowdown in Jul was temporary & underscore sustained demand for services that account for about 90% of the economy, spanning industries such as utilities, retailing, health care & construction. The outlook remains one of modest but steady economic growth backed by a resilient job market, healthier household finances & low borrowing costs. The services data from ISM also are consistent with a pickup at factories. The group's manufacturing index, released last week, surged to the highest level since 2011. The index of business activity, which parallels the ISM's factory production index, increased to 57.5 from 55.9. The gauge of order backlogs rose to 53.5 from 52 & export orders measure advanced to 55 from 53. Prices-paid index rose to 57.9 from 55.7.
U.S. Service-Industries Rebound Underpins Third-Quarter Growth
The economic data is looking reasonable, but all is not well in DC. Already it looks like there will be a major fight over combining funding for Harvey & raising the debt ceiling. Ryan calls the plan by the Dems as "ridiculous & unworkable." That's an ominous signal for the rest of the month when so much legislation is needed. Some is a must by month's end, only 24 days away. Meanwhile gold, the king of safe haven investments, is close to its one year high & poised to go even higher. This will be a highly volatile month for stocks in what is traditionally its worst month of the year!!
Dow Jones Industrials
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