Economic Journal - Friday, 10/31/2014

(As of 7:05 am PST)

Stocks are off to a wild start Friday with the Dow Jones Industrial Average and S&P500 soaring into record territory after a surprise announcement from the Bank of Japan to increase its stimulus package. Buying began overnight in the Asian markets with the broad indexes up well over 1%. Japan’s Nikkei index skyrocketed over 4% in Friday’s session as investors cheered the BOJ’s new stimulus measures. Optimism carried over into European markets which are up almost 2% in the final hours of trading. US investors kept the risk on trade going just day’s after the Federal Reserve announced the ending of its stimulus program known as quantitative easing.  Positive US economic data added to the enthusiasm early. Gold and oil are both down with oil falling below $80 per barrel and gold hitting levels unseen since 2010. With money flowing to equities treasuries were sent lower causing interest rates to rise. The market has had a remarkable snapback in the last 2 weeks with gains on pace for 4% in this week alone. Don’t be surprised to see a pullback next week after this surprise rally.

Economic Journal - Thursday, 10/30/2014

(as of 7:10 AM PST)

Today's market action is very much directed by individual stock earnings reports.  The Dow is the lone gainer on the heels of sterling profit reports by Visa and MasterCard. Social Media stocks are getting beat up and have the Nasdaq down by about half a percent.  Investors were buoyed by a great GDP report for the third quarter.  GDP came in at a 3.5% growth rate, a very robust number, showing that the recovery in the US economy is taking hold in a big way.  Fallout from the ending of QE3 has been minimal but expect there to be an overhang for the next few days that will limit market upside.  Gold and silver are down sharply while oil has resumed its downward pattern. 

Economic Journal - Wednesday, 10/29/2014

(as of 8:00 AM PST)

 

Stocks simply ran out of steam this morning after an incredible rally that make the huge early October losses nothing more than a footnote.  Markets are down a small amount. Earning continue to come in generally positive with quarterly profit now projected to show an 8% increase from a year ago.  The US dollar is giving back some gains.  The Federal Reserve is terminating QE3, the aggressive bond buying program which provided financial stimulus to markets for the last several years.  The muted effect on markets of stopping QE3 has investors feeling optimistic that our economy can continue to recover despite the withdrawal of stimulus.  Gold is down slightly while oil is recovering from its plunge under $80.

Economic Journal - Tuesday, 10/28/2014

(As of 7:10 am PST)

US stocks moved higher at the open despite a surprise reading on the US durable goods report.  Stock futures were higher prior to the session on optimism over a positive European trading session. Gains were trimmed right after the open, as orders for durable goods came in surprisingly low for September.  After a sharp decline in August, analysts expected a rebound for orders of large-ticket items, but orders fell short, falling -1.3% for the second straight month of declines. In other economic news, a report on housing showed home price growth slowing in August, nudging up 0.2% for the month according to the S&P/Case-Shiller Index.  Despite two uninspiring economic reports, stock gains remained firmly higher. Investors are looking ahead to the FOMC’s rate decision later this week. Markets are expecting the announcement of the end of the Fed’s quantitative easing program but a dovish tone around an interest rate hike decision and the ability for the Fed to remain accommodative if need be. There’s plenty of earnings to wade through as well today, with the session wrapping up with a report from Facebook after the bell. Most international markets are higher while gold and oil prices are trading around the unchanged line.

Economic Journal - Monday, 10/27/2014

(as of 7:00 AM PST)

Markets have opened to the downside this morning after Friday's surprise rally.  Europe is struggling trying to reconcile France and their budget deficits which are outside of the Eurozone limits.  Brazil is in the spotlight with its markets plummeting after an election result that is seen as anti-business.  Energy is once again in the news with oil prices falling below $80 per barrel.  There is concern that if the price of oil falls much further it will stifle the booming oil fracking business in the US.  This week will likely mark the end of QE3, the bond buying program of the Federal Reserve Bank.  The end has been well communicated so if should have minimal impact on markets.  Markets might be looking to pullback after last week's spectacular rally.

Economic Journal - Friday, 10/24/2014

(as of 7:15 AM PST)

 

Large cap stock giant Amazon disappointed investors with a terrible earnings report that sent its stock down 11% in aftermarket trading.  This morning the stock opened down about 8% which is having a chilling impact on what has been a hot market this week.  An Ebola scare in Manhattan is also adding to a build of negative momentum which seems to be taking hold of the market.  While there was also a lot of good news in terms of earnings announcements one gets the feeling that today will be a day of profit taking and consolidation.  Gold is up slightly while oil continues to plummet, approaching $80 per barrel, after being over $100 just a few weeks ago. 

