The bulk of the economic reports released this week continue to point to a slow but steady recovery. Without question, there will always be a report or two that will go against the grain, however all in all, things appear to be headed in the right direction.
The stock market has been doing well over the last month and has been marching up towards the 12,000 mark. The market which was on pace to finish the week on the positive side was derailed in the late morning Friday when news came out about political unrest in Egypt. Although nobody knows exactly how the events in Egypt will impact the markets, it appears that investors on Friday elected to pull money from the markets causing a decline of over 150 points. Investors biggest concerns about Egypt is that if anything happens over the weekend, the stock market can take it on the chin on Monday morning leaving investors to lose some of their recent gains that have come along with the recent run up in stocks.
Housing has been showing consistent improvement on a few levels. New Home Sales unexpectedly increased 18% in December. Additionally, Pending Home Sales also increased 2%. Many believe the these higher than unexpected increases are due to the fact that buyers took action on purchasing in December as mortgage rates began to rise. The only negative news regarding housing came in the form of house values and new mortgage applications.
The Case-Shiller House Value Index continues to show that home values are declining. The month of November showed a decline of .4% which follows October's 1% drop. Unfortunately this latest drop is the 4th consecutive month we have witnessed home values declining. To add salt to the wound, purchase mortgage applications dropped 8.7% and refinance apps dropped a whopping 15.3%. These consistent drops do not bode well for next month's housing reports.
The Federal Open Market Committee concluded their first meeting of the year electing to keep rates unchanged. Due to the fact that inflation is virtually non-existent on a retail level, economic growth is still very slow, and the labor market is still quite weak, the Fed decided to continue its implementation of the most recent economic stimulus package commonly referred to as QE2.
The economy as a whole continues to grow nicely. The GDP for last month showed economic growth of 3.2% which exceeded most analyst expectations. In addition, consumer optimism is at the highest level it has been since mid last year. Many people surveyed seem to be quite optimistic about the future.
Next week a number of economic reports are due out, however none more market moving than Friday's release of national unemployment. ADP will release its unemployment numbers on Wednesday, however we learned last month that ADP's numbers can sometimes be far away from reality and most likely the market will not pay much attention to them this time around.
Lastly we have been seeing an increase in weekly jobless claims as of late. Last week 51,000 more people filed for first time jobless benefits increasing the weekly number to 454,000 which is higher than we have seen in a month.
Reports due out next week are:
• Tuesday February 1st - Construction Spending & Manufacturers Index
• Wednesday February 2nd - MBA Mortgage Applications & ADP Employment Report
• Thursday February 3rd - First Time Jobless Claims, Non Manufacturing Index & Factory Orders
• Friday February 4th - Employment Situation
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment