Dow retreated 136, decliners over advancers better than 2-1 & NAZ dropped 60. The MLP index index fell 3+ to the 244s & the REIT index was off 2+ to the 364s. Junk bond funds were mixed & Treasuries rose in price. Oil slid lower to the 53s & gold was off another 3 to 1311.
AMJ (Alerian MLP Index tracking fund)
Stocks fall on earnings disappointments
The pan-European Stoxx 600 was down 0.7%, with almost all sectors & major bourses in negative territory. The EU slashed its growth outlook for the euro zone this year as it expects the bloc's largest economies to be held back by global trade tensions, among other issues. The bloc said euro zone growth will slow to 1.3% this year from a previously forecast 1.9%. In the UK, the Bank of England cut its growth & inflation forecasts. The central bank projected the weakest economic outlook for the UK economy since 2009. This is on the back of Brexit uncertainty as well as a slowdown in the global economy. Nonetheless, the bank stated that a gradual & limited rate hiking path lies ahead. Sterling initially fell following the UK central bank's decision, but later turned course, rising 0.3% against the $. Europe's auto stocks were the worst performers on the back of earnings news. Elsewhere, traders turned their attention to global trade developments, with officials from the world's 2 largest economies poised to meet for a fresh round of talks next week. Treasury Secretary Steve Mnuchin said yesterday trade representatives from DC & Beijing would both aim to reach a deal next week. The talks come with less than 3 weeks to go before a Mar 2 deadline could see an increase in US tariffs on Chinese products.
European stocks tumble as EU slashes growth forecast; BOE sees worst outlook since 2009
The number of Americans filing applications for unemployment benefits dropped from near a 1½-year high last week, pointing to continued labor market strength. Initial claims for state unemployment benefits tumbled 19K to a seasonally adjusted 234K for last week, the Labor Dept said. Claims jumped to 253K in the prior week, which was the highest reading since Sep 2017, amid layoffs in the service industry in California. The surge was blamed on a strike by teachers in Cal, a 35-day partial shutdown of the federal gov as well as difficulties adjusting the data around moving holidays like Martin Luther King day, which occurred later this year than in the past. The gov shutdown ended on Jan 25 after Pres Trump & Congress agreed to temporary gov funding, without money for his US-Mexico border wall. The forecast called for claims falling to 221K. 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 4K to 225K last week. The gov reported last Fri that non-farm payrolls increased by 304K jobs in Jan, the largest gain in a year. The strong labor market should help support the economy amid rising headwinds, including a diminishing boost from fiscal stimulus & slowing growth in China & Europe. Federal Reserve Chairman Jerome Powell said on Wed that "the U.S. economy is now in a good place." The Fed last week kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy's outlook. The central bank removed language from its Dec policy statement that risks to the outlook were "roughly balanced." The claims report showed the number of people receiving benefits after an initial week of aid fell 42K to 1.74M for the latest week after these continuing claims had raced to a 9-month high in the prior week. The 4-week moving average of continuing claims rose 4K to 1.74M.
US weekly jobless claims fall from one-and-a-half-year high
There are rumors that there is hope on resolving the mess over the gov shutdown vs southern wall. As usual, details are hazy. Traders are still digesting the 6 week stock rally which has hardly had a pause. The buyers are happy, but extending this streak without more economic support (such as a China trade deal) will be difficult.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 53.28 | -0.73 | -1.4% |
| GC=F | Gold | 1,313.80 | -0.60 | -0.1% |
Stocks opened lower on earnings disappointments from corps & weak data out of Germany. Fiat
Chrysler (FCAU) shares fell after weaker-than-expected guidance for profits & industrial free cash flow this year raised doubts about longer-term
targets. The number of Americans filing applications for
unemployment benefits dropped from near a 1½-year high last week,
pointing to continued labor market strength. Germany reported a 4th consecutive drop in industrial output. In Europe, Germany's DAX fell 1.8%. London's FTSE slipped 0.4% & France's CAC fell 1.1%. In
Asia, Japan's Nikkei closed 0.6% lower. Markets in
China & Hong Kong remain closed for the Lunar New Year holiday.
