Economic Journal - Friday, 5/30/2014

(As of 7:30 am PST)

US stocks edged lower on Friday, but the broad averages remained on pace for weekly and monthly gains.  Investors sold down stocks at the open after receiving disappointing economic reports to close the week.  A report on personal spending showed consumers spent less than forecasted for April. Also adding to the selling pressure was a final reading on consumer sentiment which showed sentiment falling below expectations for May. It was the first decline in a year as Americans cut back on purchases and also saw declines on utilities due to unusually warm weather. On a brighter note, a report from the Chicago PMI, showed manufacturing activity picked up more than expected. In overseas action, Europe was mostly flat while Asian markets finished lower. As the last trading day of May comes to close, expect more uncertainty to creep in over the summer months as investors consider the elephant in the room...the imminent exit of the Fed's QE program and the effects of a rising interest rate environment.

Economic Journal - Thursday, 5/29/2014

(As of 7:30 am PST)

 

Stocks are mildly higher after the first hour of trading as investors sifted through a torrent of data after a quiet day yesterday.  The S&P500 broke through an intraday record early in the session after stalling out the day before.  Investors shrugged off a disappointing revision to Q1 GDP data which showed the US economy actually contracted 1%.  Better than expected jobless claims numbers helped support stocks as claims fell by 27,000 in the previous week.  Stocks held their gains after a report on pending home sales showed sales rose 0.4% in April.  It was the second consecutive monthly gain after several months of slowing activity. In international news, most Asian markets finished in the red, while Europe traded mixed most of the day.  After taking a brief pause yesterday, investors appear welcoming to today’s recent data, but there’s a similar sense that a breakout to the upside would require some surprisingly compelling news.

Economic Journal - Wednesday, 5/28/2014

(As of 7:30 am PST)

 

US stocks opened lower this morning as investors paused after four straight sessions of gains.  The S&P500 rose yesterday to an all-time high closing above 1900 on a record day.  Earnings related news is dominating the headlines today as investors had little economic data to trade on.  Most notably a report from Michael Kors showed the luxury retailer beating quarterly estimates.  Shares of DSW, the discount shoe retailer, plummeted 25% after cutting its forecast for its full-year earnings results. In other company news, shares of Twitter jumped 3.5% after an analyst upgraded the stock to buy from neutral.  Also, McDonald’s made headlines early after the company reportedly is planning to return between $18 billion and $20 billion to shareholders in the form of dividends or stock repurchases.  Shares were down almost 1% in early trade.  European markets are posting small losses at the end of the trading day while Asian markets saw gains from yesterday’s up day on Wall St.  Gold and oil are down again on the day while interest rates also fell as investors bought up treasuries.  It looks like some small profit taking may be the order of the day today, as a light news flow gives the market a chance to catch its breath.

Economic Journal - Tuesday, 5/27/2014

(As of 7:30 am PST)

Stocks are on the rise this morning with the S&P500 hitting another intraday high as investors welcomed positive economic data to start the week.  Better than expected reports on home prices and durable goods orders greeted markets early as traders returned to their desks from the long holiday weekend.  Home prices, according to the Case-Shiller Index, rose in March for the first time in 5 months.  Also, orders for durable goods rose slightly in April as a spike in demand for military goods helped lift activity. Excluding the defense sector, orders for most other civilian categories dropped on the month.  Adding to early momentum was a report on consumer confidence which showed confidence among consumers rose in May matching the consensus estimate.  Asian markets finished the day mostly lower while Europe is higher going in to the last hour of trade.  Gold and oil are both lower while interest rates are flat.  All in all it looks like a good start to this holiday shortened week.  The economic data calendar is packed full of reports this week, after last week’s empty data calendar.  The market continues to surprise to the upside as May looks to be on pace for a positive close.

Economic Journal - Friday, 5/23/2014

(As of 7:25 am PST)

US stocks are marching higher for the third straight day with markets on pace for weekly gains.  The only economic report due out today was a positive one and is propelling markets higher.  Sales of new single-family homes rose 6.4% in April to an annual rate of 433,000, ahead of expectations, but below the year ago rate of 452,000.  Housing has slowed this past year due to rising prices and low inventory.  International markets are finishing the week on a positive note with a long holiday weekend ahead for the US and UK.  Gold is down slightly and oil up while interest rates are slightly lower.  With the S&P500 trading near record levels and a quiet news flow heading into the weekend, many analysts are struggling to forecast this market pushing higher.  

