Dow shot up 293 closing at the high, advancers over decliners nearing 3-1 & NAZ surged 113. The MLP index rose 2+ to the 353s & the REIT index added 3+ to the 296s. Junk bond funds edged higher & Treasuries pulled back. Oil climbed to the 46s & gold slid lower.
The US economy expanded across
most regions & industries in Jul & Aug, a Fed
report showed, as tighter labor markets boosted wages for some workers. 6 of 12 districts reported “moderate” growth, & 5 others
said expansion was “modest,” according to the Beige Book. The survey is based on reports gathered on or
before Aug 24 by regional Fed banks. The report gives central bank officials, who next meet Sep 16-17,
an anecdotal picture of growth as they consider ending 6
years of near-zero interest rates. “Most districts reported modest to moderate growth in labor demand,”
the Beige Book said, with this tightening in labor markets pushing up
wages slightly in some industries, especially in the NY,
Cleveland, St. Louis & San Francisco districts. The Beige Book also showed that manufacturing activity was mostly
positive, with only the NY & Kansas City Fed districts seeing
declines. “Credit quality was reported to be improving in most districts, while
credit standards were generally said to be unchanged,” the Beige Book
said. 48% of 54 economists surveyed last week expect a Sep increase in the benchmark lending rate, down
from 77% two weeks earlier. About ¼ say the Fed
will lift off in Dec, while 17% said Oct.
The difference between the 2 parties in the latest polls published
in Athens shows the country's Sep 20 election is too close to call.
Greece's
main opposition New Democracy party would get 25.3% of the total
vote if elections were held now, leading for the first time over former
Prime Minister Alexis Tsipra's Syriza party, which would get 25%
of the vote, according to a voting intention poll. No party would get enough votes for an outright majority
in the next parliament, meaning that Europe’s most indebted state could face thorny coalition
talks after the ballot. Those could have the effect of delaying or
derailing the implementation of its bailout clauses. Syriza
party would get 23% of the total vote if elections were held
now, compared with 22.6% for the main opposition party, New
Democracy, a voting-intentions website survey shows. The far-right Golden Dawn party polls at 3rd
place with 6.1%, while pro-bailout River & Pasok parties would
get just over 4% each.
Independent Greeks, the junior coalition partner in Tsipras’s last
gov doesn’t get enough votes to elect lawmakers. Popular
Unity, a party founded by former Syriza lawmakers who revolted against
Tsipras’s decision to strike a bailout agreement with creditors would
get 3.9% of the vote, while 14% of respondent are undecided. Tsipras’s lead has narrowed to
0.4 points, from 1.5 points, in its previous survey, which was released
on Aug 28.
New orders for US factory goods rose for a 2nd straight month in
Jul on strong demand for automobiles, which could help to keep
manufacturing supported as it deals with a strong dollar & softening
global demand. The Commerce Dept said new orders for manufactured
goods increased 0.4% after an upwardly revised 2.2% rise
in Jun. Factory activity has been hobbled by a strong dollar & spending
cuts in the energy sector after last year's sharp plunge in crude oil prices. Tepid global demand is also hurting manufacturing, which accounts for about 12% of the domestic economy. Economists had forecast factory orders rising 0.9% after a previously reported 1.8% increase in
Jun. The dollar has gained against the currencies of the US main trading partners since Jun 2014, which has undercut export growth & weighed on the profits of multinationals. Orders for transportation equipment rose 5.5% as
bookings for motor vehicles & parts increased 4.0%, the largest
gain in a year. Orders for automobiles are likely to remain strong
after sales surged in Aug. In Jul, there were increases in orders for machinery, electrical
equipment, appliances & components, & computers & electronic
products. Orders for non-defense capital
goods excluding aircraft, seen as a measure of business confidence &
spending plans, increased 2.1% instead of the 2.2% rise
reported last month. Shipments of these core capital goods, which are used to
calculate business equipment spending in the GDP
report, increased 0.6%, unchanged from last month's
estimate. Inventories of factory goods slipped 0.1% after 3 straight
months of gains. That left the inventories-to-shipments ratio at a
lofty 1.35, unchanged from Jun, suggesting manufacturers might be sitting on a pile of unwanted
goods, which could hurt production & weigh on growth in the coming
quarters. Unfilled orders at factories rose 0.2%, increasing for a 2nd straight month.
Stocks were relieved that the world did not come to an end after yesterday's plunge. But this rally is short of impressive, partly because of this being a semi holiday week ahead of Labor Day. Dow is near a 2 year low & down 1½K YTD (almost 10%) as the threat of a interest rate hike still spooks the market. It would be best to get it over, admitting that the emergency period that lasted almost a decade is over.
