It appears that the stock market rally that we have been experiencing over the last month has lost some of its momentum. For the week, the market has remained in a fairly narrow range of plus or minus 100 points. The media loves to sensationalize events so you will hear on some days that the market has hit new record highs. However, when you look at the numbers you will see that the records being achieved are coming from minimal gains in the markets.
This week there has not been many economic reports released that have had a significant impact on the markets however the few that were released were:
•U.S. Manufacturing – This sector continues to grow however, the pace of the growth has slowed down. The index has grown for four straight months and this past month increase was only 1.6% from the prior month.
•The scheduled FHA Mortgage Insurance Premium increase on April 1 appears to have driven demand for government loans and gave a boost to purchase applications in the March 29 week, according to the Mortgage Bankers Association. The increase in demand for these loans however only lifted total purchase applications by 1.0 following the prior week's 7.0 percent gain. Purchase applications are up about 4 percent from a year ago which reinforces the upward trend for home sales. Refinance applications are down 6 percent despite mortgage rates declining over the last 2 weeks.
•The first Friday of every month is almost always one of shock and awe; the release of the monthly employment data is rarely a calm event. Today the March data didn’t disappoint in terms of surprise. The unemployment rate hit at 7.6% down from 7.7% in Feb, so far on the surface that looks good, but not really. Non-farm job growth was expected at about 190K, job growth as reported increased just 88K; non-farm private job growth was thought to be about 200K, as reported up just 95K. There were revisions to Feb and Jan jobs that totaled an additional 61K jobs from original reports but the increases were minor in comparison to the very weak employment picture painted today. No matter the spin (assuming we hear it from the Administration) the report was the weakest since last June and the miss in forecasts the worst in over two years. As for the decline in the unemployment rate to 7.6%; adds to the concerns, it indicates an increasing number of discouraged workers no longer looking for jobs
•Another indicator in the weakening job market is that first time jobless claims have been rising again. Last week the report was 357,000 and this week the number of claims jumped to 385,000. Once again we appear to be approaching the 400,000 mark which if hit will undoubtedly stir up more feelings that the economy is heading in the wrong direction.
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Happenings throughout the world keep reminding us of just how fragile the market is. Europe continues to be very volatile and unstable keeping many U.S. investors and employers on edge. North Korea’s recent threat of a nuclear attack against the U.S. is making headlines further enhancing emotional instability in the U.S. consumer base as well as stock markets.
Market moving reports for next week are very light:
•Wednesday April 10th - MBA Applications
•Thursday April 11th - First Time Jobless Claims
•Friday April 12th – Producer Price Index and Retail Sales
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