 

***The US stock market will be closed on Monday due to the observance of Memorial Day holiday.  Thank you to all the men and women who have served and do serve our great country. We honor you this weekend.***

Economic Journal - Thursday, 5/22/2014

(As of 7:20 am PST)

 

Markets opened near the unchanged line today as investors waded through a mix of economic data both at home and abroad.  Jobless claims rose by 28,000 to 326,000 last week after falling to a seven-year low in early May.  The level of claims still remains near a pre-recession low but today’s unexpected spike is worth noting.  A report on housing showed existing home sales rose 1.3% in April, slightly below expectations but still a positive reading.  On another note, a report which tracks leading economic indicators in the US, rose in April.  Also hitting the wires in early trading was a final reading of the manufacturing PMI index which showed manufacturing activity accelerating to a 3 month high in April. Strong manufacturing data out of China and Japan also helped to lift stocks early.  In earnings related news, retailers Best Buy and Dollar Tree posted earnings results that beat expectations and shares are rallying as a result.  Hewlett Packard is set to report after the bell today.  Asian markets finished decidedly higher while Europe is flat in the final hour of trade.  There’s a positive sentiment in the market today, but after yesterday’s surge it looks like today’s session may be more cautious.

Economic Journal - Wednesday, 5/21/2014

(As of 7:20 am PST)

 

Stocks are on the move higher erasing most of yesterday’s losses, with triple digit gains on the Dow.  Investors were focused on earnings reports from several retailers including Target and Tiffany & Co. in early action.  Target reported a 16% drop in earnings, mostly related to the data breach which occurred over the holiday season.  Shares were higher this morning despite the sharp decline in earnings.  Shares of Tiffany & Co. surged 9% after a strong earnings report that beat analyst estimates.  The retail sector is leading this morning’s gains after causing a selloff yesterday when poor results from Staples and TJ Maxx dominated headlines.  Investors are also preparing for a day chock-full of Fed speakers including newly elected Fed Chairwoman Janet Yellen.  Minutes from the Fed’s recent Federal Open Market Committee meeting will be released later this morning, which will have investors looking for clues about the first rate hike.  European markets are following Wall St. higher while Asian markets finished on a mixed note. Gold and oil are both lower while treasury prices are on the decline ahead of the Fed minutes.  Barring any unforeseen policy moves from the Fed, it looks like today is shaping up to be a nice day on the markets.

Economic Journal - Tuesday, 5/20/2014

(As of 7:25 am PST)

 

Stocks are skidding in early action with retailers leading the retreat.  Disappointing earnings announcements from several retailers are sending the sector lower this morning.  Shares of Staples are down nearly 10%, while shares are Dick’s Sporting Goods are getting clobbered, down 15% on the day, after reporting an earnings miss.  Urban Outfitters, TJ Maxx and Ross Stores are also notably lower on the day. With a lack of economic data to report today, investors will be focused on speeches from Philadelphia Fed President Charles Plosser and New York Fed President William Dudley later this morning.  Meanwhile, markets abroad are keeping in step with Wall St.  European markets are in the red, while Asian markets finished the trading day higher after yesterday’s gains in the US.  Gold is flat today, while oil is lower and interest rates are down.  It looks like profit taking is the order of the day, especially in the retail sector.  We’ll keep our eye on this afternoon’s Fed speeches for any peculiar communication on policy direction.

Economic Journal - Monday, 5/19/2014

(As of 7:00 am PST)

 

US stocks continued their cautious trade this morning as the major indexes opened on a mixed note.  In early action, investors digested a disappointing earnings announcement from Campbell’s soup and also reacted to AztraZeneca’s rejection of a deal to be bought out by Pfizer.  It is a very light week for economic data.  There are no reports due out today or tomorrow.  Investors will continue to be focused on earnings and will also be paying close attention to several Fed officials set to speak this week, looking for clues into any policy changes and also the overall state of the economy.  Gold and oil are higher today.  Interest rates are slightly lower as is the US dollar.  It looks like a quiet day is shaping up as the market catches its breath from last week’s volatility.

Economic Journal - Friday, 5/16/2014

(As of 7:20 am PST)

 

Stock futures were higher prior to today’s open as investors cheered positive housing data, but momentum has quickly shifted to the downside as the major averages move lower.  Housing data released prior to today’s open surprised investors as new housing starts jumped in April to the fastest pace in 5 months.  Building permits (a sign of future demand) also came in better than expected.  Gains were short lived however, after a report from the Univ. of Michigan and Thomson Reuter’s showed consumer sentiment falling well below expectations.  After hitting record highs earlier in the week, markets are now on track to finish this volatile week with weekly losses.  Concerns around the Ukraine-Russia crisis, stalling growth around the globe, and uninspiring economic data at home has aided in the cautious tone this week.  After many traders were calling for a breakout at these current levels, many are now left wondering how much higher this market can go.

