MM Recap for March 31st

Posted by Joel pate in Uncategorized. Tagged:

With no economic reports and no hair-raising news from the Crimea or the Ukraine, there was little to report last Monday. Stocks opened in positive territory, but the major indices soon went negative. Several social media stocks took big hits, bringing the Nasdaq down. Through all the ups and downs, U. S. Treasury yields fell by two basis points, closing at 2.73%. When the markets closed, the Dow had shed 25.08 points, the Nasdaq took an uncharacteristic loss of 50.40 points, and the S&P 500 dropped 9.08 points.
Tuesday’s reports housing-based; both the Case-Shiller Price Index of the nation’s 20 largest cities and the FHFA housing price index coming in below expectations. The Case-Shiller fell to 13.2 in January, from 13.4 in December. The FHFA housing price index dipped to 0.5% from 0.7%. New home sales in February also took a hit, tumbling to an annual rate of 440,000 units from 455,000 in January. Who wakes up with two feet of snow in the driveway and a wind-chill of -26°, and says, “Why don’t we look at houses today?”
Consumer confidence surprised, rising to 82.3 in March from the previous 78.3. Hopefully, that’s a sign that shoppers are getting ready to buy again instead of just looking.
The 10-year yield was unchanged at 2.74%, and stocks closed in positive territory.
Stocks climbed early Wednesday morning on the strength of a report on durable goods orders for February. Durables, big-ticket items, such as furniture, appliances and other major purchases meant to last three or more years, rose 2.2%, after shocking the markets the previous month with a -1.2% decline. Excluding transportation, they rose only 0.2% following the previous 0.9% increase, but that was enough to send stocks into negative territory, where they closed.
Tough talk to Russia from President Obama regarding the Ukraine unnerved investors, and selling began. Obama signed an executive order to sanction Russian companies in the financial services, energy, metals and mining, defense and engineering industries, according to CNN. Also dragging stocks down is that hope for stimulus measures for Europe and China is quickly fading.
The 10-year yield dipped three basis points to close at 2.70%. Stocks got pummeled, with the Dow dropping -78.98 points. The Nasdaq fell 60.69 points, while the S&P 500 was down -13.06 points.
Decent economic reports failed to perk up the markets Thursday morning. The news everyone was waiting for showed the final estimate on 4Q GDP rose to 2.6% — down from the second revision of 4.1%. Declines in government spending as well as a pullback in private inventory investments were largely responsible for the decline.
Initial jobless claims for the week ended March 22 dropped by a better-than-expected 10,000 to 311,000.
The final report, pending home sales in February, showed them sliding by -0.8% from -0.2%, which were both the previous result and forecast. Again, many blamed the weather.
When the closing bell rang, the 10-year yield dropped another three basis points to 2.67%. The Dow fell -4.76 points, while the S&P 500 was down -3.52 points. The Nasdaq struggled through another losing session, falling -22.5 points.
Additional concerns centered on the annual stress tests administered to the nation’s largest banks on behalf of the Fed. The tests insure that banks, as well as other businesses, would be able to remain solvent under severe pressure. The test results sent bank stocks down, but none more than Citigroup, which flat out failed the test. Its stock fell 5.0%.
Friday’s reports were positive, but not world-beating. Stocks rose when the data were released, then fell, then rose again but never reached their opening highs. Per the DOC, personal income was up 0.3% in February — the same as in January, but personal spending posted its biggest gain in three months. It rose 0.3% from the previous 0.2%. The PCE, a major inflation indicator, duplicated its recent increase of 0.1%.
The final University of Michigan consumer sentiment survey for March fell to 80 from 81.6 two weeks ago. That’s not a good sign, but not a terrible decline, either.
Initially, the Mortgage Bankers Association reported that mortgage applications fell 3.5% during the week ended March 21. However, the results are based on a revised report showing a 0.2% increase instead of the initial 1.2% decline. The refi index plummeted 8% from the previous week, including an 8.1% drop in conventional refinance applications and a 5% decline in government refinance applications. In contrast, the seasonally adjusted purchase Index increased 3% from one week earlier, driven mainly by a 4.0% increase in conventional purchase applications.
Economic reports this week are numerous, and fall somewhere between very important to “Who cares?” The first one up is the Chicago PMI index on manufacturing conditions in the upper Midwest. This area is a major producer of food and food products, as well as farm machinery, cars and trucks, and other expensive items. However, production is expected to edge down to 59.2 from 59.8.
On Wednesday analysts predict a big improvement in February factory orders. They should increase 0.5%, quite a move considering they registered -0.7% in January.
On Thursday a report on first-time jobless claims for the week ended March 29 is due, with analysts expecting 320,000. That’s 9,000 more than the previous week. Continuing claims, those collecting benefits for a second week or more, are released with first-time claims. They should rise by about 9,000. The trade balance for February is expected to move to -$39.4 billion from the previous $39.1 billion. The final report is a look at March ISM services, e.g., people who work in hospitality, health care, retail and other low-paying jobs. Analysts predict it should rise to 53.2 from 51.6.
The much-awaited non-farm payroll report comes out Friday, and if estimates become reality, Wall Street will resemble Times Square on New Year’s Eve. The Consensus Forecast says 192,000 new jobs will have been added in March, while Reuters predicts 195.000. Either one would likely send the 10-yield up by several basis points. Analysts expect the unemployment rate to edge down to 6.6%. If these numbers are close to reality, the 10-year yield, which moves inversely to price, should add a few basis points.

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