MMRecap
for November 3rd
Last Monday was a relatively
quiet day, with only September pending home sales released. They rose 0.3%,
which was better than the previous -1.0% decline; it was, however, far short
of expectations, which ranged from 0.5% to 1.0%.
Although the Dow gained 12.53
points, that was about as good as it got. The Nasdaq closed up 2.22 points,
and the S&P 500 fell 2.95 points. The 10-year Treasury slid to 2.27%.
Tuesday gave us the report on
durable goods; it came in far better than the previous report of -18.3%. This
report showed durable goods down only by -1.3%, a disappointing number when
compared to the hopes of the forecasters that durable goods sales would
improve by 0.5% or 0.6%. Orders for durable goods ex-transportation fell
-0.2% on this report, far lower than the 0.7% from the prior report.
Case-Shiller reported that
home sale prices rose 5.6% for the month of August. This was slightly down
from the 6.7% rise in prices from July. We also had the consumer confidence
report for October that came out Tuesday. Good news here! The report showed
an increase in consumer confidence with a score of 94.5. This was a nice jump
from 89.0. All this good news had a positive effect on the markets as the Dow
rose 187.81 points, or 1.12%, the Nasdaq gained 78.36 points, or 1.75%, and
the S&P 500 closed up 23.42 points, or 1.19%. The 10-year yield rose 3
basis points to finish the day at 2.30%.
Wednesday morning the Fed
announced that QE3 was finished, done, over with! That was the only report
that counted, and the markets reacted a bit, but nothing drastic. When the
markets closed, the Dow was down 31.44 points, the Nasdaq closed at -15.07
points and the S&P 500 slipped slightly, closing at -2.75 points. The
10-year yield rose 4 basis points to end the day at 2.34%.
On Thursday we had the usual
reports on initial and continuing jobless figures, as well as the GDP report.
Initial jobless claims came in at 287K -- 3000 more new claims than the week
before. Continuing claims, those receiving unemployment benefits for a second
or more weeks, also went up, and the results for the week ended October 18
came in at 2384K, compared with 2355K the prior report.
The GDP report for Q3 was
disappointing as the economy only grew 3.5%. This was better than had been
forecasted but down from the 4.6% from the previous quarter. This news didn’t
seem to affect the markets much, as all of the indices were up for the day.
When the bell rang on Thursday, the Dow was up 221.11 points, or 1.30%, the
Nasdaq rose 16.91 points, or 0.37% and the S&P 500 went up 12.35 points,
or 0.62%. The 10-year yield dropped 2 basis points to close at 2.32%.
Friday was a busy day in spite
of it being Halloween. Lots of reports came out to end the month. The first
report was on personal income for the month of September. Although it was up
by 0.2%, that was less than the expected amount of 0.3%. Not a big deal. On
the other hand, personal spending took a dip to -0.2%, after a +0.5% increase
in August. So apparently the people who went out and spent some of their
income in August took a breather in September.
No surprise on the PCE report,
which came in as expected for September and remained at 0.1%. The employment
cost index for Q3 held at 0.7%. This has been constant for the last two
quarters. The Chicago PMI had good news and reported an increase to 66.2 for
October. This is up from the 60.5 reported for September. Finally, the month
ended with the Michigan sentiment report for October. More good news, as the
report inched up to 86.9 from 86.4. Though not earth-shaking, an increase in
confidence is always a welcomed sign. The markets were happy last Friday, and
all of the indices ended up. The Dow closed up 195.10 points, or 1.13%.
Nasdaq closed up 64.60 points, or 1.41%, and the S&P 500 closed up 23.40
points, or 1.17%. The 10-year yield rose 3 basis points to close the week at
2.35%.
According to the MBA, mortgage
applications for the week ended October 24th decreased by 6.6% on a
seasonally adjusted basis from the previous week. Refinance applications also
decreased by 7% from the prior week. The refinance share of mortgage activity
remained unchanged at 65% of total loan applications. The average contract
for a conforming 30-year fixed rate mortgage increased to 4.13% from 4.10%.
Although Halloween is over, we
have another scary week coming up, as there are 16 reports scheduled. Some of
these reports are market movers, some aren’t.
Today’s first report is the
ISM index, a look at manufacturing in the U.S. during October. It had
previously dipped to 55.7 from 56.6. That will be followed by the report on
construction spending in September, which already made a good recovery from
August, rising 0.7% vs. 0.8% the previous month.
On Tuesday we get a peek at
the trade balance, which had been edging down in an effort to reduce the
$40.1B deficit. It was slowing a bit, but the last couple of months it has
returned to its evil ways, and that is expected to continue. The next report
is factory orders for September which are predicted to drop -0.5%; but that’s
a lot better than the August report of -10.1%.
Because the employment numbers
come in on Thursday, the ADP employment change report for October will be
released Wednesday, along with the October ISM index on the service sector.
This is a far less important report than the manufacturing ISM. Neither one
of these reports generally affect the markets much.
On Thursday we have the
initial and the continuing jobless claims reports. Thursday’s final report
will be on Q3 productivity and unit labor costs. Last month the productivity
level came in at 2.3%. The analysts are predicting this report to show only
about 1.5%. The unit labor cost is expected to go up to 0.9% from the
previous -0.1%.
Friday is the biggie, with the
unemployment report for October to be released. Unemployment dropped below
6.0% (actually it came in at 5.9%) in September for the first time since
July, 2008. It is expected to stay about the same. Next up is the nonfarm
payrolls report, and the analysts are divided about their predictions. Some
believe the figure will come in at about 235K, while the other group is
betting on 275K. The previous report indicated 248K jobs in the nonfarm
payrolls.
That wraps it up for this
week.
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Copyright
2008 The Daily Communicator
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Monday, November 3, 2014
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