Economic Journal - Thursday, 5/15/2014

(As of 7:20 am PST)

 

Stocks are retreating this morning as investors sifted through a surge of economic data including weekly jobless claims, industrial production, and manufacturing reports.  Most of the data came in positively, with several reports beating expectations, but negative sentiment has taken hold early as a bout of profit taking appears underway.  Let’s look at a few of the reports.  Less people filed for unemployment benefits last week as jobless claims fell to 297,000 from 321,000, the lowest level since 2007. Manufacturing activity sky-rocketed in the New York region in May, according to the Empire State Manufacturing index.  The consumer price index rose 0.3% last month, for a 2% rise in the past 12 months.  One negative report today showed industrial production dropped 0.6% in April, a faster pace than was expected.  Also disappointing was a reading on the Philly Fed manufacturing index which showed activity declining in April.  Earnings are also under close watch today.  Wal-Mart Stores is seeing some pressure after reporting disappointing quarterly results.  Cisco Systems, on the other hand, is rallying 7% to lead all tech stocks, after beating earnings estimates  yesterday.  Interest rates are plummeting as investors flock to the safe haven US treasury.  It looks like a risk-off day today for the stock market.

Economic Journal - Wednesday, 5/14/2014

(As of 7:20 am PST)

 

US stocks opened lower today after a nice start to the week as investors waded through economic data and a mixed batch of earnings results.  Causing the greatest concern was a report on wholesale prices which showed prices jumped 0.6% in April, the largest increase since 2012.  The second straight month of sharp increases has some investors worried that this could be the beginning of a pickup in inflation.  However, many economists have been quick to warn against reading too much in to the recent data, as the PPI index recently changed some of its key measurements.  Nonetheless, it is something to keep an eye on, and certainly has caused some concern today.  Mixed earnings results from Macy’s, Deere & Company and Plug Power are adding to the negative sentiment early, while investors also sold down shares of Cisco Systems ahead of the company’s earnings announcement after the bell today. International markets are mixed while gold and oil are rallying.  Interest rates took a dive with the 10 yr. treasury yield hitting 2.55%.  After posting record highs earlier this week, the Dow Jones and S&P500 look set to take a break in today’s session.

Economic Journal - Tuesday, May 13, 2014

(As of 7:15 am PST)

 

Markets are cautiously higher early as investors waded through a soft retail sales report.  Sales at US retailers rose only 0.1% in April, below the consensus estimate and well off the previous month’s pace.  On a brighter note, sales for March were revised upward to 1.5%, the largest monthly gain in 4 years. Economists attribute the surge in March and a drop off in April to this year’s late Easter holiday.  In other economic news, prices for imported goods dropped 0.4% in April, led mostly by lower fuel costs which fell 1.7%.  After a strong day on the market yesterday, which had investors jumping back in to technology stocks, things seem to be cooling down today.  International markets are mixed, with Asian markets finishing mostly in the green despite disappointing retail sales and industrial production data in China.  Europe is trading with modest gains heading into the final hour of the session. Gold is flat and oil up slightly while interest rates are down.  It was a record day for the S&P500 and Dow Jones yesterday as both indexes closed at record levels.  We’ll see if large caps can continue to carry markets higher today.

Economic Journal - Monday, May 12, 2014

(As of 7:15 am PST)

 

US stocks are rallying to start the week with the Dow Jones Industrial Average and S&P500 eyeing all-time record highs.  Early market action is being driven by M&A activity while positive trade on international markets is also propelling markets higher.  China stocks kicked things off Monday, rallying 2%, as investors welcomed new capital market reforms.  Most Asian markets pushed into the green on the news.  European markets followed suit led by an advancing mining sector as mining companies across Europe received an upgrade from JP Morgan.  Merger and acquisition announcements are leading the rally in the US today.  Economic data is light today with a report on the treasury budget due out later this morning.  Gold and oil are both higher.  Interest rates are flat and the US dollar is slightly lower. 

Economic Journal - Friday, 5/9/2014

(as of 7:01 AM PST)

Markets continued their disappointing performance that started mid-day yesterday.  After a solid triple digit start there was a big turnaround and even though indexes ended the session mixed, with the Dow eking out a small gain, and with both the NASDAQ and S&P finishing down, it felt much much worse.  The Ukraine has come back into focus in a negative way, and less than sterling economic news from Western Europe has investors even further on the defensive.  It looks like a forgettable day shaping up.  Oil and gold are up slightly and interest rates are stable.  The US dollar is strengthening against most currencies in what seems like a flight from risk to a safe haven.

