Thursday, January 11, 2018

Higher markets on hopes for economic growth

Dow went up 80, advancers over decliners 5-2 & NAZ added 12.  The MLP index gained 2+ to the 294s.  Junk bond funds were mixed & Treasuries slid lower.  Oil climbed to the 64s & gold gained 1 to 1320.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil64.43

GC=FGold   1,322.80

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Stocks rebounded from the first retreat of the year, as energy shares surged with the price of crude at a 3-year high.  Treasuries held steady & the $ fell versus the € after wholesale-price data cooled inflation expectations.  The S&P 500 flirted with a fresh record & small caps surged.  The 10-year Treasury yield fluctuated near 2.56% as bonds halted a selloff sparked by rising concerns on inflation & the potential for fewer purchases by China.  The € jumped after minutes from the ECB Dec meeting showed guidance on future actions will change slowly & the Stoxx Europe 600 Index fell.  While traders have tried to shake off some of the concerns that led to yesterday's declines, they're still struggling to find fresh reasons to extend a rally that took global stocks to or near record highs earlier this week.  A string of earnings releases starting with major banks tomorrow might offer them more direction.

U.S. Stocks Rise, Dollar Slips With Bonds Steady: Markets Wrap

US wholesale prices fell in Dec for the first time in more than a year on declining costs for services, a potential sign that inflation pressures are easing in the economy, a Labor Dept report showed.  Producer-price index fell 0.1% M/M (est 0.2% rise) after 0.4% gain the previous month, first decline since Aug 2016.  PPI rose 2.6% from a year earlier (est 3%) after 3.1% gain in prior 12-month period.  Excluding food & energy, core gauge fell 0.1% M/M (est 0.2% rise), rose 2.3% Y/Y.  Most of the monthly drop in the PPI reflected a 0.2% decline in the cost of services, while goods prices were unchanged.  A drop in the index for automotive fuel retailing was a major driver, along with falls in costs for loan services, airline passenger services & apparel retailing.  The PPI excluding food, energy & trade services, a measure some economists prefer because it strips out the most volatile components, rose 2.3% from Dec 2016 following a 2.4% gain.  With inflation still below the Fed's target, the PPI report is likely to put additional focus on Labor Dept figures due tomorrow for consumer prices.  That will give a better indication of where inflation is headed & how it will factor into the central bank's deliberations over how fast to raise interest rates in 2018.  Excluding the volatile categories of food, energy & trade services, producer costs rose 0.1% from the previous month following a 0.4% increase.

U.S. Wholesale Prices Unexpectedly Show First Drop Since 2016

US filings for unemployment benefits unexpectedly rose to a 3-month high last week during a holiday period when claims tend to be volatile, Labor Dept figures showed.  Jobless claims increased by 11K to 261K (est 245K), highest since Sep, when filings were elevated due to hurricanes.  Continuing claims fell by 35K to 1.867M in the latest week, lowest since 1973.  The 4-week average of initial claims, a less-volatile measure than the weekly figure, rose to 251K from the prior week's 242K.  Even with the latest increase, claims remain low by historical standards, with levels below 300K seen as indicating a healthy labor market as companies remain reluctant to dismiss workers.  Last week included the New Year's Day holiday & followed the week containing Christmas, which tend to generate fluctuations in filings due to seasonal positions & difficulties adjusting for them.  At the same time, further increases in jobless claims could suggest that labor-market progress is hitting bumps.  A report last week showed that US employers added fewer jobs in Dec than had predicted, amid a drop in retail positions.  Unemployment rate among people eligible for benefits fell to 1.3% from 1.4% in previous week.

Jobless Claims in U.S. Rise to Three-Month High After Holidays

Walmart (WMT), a Dow stock & Dividend Aristocrat, raised starting hourly salaries from $9 to $11 an hour.  That's just one more indication that the US economy is doing well which should bring higher stock prices.  The Dow is at another record level with following winds encouraging stock buyers.  The next stop is 26K, just 500 away. 

Dow Jones Industrials

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