Economic Journal - Thursday, 10/23/2014

(As of 7:20 am PST)

US stocks are surging this morning after yesterday’s disappointing close.  US indexes erased all of yesterdays losses in the early going as the Dow surged well over 200 points, while the Nasdaq and S&P500 were also up over 1%.  Strong earnings results from the industrial sector got things going early.  Better than expected earnings from Caterpillar, 3M Co., and General Motors ignited the buying as investors applauded the quarterly results and outlook from the three Dow components. Other positive results from Southwest Airlines and athletic retailer Under Armour added to the momentum.  Economic data is light today but mostly positive. Jobless claims jumped 17,000 last week to 283,000, but the move was less than what analysts expected and remained below 300,000 for the sixth straight week. An upbeat report out of Europe showed the initial reading of the Euro-zone Markit PMI for October reached a 2 month high, beating analyst expectations. European stocks are on pace for a higher close. Asian stocks finished mostly lower overnight. Gold is down 1% today while oil is up 1% to just over $81.50 per barrel. Interest rates are higher and treasury prices dropped as investors bought up stocks. The 10 yr. treasury yield is back up to 2.27% after dipping below 2% just a couple weeks ago.

Economic Journal - Wednesday, 10/22/2014

(as of 7:05 AM PST)

Markets are taking a timeout this morning after a second day of solid gains yesterday.  Momentum has totally shifted from supremely negative to solidly optimistic while volatility is returning to normal levels after spiking higher over the last two weeks.  International markets followed the US lead overnight to some strong performances.  Profit reports are definitely leading the way with most reports coming in better than expected.  Precious metals are giving back some gains this morning while oil is holding steady, trying to recover from the huge declines of the last few weeks.  Interest rates are stable.  After two spectacular days of market recovery expect consolidation and some profit taking to erase the minimal gains we see to start the day.

Economic Journal - Tuesday, 10/21/2014

(As of 7:30 am PST)

Stocks are on the rise in early action as earnings from big names dominated headlines.  Apple kicked things off after the bell yesterday reporting earnings that beat analyst estimates. The iPhone maker reported a remarkable sales number of  39.2 million iPhones last quarter. Shares of Apple were up 2%  to pace tech stock gains. Shares of Chipotle and McDonalds took a beating after both food retailers reported disappointing earnings. Verizon also is making headlines this morning as the telecomm company reported profits that were just shy of estimates while sales were in line. In economic news, US existing home sales rose 2.4% in September rebounding from an unexpected drop in August and accelerating to the fastest pace in over a year. Asian markets finished the day mixed, while European indexes are poised for a strong close. Interest rates are inching higher today as are gold and oil prices.  If the market can sustain gains throughout the day it would be the third straight session of positive trading after weeks of significant losses.

Economic Journal - Monday, 10/20/2014

(As of 7:25 am PST)

Stocks are mostly higher to start the trading week, continuing the positive momentum that began late last week.  The S&P500 and Nasdaq are higher but the Dow is down 0.5% as the blue chip index is being dragged lower by IBM's 7% decline on a disappointing earnings result. Today's economic data calendar is empty but will pick up later in the week with existing home sales and new home sales highlighting the week. In other news today, Dallas Fed President Richard Fisher said he supports the ending of QE3 next week as scheduled and that he has no concerns over inflation trending lower. After years of stimulus, the Federal Reserve will end its bond-buying program next week, a policy move that is likely priced in to the market, but will be the focus for investors the next couple weeks nonetheless.  Asian markets rallied today on the heels of Fridays session on Wall St. European markets sold off Monday showing continued signs of weakness. Treasury prices rose sending interest rates down while gold moved higher as oil also settled lower.

Economic Journal - Friday, 10/17/2014

(As of 7:20 am PST)

 

Upbeat earnings reports and positive economic data have sent stocks rallying to close out this volatile week. Economic data provided a boost in early morning action as reports on housing starts and building permits came in better than expected. Also adding to the momentum was a strong reading of the University of Michigan consumer sentiment report, which rose ahead of expectations for October and reached the highest level since July 2007.  Earnings beats from big names like General Electric, Honeywell, and Morgan Stanley also sent stocks climbing. Today’s gains come a day after a choppy session for Wall Street  in which markets opened down over 1% and ended the day near the unchanged line. Several comments from Federal Reserve officials throughout the day that economic stimulus could be re-applied if needed, helped markets to stabilize and reduce losses.  European markets are poised to finish with a strong day of gains while Asian markets finished mixed. Oil is higher on the day after falling to multi-year lows over the past several weeks. Gold is lower and interest rates are higher. Today’s rally (if it can hold) would be a nice way to finish a very turbulent week for global equity markets.