Dow shot up 178, advancers over decliners 2-1 & NAZ gained 39. The MLP index rebounded 5+ to the 356s & the REIT index bounced back 3+ to the 297s. Junk bond funds crawled higher & Treasuries retreated. Oil was higher after selling yesterday & gold was flattish.
US companies
added 190K workers to payrolls in Aug, figures from
the ADP Research Institute. The
forecast called for a
200K advance. The Jul reading was revised lower to 177K from a previously
reported 185K increase. “Recent global financial market turmoil
has not slowed the U.S. job market, at least not yet,” ADP Research said. “Job growth remains strong and
broad-based, except in the energy industry.” A
Labor Dept report Fri is projected to show employers,
including gov agencies, took on 218K workers last month, while
the jobless rate fell to a 7-year low of 5.2%. Goods-producing
industries, which include manufacturers & construction companies,
increased headcount by 17K.
Construction employment climbed 17K & factory payrolls rose
7K. Employment at service providers rose 173K in Aug, led by
gains in professional & business services. Companies employing
500 or more workers added 40K jobs. Headcount at businesses with 50-499 employees increased 66K & the smallest companies boosted
payrolls 85K.
Saudi Arabia & its Gulf allies
are at odds with Iran & other OPEC members over whether the
organization should include oil-price forecasts in its long-term
strategy report. The Gulf kingdom, which has led
OPEC in a battle against rival
producers, is seeking to exclude price assumptions from the report. The disagreement reflects internal divisions over
whether OPEC policy should focus on prices or the stability of the oil
market. Oil prices plunged to a 6-year low last month as OPEC kept its taps open in an effort to
pressure competitors such as US shale drillers to cut
production. Saudi Arabia, Kuwait, Qatar & the United Arab Emirates
overcame opposition from Iran & the other 7 members last
November to adopt that strategy. OPEC has since lost $B
in revenue, pushing some members to the brink of economic crisis & prompting calls from Algeria & Venezuela for a change in policy. “I haven’t received the formal report for the position of Saudi Arabia,” Iran Oil Minister Zanganeh said when asked about the disagreement. While it may take some months for members
to exchange views, they are mature enough to resolve differences &
“after ups and downs OPEC will reach an agreement for managing the
market.” OPEC’s strategy review is due for
completion later this year. The previous edition produced in 2010
estimated crude would trade in a range of $70-86 a barrel thru to
2020, then climb to $106 by 2030. The
US, Canada, Brazil & Russia, the biggest sources of supplies
outside OPEC, face an array of technological & regulatory obstacles
that will be compounded by the drop in crude prices. Some smaller US shale drillers could be forced “out of
business,” Brazil will face “extreme technological challenges,” &
Russia’s best hope may be to prevent output declining.
China’s stocks pared losses on the last trading day of the week on
speculation state funds intervened to stabilize the market before a
major military parade on Thurs.
The
Shanghai Composite Index slipped 0.2% to 3160,
trimming a drop of as much as 4.7%. 7 stocks fell for every 2 that gained as a rally for technology shares fizzled. Large-company shares
rebounded in late trade for at least a 6th day from session lows amid
possible purchases by gov-backed funds. The benchmark stock
measure extended its biggest 2-month loss since 2008 after traders
reduced holdings of shares purchased with borrowed money for an 11th day & an official factory gauge fell to the lowest reading in 3
years. Markets will be closed Thurs & Fri to commemorate the end of
WWII. The effort to support stocks is part of a broader push to
ensure nothing detracts from the parade, which is the gov will
use to demonstrate its rising military & political might. What happens
in the market has a growing influence on public perceptions of the
gov's economic management. The Shanghai Composite lost 25% in
Jul & Aug on concern the deepening slowdown will hurt earnings.
Official data yesterday showed manufacturing contracted last month,
while a report from the State Information Center & China Development
Bank said exports may rise 2% this year as imports slump 10%.
Stocks are taking a breather after yesterday's sell-off. There is nothing special going on & the ADP report was bland, but traders are relieved there was additional selling. With the Chinese stock markets closed for the rest of the week, stocks in the US may not do much of anything until the jobs report is released on Fri. And that probably will not bring surprising data. Next week, traders will get more serous about where to take stocks oil prices were will a big driver of stocks.
![Live 24 hours gold chart [Kitco Inc.]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tPWXF9CCWg9XAc8VpP0lbRLpjB8wQT6sDiLSm5KMOePAox0rKZRVFM8zppTOCggIGbpTWUC5sEE0bX09xlIcBoV0P6S2PltKADRI7LpBvcIriAEp6zV2zVBUzaAqLJ=s0-d)
,,,0.19 