Economic Journal - Thursday, 5/8/2014

(As of 7:10 am PST)

 

The stock market opened on a cautious note but has since erased early losses as the major averages are all higher on the day.  Fed Chair Janet Yellen returned to Capitol Hill for day two of her congressional testimony, today visiting the Senate Banking committee.  Markets are tuning in to Yellen’s comments around monetary policy and the strength of the US economy.  All other news is pretty light today.  A report on jobless claims came in lower than expected, while earnings results are also driving market sectors.  International markets are mostly higher on the day while gold and oil are down slightly.  Interest rates are up slightly while the US dollar is also up against major currencies.  It looks to be a quiet day today.

Economic Journal - Wednesday, 5/7/2014

(as of 7:20 AM PST)

Technology stocks continue to fall, extending losses from yesterday’s trading.  Profit reports mostly disappointed after the market close yesterday and we can see that disappointment, especially in the Nasdaq which is down moderately, while other indexes are showing small gains.  An apparent break in the Ukraine crisis is providing some support. Without that positive news, we could be looking at another triple digit loss on the Dow and greater percentage losses on the Nasdaq.  There seems to be a decidedly negative momentum which might weigh on stocks more and more as the day progresses.  Investors appear to be abandoning momentum growth stocks and looking to fundamentals, such as revenue growth and earnings in making investment decisions.  Gold is down over 1% while oil is holding steady.  Fasten your seat belt.  There is turbulence ahead. 

Economic Journal - Tuesday, 5/6/2014

(as of 7:10 AM PST)

 

Markets are down to start.  An escalation of violence in Ukraine has European markets on the defensive and it has spread to the US.  It is a mild retreat with indexes down about a half percent.  Gold and oil are near unchanged.  The US balance of payment deficit was down slightly and better than analyst expectations, but the US dollar is falling against most of its peers, especially Japan as the yen exhibits good strength.  Interest rates are stable.  It looks to be a quiet day.

Economic Journal - Monday, 5/5/2014

(as of 7:25 AM PST)

It is a tough way to start the week.  Negative economic data out of China, coupled with increasing tensions and bloodshed in Ukraine has investors on the defensive this morning.  China PMI, a measure of industrial activity was revised downward.  A revised reading of 48.1 shows that the China economy is stumbling.  Any reading below 50 indicates business contraction.  More importantly, several Ukraine soldiers were killed as violence escalates in Ukraine.  Other former members of the Soviet bloc look on with great concern.  On a positive note, the US economy continues to show strength with a strong ISM Services reading of 55.1, the highest in six months.  The ISM services data is important because services represent 75% of US economic output.  That data has helped stocks to recover some opening losses. Gold is up strongly on international tension and oil is up slightly, but close to flat-line. 

Economic Journal - Friday, 5/2/2014

(as of 7:20 AM PST)

A blockbuster employment report should have stocks screaming to the upside, but it is a very quiet market to start the day.  The economy generated 288,000 new jobs, the highest level of job growth in two years.  Revisions upward of prior months added even more positive news for investors to ponder.  Perhaps the fact that the unemployment rate fell below a prior target that had been set by the Federal Reserve was the reason.  Unemployment dropped from 6.6% to 6.3%, below what was once considered the ‘magic number’ for increasing interest rates.  Maybe increased selling pressure from the ‘sell in May and go away’ crowd is the reason.   Or perhaps we have simply come up too far, too fast and we need a breather.  It is of course a combination of factors, but by the end of the day strong economic data should prevail and provide a nice lift to market indexes.  Gold continues to drag but holding level, while oil is unchanged.  Interest rates are on the rise on the positive economic news.

 

Economic Journal - Thursday, 5/1/2014

(as of 7:18 AM PST)

 

Interesting dynamics have stock markets jittery, hovering around flat line.  There is a feeling that investors want to propel markets higher yet hesitation as the Dow Jones Average hit a record high yesterday.  Economic data is strong.  Personal income was up half a percent, while personal spending was up by .9 percent.  The April ISM number, a key measure of industrial activity, came in above expectations at 54.9, the highest reading since December.  Any number above 50 represents positive growth and 54.9 is very robust.  Jobless claims were much higher than expected, dampening some enthusiasm.  The beginning of May begins a pattern for some investors that exaggerate selling pressure. The ‘Sell in May and go away’ is an anomaly of markets that suggest investors move to the sidelines for the May through September period, since most gains are generated from October through April.  Whether significant or not, markets have to deal with an artificial outflow of capital which could temporarily increase selling pressure, forcing markets down.  Commodities are lower across the board, led by gold, down more than 1%.  Interest rates continue to be very well behaved, with the 10 year yield at 2.65%.  Positive data may be strong enough to push markets to yet another record today.