Stocks fall on earnings disappointments
Federal Chair Jerome Powell painted a bleak picture of widening economic disparities in the US, calling the lack of
economic mobility in the country one of the biggest economic challenges
over the next decade. During a town hall, with a group of educators, he said the likelihood of someone going from the “bottom to
the top” has become increasingly slim, while income for the middle and
lower levels “has really decreased.” “We want prosperity to be widely shared,” he added. “We need policies to make that happen.” Powell
acknowledged that income inequality lays outside of the Fed's
jurisdiction, but called for policies to enhance mobility, improve
people's chances in life & enable people to enter a workforce that’s
increasingly dependent on technology and artificial intelligence. “This
isn’t really the Fed’s work,” he said. “But there are policies that we
need to do that everyone should be able to agree on.” It’s
not the first time that Powell has addressed what he believes is an
unfair system. In Dec, while delivering prepared remarks, Powell
said that the benefits of the strong economy have “not reached all
Americans.” Although unemployment has dropped to a near-historic low,
wage growth has been slow to follow. “The aggregate statistics tend to mask important disparities by income, race and geography,” he said at the time.
What Fed Chair Jerome Powell sees as America's top economic challenge
The pan-European Stoxx 600 was down 0.7%, with almost all sectors & major bourses in negative territory. The EU slashed its growth outlook for the euro zone this year as it expects the bloc's largest economies to be held back by global trade tensions, among other issues. The bloc said euro zone growth will slow to 1.3% this year from a previously forecast 1.9%. In the UK, the Bank of England cut its growth & inflation forecasts. The central bank projected the weakest economic outlook for the UK economy since 2009. This is on the back of Brexit uncertainty as well as a slowdown in the global economy. Nonetheless, the bank stated that a gradual & limited rate hiking path lies ahead. Sterling initially fell following the UK central bank's decision, but later turned course, rising 0.3% against the $. Europe's auto stocks were the worst performers on the back of earnings news. Elsewhere, traders turned their attention to global trade developments, with officials from the world's 2 largest economies poised to meet for a fresh round of talks next week. Treasury Secretary Steve Mnuchin said yesterday trade representatives from DC & Beijing would both aim to reach a deal next week. The talks come with less than 3 weeks to go before a Mar 2 deadline could see an increase in US tariffs on Chinese products.
European stocks tumble as EU slashes growth forecast; BOE sees worst outlook since 2009
The number of Americans filing applications for unemployment benefits dropped from near a 1½-year high last week, pointing to continued labor market strength. Initial claims for state unemployment benefits tumbled 19K to a seasonally adjusted 234K for last week, the Labor Dept said. Claims jumped to 253K in the prior week, which was the highest reading since Sep 2017, amid layoffs in the service industry in California. The surge was blamed on a strike by teachers in Cal, a 35-day partial shutdown of the federal gov as well as difficulties adjusting the data around moving holidays like Martin Luther King day, which occurred later this year than in the past. The gov shutdown ended on Jan 25 after Pres Trump & Congress agreed to temporary gov funding, without money for his US-Mexico border wall. The forecast called for claims falling to 221K. 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 4K to 225K last week. The gov reported last Fri that non-farm payrolls increased by 304K jobs in Jan, the largest gain in a year. The strong labor market should help support the economy amid rising headwinds, including a diminishing boost from fiscal stimulus & slowing growth in China & Europe. Federal Reserve Chairman Jerome Powell said on Wed that "the U.S. economy is now in a good place." The Fed last week kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy's outlook. The central bank removed language from its Dec policy statement that risks to the outlook were "roughly balanced." The claims report showed the number of people receiving benefits after an initial week of aid fell 42K to 1.74M for the latest week after these continuing claims had raced to a 9-month high in the prior week. The 4-week moving average of continuing claims rose 4K to 1.74M.
US weekly jobless claims fall from one-and-a-half-year high
There are rumors that there is hope on resolving the mess over the gov shutdown vs southern wall. As usual, details are hazy. Traders are still digesting the 6 week stock rally which has hardly had a pause. The buyers are happy, but extending this streak without more economic support (such as a China trade deal) will be difficult.
Dow Jones Industrials
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