Dow surged 396 (closing near the highs), advancers over decliners 3-1 & NAZ climbed 32. The MLP index added 1+ to the 283s & the REIT index went up 2+ to the 257s. Junk bond funds rose & Treasuries drifted lower. Oil climbed in the 65s (more below) & gold gave back another 4 to 1181 with more selling.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US jobless claims fall for a second straight week
Oil prices rose as global markets steadied, recouping some of the previous day's 2% slide, though a weakening outlook for crude demand kept prices in check. Brent crude oil futures were up 56¢ at $71.32 per barrel & West Texas Intermediate (WTI) crude futures ended the session up 45¢ at $65.46 a barrel. The oil market had felt the effects yesterday of a large build in US inventories that added to concern over the outlook for fuel demand. Crude was also swept lower by broader selling of industrial commodities such as copper. Oil prices clawed back some of the previous day's losses after Beijing said it would send a delegation to DC to try to resolve a trade dispute between the US & China that has roiled global markets. China & the US have implemented several rounds of trade tariffs & threatened further duties on exports worth hundreds of B$, which could knock global economic growth. Market sentiment remains bearish amid the dispute & concerns of an economic slowdown in emerging markets. The crisis gripping the Turkish lira has rattled other emerging markets & reverberated across equities, bonds & raw materials. On the supply front, US data yesterday showed crude output rose 100K barrels per day (bpd) to 10.9M bpd in the latest week. Crude inventories increased by 6.8M barrels, representing the largest weekly rise since Mar last year. While supply rises in the US, Asian markets are showing signs of slowdown as trade disputes & a stronger $ drag on the economies of some of the world's largest oil buyers. Providing some support for Brent crude were looming US sanctions against Iran's oil exports, set to start from Nov. Iran's biggest customers, such as India, South Korea & Japan, are already scaling back orders.
US shale growth will offset global production problems over the coming months, analysts say
The Philadelphia Fed manufacturing index sank to 11.9 in Aug from 25.7 in Jul, the lowest reading in 21 months, the regional district of the central bank said. That was well below the consensus for a reading of 22.5. Any reading above zero indicates improving conditions. The new-orders index plunged 21.5 points to 9.9 & the shipments index fell 8.1 points to 16.6. The index for activity in the next 6 months increased to 38.8 after declining for 4 consecutive months but the index still is down a bit over the last 6 months. The Philly Fed index was much weaker than the Empire State factory index, released yesterday, which rose 3 points to 25.6 in Aug. The 2 regional manufacturing reports are of interest to traders primarily because they are seen as an early forecast of the national Institute for Supply Management factory survey due in 2 weeks. The drop in the Philly index may be due to rising trade tensions.
Construction on new houses increased by less than 1% in Jul, reflecting a recent slowdown in building that’s likely tied to higher mortgage rates & growing shortages of skilled craftsmen. Housing starts edged up to an annual rate of 1.17M last month from a revised 1.16M in Jun, the Commerce Dept said. The forecast called for starts to total 1.27M. Permits to build new houses, meanwhile, rose 1.5% to a 1.31M annual pace. While that’s still quite healthy, permits have also fallen off a recent post-recession peak. Housing starts jumped 11.6% in the Midwest & 10.4% in the South, the fastest growing region in the US. New construction fell by 11% in the West & 4% in the Northeast. Builders began work on new single-family homes at a 862K annual rate & structures with 5 or more units at a 303K clip. The number of housing starts in Jul, however, was 1.4% lower compared to the same month in 2017. For the year to date, starts are running 6.2% higher than the same period in 2017. For the past few years, buyers have been clamoring for more houses & builders have suggested that they're feeling fine. Yet none of that has translated into enough homes being built to keep prices down & satisfy the need of most buyers.
Aug is turning out to be an eventful month for stocks. The Dow had an excellent day, closing at its highs with only 3 of its stocks in the red. Problems in Turkey were put aside & the best is being assumed for trade negotiations with China. It's interesting that market leader tech stocks have been laggards lately. The chart below shows the Dow still needs 1K to reach a new record high. However, progress has been slow this month with the Dow up only 100.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The number of Americans filing for unemployment
benefits fell for a 2nd straight week last week, suggesting no impact
yet on the labor market from ongoing trade tensions between the US & its trading partners. Initial claims for state unemployment
benefits slipped 2K to a seasonally adjusted 212K for the latest week, the Labor Dept. The forecast called for claims rising
to 215K in the latest week. Data for the prior
week was revised to show 1K more applications received than
previously reported. The claims data is being
closely watched for signs of layoffs as a result of the administration's protectionist trade policy, which has led to an
escalating trade war with China & import tariffs with
other trading partners, including the EU, Canada & Mexico. While there have been reports of
some companies either laying off workers or planning to as a result of
the import duties, that is not yet evident in the claims data. Economists say a robust
economy is helping the labor market weather the trade storm. Companies
are also reporting difficulties finding qualified workers, with the
labor market viewed as being near or at full employment. The economy grew at a 4.1% annualized rate in Q2, the fastest in nearly 4 years & almost double the 2.2% pace logged in Q1. Claims dropped to 208K
last month, which was the lowest reading since
1969. The 4-week moving average of
initial claims, considered a better measure of labor market trends as it
irons out week-to-week volatility, rose 1K last week to 215K. The claims report also
showed the number of people receiving benefits after an initial week of
aid dropped 39K to 1.72M in the latest week. The 4-week moving average of continuing claims fell 8K
to 1.74M.
