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Tuesday, October 25, 2016
Markets drift lower on sluggish earnings
Dow pulled back 53, decliners over advancers 2-1 & NAZ pulled back 23. The MLP index lost 2+ to the 311s & the REIT index fell 1+ to the 342s. Junk bond funds were a little higher & Treasuries also rose. Oil was weak (more below), barely hanging in above 50, & gold went up.
Crude dropped as the $ strengthened & analysts
predicted weekly gov data will show that US supplies climbed. Futures fell almost 1% as
the $ reached its strongest since Mar
increasing bets that the Fed will raise interest rates by
year-end. A stronger greenback curbs the appeal of commodities
denominated in the US currency to investors. Crude stockpiles probably
rose 1.75M barrels last week.
Oil
has fluctuated near $50 a barrel amid uncertainty about whether OPEC can implement an accord to
cut output when its members gather at an official meeting in late No. A
committee will meet this week to try to resolve differences over how much members should pump. Last month’s OPEC deal
pushed prices higher, bringing some drilling back in the US, which has
in turn prevented crude from making new highs. West
Texas Intermediate for Dec delivery slipped 20¢ (0.4%) to $50.32.
Americans took a dimmer view about the economy this month, the latest
sign households have become a bit cautious in recent weeks. The Conference Board index of consumer
confidence dropped to 98.6 in Oct from 103.5 in Sep.
Economists expected the index to
fall to 101.2. Consumers' assessment of current conditions weakened over the
month & their outlook for the labor market was also less optimistic in
Oct than a month earlier.
Home-price growth accelerated in Aug, as a lack of inventory &
low interest rates helped push prices to near-record levels. The S&P CoreLogic Case-Shiller Indices covering the entire
nation rose 5.3% in the 12 months ended in Aug, a small jump from a
5% increase reported in Jul. The 10-city index gained 4.3%, up from 4.1% last month & the
20-city index gained 5.1% year-over-year, up slightly from a 5% increase
in Jul. The strong rise in prices comes amid other signs the housing
recovery is gaining strength. The share of first-time buyers rose to 34% in Sep,
the highest since Jul 2012, according to the National Association of
Realtors. The national Case-Shiller index is now just a hair away from the record high set a decade ago in 2006. "Supported by continued moderate economic growth, home prices
extended recent gains," said David Blitzer, managing director at S&P
Dow Jones Indices. The hottest markets in the country have shifted away from
Cal & toward the northeast, as many buyers priced out of the
Silicon Valley area flee to secondary tech hubs.
There were a bunch of earnings reports today. By & large they were not encouraging. Oil continues to struggle, trying to stay above the important 50 support level. Safe haven investments gold & Treasuries are attracting more attention. Earnings results are not giving the lift that the bulls were hoping for. Drab economic growth is the root of the problem. Dow can not break away from 18K.
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