Dow dropped 101, decliners ove advancers about 2-1 & NAZ fell 49. The MLP index was off 2+ to the 251s & the REIT index pulled back 2+ to the 368s (still near its record highs reached in 2016). Junk bond funds slid lower & Treasuries were sold, bringing higher yields. Oil climbed in the 56s & gold sank 12 to 1335 after its recent run.
AMJ (Alerian MLP Index tracking fund)
Orders to US factories for big-ticket manufactured goods posted a 1.2% advance in Dec, the best showing in 4 months, but much of the strength came from a surge in orders for comercial aircraft. In a worrisome development, a key category that tracks business investment fell for a 2nd straight month. The Dec advance in orders for durable goods followed a 1% rise in Nov which was revised up from an initial reading of 0.7%, the Commerce Dept reported. But orders for non-defense capital goods excluding aircraft, a closely watched category used as a proxy for business investment plans, fell 0.7% after a 1% drop in Nov. The strength in the overall number came from a 28.4% jump in commercial aircraft orders. Durable goods orders have been weak since Aug, when they had surged by 4.7%. Analysts believe part of the weakness is a cutback in demand for US exports of manufactured goods, reflecting higher tariffs many countries have imposed on US goods in retaliation for tariffs the Trump administration has imposed in an escalating trade war with China & other nations. The gov has not reported on durable goods since Dec 21, the day before the start of the partial gov shutdown that has disrupted the release of many key economic indicators. That data gap has made it harder to get a reading on the current health of the economy. The gov will finally provide a look at the economy's overall performance next week when it releases the GDP for Q4. Analysts have been downgrading their estimates of this figure since a disappointing Dec retail sales report last week showing that sales had plunged 1.2% in Dec, the biggest one-month decline in 9 years.
Fewer Americans sought unemployment benefits last week, a sign that layoffs declined and hiring is likely strong. The Labor Dept said weekly applications for unemployment benefits fell 23K to a seasonally adjusted 216K, a very low level by historical standards. The 4-week average, a less volatile measure, rose to 235K. Applications are a proxy for layoffs, since people cannot claim benefits unless they lose a job through no fault of their own. Businesses are hiring at healthy levels & posted the most open jobs in nearly 2 decades in Dec. With demand for workers strong, companies are holding onto their staffs.
After the 2 month rally, stocks are vastly overbought & due for some type of correction. New economic data for 2019 is coming in sluggish, not encouraging for the bulls. The Dow is less than 1K away from setting a new record high, but it will need positive news on the trade front to reach fresh record heights.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 57.05 | -0.11 | -0.2% |
| GC=F | Gold | 1,333.70 | -14.20 | -11% |
Stocks traded lower following disappointing durable goods & manufacturing figures. Investors were also keeping an eye on possible advances in US-China trade talks. The Philadelphia Federal Reserve said its gauge on
business activity in the Mid-Atlantic region unexpectedly fell to the
weakest level since May 2016. The index dropped to reading of -4.1 from 17 in Jan. A reading below zero indicates contraction. The
Commerce Dept reported that overall durable goods rose in
Dec. However, a key component called nondefense capital goods fell
0.7% from Nov, pointing to a further slowdown in business
spending. The Labor Dept reported initial claims for
state unemployment benefits dropped 23K to a seasonally adjusted
216K last week. Negotiators may be close to coming up with a deal that will end the trade sanctionsbetween the US & China, considered the most significant progress yet toward ending a 7-month trade war. In Asian markets, China's Shanghai Composite fell 0.3%, Hong Kong's Hang Seng
gained 0.4% & Japan's Nikkei edged up 0.2%. In Europe, London's FTSE dropped 0.9%, Germany's DAX added 0.2% & France's CAC was little changed.
Stocks slide on weak economic data
Orders to US factories for big-ticket manufactured goods posted a 1.2% advance in Dec, the best showing in 4 months, but much of the strength came from a surge in orders for comercial aircraft. In a worrisome development, a key category that tracks business investment fell for a 2nd straight month. The Dec advance in orders for durable goods followed a 1% rise in Nov which was revised up from an initial reading of 0.7%, the Commerce Dept reported. But orders for non-defense capital goods excluding aircraft, a closely watched category used as a proxy for business investment plans, fell 0.7% after a 1% drop in Nov. The strength in the overall number came from a 28.4% jump in commercial aircraft orders. Durable goods orders have been weak since Aug, when they had surged by 4.7%. Analysts believe part of the weakness is a cutback in demand for US exports of manufactured goods, reflecting higher tariffs many countries have imposed on US goods in retaliation for tariffs the Trump administration has imposed in an escalating trade war with China & other nations. The gov has not reported on durable goods since Dec 21, the day before the start of the partial gov shutdown that has disrupted the release of many key economic indicators. That data gap has made it harder to get a reading on the current health of the economy. The gov will finally provide a look at the economy's overall performance next week when it releases the GDP for Q4. Analysts have been downgrading their estimates of this figure since a disappointing Dec retail sales report last week showing that sales had plunged 1.2% in Dec, the biggest one-month decline in 9 years.
US durable goods orders up 1.2% in December
Fewer Americans sought unemployment benefits last week, a sign that layoffs declined and hiring is likely strong. The Labor Dept said weekly applications for unemployment benefits fell 23K to a seasonally adjusted 216K, a very low level by historical standards. The 4-week average, a less volatile measure, rose to 235K. Applications are a proxy for layoffs, since people cannot claim benefits unless they lose a job through no fault of their own. Businesses are hiring at healthy levels & posted the most open jobs in nearly 2 decades in Dec. With demand for workers strong, companies are holding onto their staffs.
US weekly jobless claims fall to a low 216,000
The US & China have started to outline commitments in principle on the stickiest
issues in their trade dispute, marking the most significant progress yet
toward ending a 7-month trade war, according to leakers. The world's 2 largest economies have
slapped tariffs on hundreds of B$ of goods,
slowing global economic growth, skewing supply chains & disrupting
manufacturing. As officials hold high
level talks on today & tomorrow in DC, they remain far apart
on demands made by Pres Trump's administration for
structural changes to China's economy. But the broad outline of what
could make up a deal is beginning to emerge from the talks, the sources
said, as the 2 sides push for an agreement by Mah 1. That marks the
end of a 90-day truce that Trump & Chinese President Xi Jinping agreed
to when they met in Argentina late last year. Negotiators are drawing up 6 memorandums of understanding on
structural issues: forced technology transfer & cyber theft,
intellectual property rights, services, currency, agriculture &
non-tariff barriers to trade. At meetings between US & Chinese officials last week in Beijing the 2 sides traded texts & worked on outlining obligations on paper. The process has become a
real trade negotiation, so much so that at the end of
the week the participants considered staying in Beijing to keep working.
Instead they agreed to take a few days off & reconvene in DC.
US and China are sketching the outlines of a deal to end the trade warAfter the 2 month rally, stocks are vastly overbought & due for some type of correction. New economic data for 2019 is coming in sluggish, not encouraging for the bulls. The Dow is less than 1K away from setting a new record high, but it will need positive news on the trade front to reach fresh record heights.
Dow Jones Industrials
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