US jobless claims fall for a second straight week
Oil prices rose as global markets steadied, recouping some of the previous day's 2% slide, though a weakening outlook for crude demand kept prices in check. Brent crude oil futures were up 56¢ at $71.32 per barrel & West Texas Intermediate (WTI) crude futures ended the session up 45¢ at $65.46 a barrel. The oil market had felt the effects yesterday of a large build in US inventories that added to concern over the outlook for fuel demand. Crude was also swept lower by broader selling of industrial commodities such as copper. Oil prices clawed back some of the previous day's losses after Beijing said it would send a delegation to DC to try to resolve a trade dispute between the US & China that has roiled global markets. China & the US have implemented several rounds of trade tariffs & threatened further duties on exports worth hundreds of B$, which could knock global economic growth. Market sentiment remains bearish amid the dispute & concerns of an economic slowdown in emerging markets. The crisis gripping the Turkish lira has rattled other emerging markets & reverberated across equities, bonds & raw materials. On the supply front, US data yesterday showed crude output rose 100K barrels per day (bpd) to 10.9M bpd in the latest week. Crude inventories increased by 6.8M barrels, representing the largest weekly rise since Mar last year. While supply rises in the US, Asian markets are showing signs of slowdown as trade disputes & a stronger $ drag on the economies of some of the world's largest oil buyers. Providing some support for Brent crude were looming US sanctions against Iran's oil exports, set to start from Nov. Iran's biggest customers, such as India, South Korea & Japan, are already scaling back orders.
US shale growth will offset global production problems over the coming months, analysts say
The Philadelphia Fed manufacturing index sank to 11.9 in Aug from 25.7 in Jul, the lowest reading in 21 months, the regional district of the central bank said. That was well below the consensus for a reading of 22.5. Any reading above zero indicates improving conditions. The new-orders index plunged 21.5 points to 9.9 & the shipments index fell 8.1 points to 16.6. The index for activity in the next 6 months increased to 38.8 after declining for 4 consecutive months but the index still is down a bit over the last 6 months. The Philly Fed index was much weaker than the Empire State factory index, released yesterday, which rose 3 points to 25.6 in Aug. The 2 regional manufacturing reports are of interest to traders primarily because they are seen as an early forecast of the national Institute for Supply Management factory survey due in 2 weeks. The drop in the Philly index may be due to rising trade tensions.
Philly Fed index sinks in August to lowest reading in 21 months
Construction on new houses increased by less than 1% in Jul, reflecting a recent slowdown in building that’s likely tied to higher mortgage rates & growing shortages of skilled craftsmen. Housing starts edged up to an annual rate of 1.17M last month from a revised 1.16M in Jun, the Commerce Dept said. The forecast called for starts to total 1.27M. Permits to build new houses, meanwhile, rose 1.5% to a 1.31M annual pace. While that’s still quite healthy, permits have also fallen off a recent post-recession peak. Housing starts jumped 11.6% in the Midwest & 10.4% in the South, the fastest growing region in the US. New construction fell by 11% in the West & 4% in the Northeast. Builders began work on new single-family homes at a 862K annual rate & structures with 5 or more units at a 303K clip. The number of housing starts in Jul, however, was 1.4% lower compared to the same month in 2017. For the year to date, starts are running 6.2% higher than the same period in 2017. For the past few years, buyers have been clamoring for more houses & builders have suggested that they're feeling fine. Yet none of that has translated into enough homes being built to keep prices down & satisfy the need of most buyers.
Housing starts inch up in July, miss forecast
Aug is turning out to be an eventful month for stocks. The Dow had an excellent day, closing at its highs with only 3 of its stocks in the red. Problems in Turkey were put aside & the best is being assumed for trade negotiations with China. It's interesting that market leader tech stocks have been laggards lately. The chart below shows the Dow still needs 1K to reach a new record high. However, progress has been slow this month with the Dow up only 100.
Dow Jones Industrials
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