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Market Besieged by Data
There should be a lot of clock watching today as participants count down the hours to the close of business before the Thanksgiving holiday.
Our friends in Washington, though, were kind enough to provide plenty of early busy work for those of us at our desks today. To that end, there are five economic releases this morning -- Personal Income and Spending, Durable Goods Orders, Initial Jobless Claims, the University of Michigan Consumer Confidence, and New Home Sales -- and a $32 billion 7-year note auction at 1:00 p.m. ET.
The stock market's preliminary bias is tilted to the upside as a big dip in the dollar index (-0.8%) has offset the disappointment of weak FY10 net income guidance from Deere & Co. (DE).
The initial rush of economic data did not disrupt the positive tone either.
Both the personal income and spending, and initial claims, reports produced positive surprises. The Durable Orders data was disappointing, but a sizable upward revision to the prior month neutralized the weak October reading.
With respect to the income and spending report, it set a positive tone for fourth quarter GDP. Personal consumption expenditures rose 0.7% (consensus 0.5%) in October, with real PCE rising 0.4% versus a 0.7% decline in September. Personal income jumped 0.2% (consensus +0.1%), as did real disposable income.
The personal savings rate dipped to 4.4% from 4.6%, yet that is still comfortably above the monthly 2.8% average over the last 10 years.
Initial jobless claims moved below the psychologically troubling line of 500,000, dropping to 466,000 (consensus 500,000) for the week ended Nov. 21. That is the first sub-500,000 reading since the week ending Jan. 2, 2009.
Continuing claims fell to 5.423 million (consensus 5.565 million) for the week ended Nov. 14 from 5.613 million. This drop continues to reflect mostly workers seeing their benefits expire; however, with the recent extension of unemployment benefits passed in Congress, the rate of "improvement" here is apt to slow and perhaps worsen in coming weeks.
Overall, initial claims remain at high levels that continue to point to further declines in nonfarm payrolls.
The durable orders data was the weak spot in the initial batch of reports. Orders for manufactured goods declined 0.6% in October (consensus +0.5%) and were off 1.3%, excluding transportation. Strikingly, new orders for nondefense aircraft and parts surged 50.8%, but that looks more like a catch-up factor at work following a 44.0% decline in August.
Nondefense capital goods orders, excluding aircraft -- which is a proxy for business investment -- declined 2.9% in October after a 2.6% increase in September. This is a signal that businesses literally are not buying into the notion of a strong economic recovery just yet.
Despite the weak readings for October, the September readings for durable orders were marked up considerably, with total durable orders revised to a 2.0% gain (from 1.0%) and orders, excluding transportation, revised to a 1.8% increase (from 0.9%).
The Univ. of Michigan Consumer Confidence reading (consensus 67.0; prior 66.0) and the New Home Sales report (consensus 404K; prior 402K) will follow at 10:00 ET.
The futures market at the moment is presaging an opening gain on the order of 0.5%.
Best wishes to everyone for a happy and peaceful Thanksgiving holiday!
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