Mid-Day Recap: Equities Search For Direction After Earnings, Econ Data
Jobless claims are down, inflation is benign, and manufacturing conditions were positive for the third straight month, but trading is jittery as investors snatch profits following the major gains yesterday. Approaching mid-day, a direction has yet to be found in equities, while yields on Treasuries are lower across the board and the dollar is trading higher against the yen and sterling.
As of 12:30, the Dow has shrunk 0.13% to 10,003. The S&P 500 is down 0.17% to 1,090, and the NASDAQ is 0.36% lower at 2,164.
Initial claims for unemployment benefits fell to the lowest figure in nine months. There were 514,000 new claims in the week ending Oct. 10, and moderation in five of the past six weeks has allowed the 4-week average to fall to 531,500.
The report is “consistent with our view that the US labor market is improving, but that firms are still reluctant to hire new employees,” said analysts from Nomura Global Economics.
The total number of recipients also fell 75k to the week, moving under 6 million for the first time since mid-March. But analysts were quick to point out that “the flow from unemployment to employment is not expanding rapidly”; rather, the state’s benefits are being exhausted.
Released at the same time, the Consumer Price Index ticked up 0.2% in September. Led by broad gains, prices moved higher than the Street’s +0.1% forecasts, but overall prices remain down 1.3% compared to last year.
The Core index, which strips away energy and food prices, also ticked up 0.2%. Its yearly trend is in the opposite direction at +1.5%, but that’s still under the Fed’s preferred +2.0% rate.
“Today's figures won't shift the argument about inflation risks at the Fed,” said Nigel Gault from IHS Global Insight. “They don't show deflation, but nor do they show sufficient inflation pressures to make the doves want to tighten soon.”
After those two positive reports, conditions in the manufacturing world were slightly mixed. The NY Fed’s Empire State survey turned sharply higher as it climbed 16 points to +34.6 in October, its highest level in five years, but the Philadelphia Fed’s survey tumbled more than 2 points to +11.5.
By numbers alone, the gain in the New York survey should far outweigh the modest fall in Philadelphia, but the latter has a longer history and tighter correlation with the nationwide ISM index, so reactions weren’t all that optimistic.
No more data is scheduled for the day and the Treasury isn’t holding any auctions, but the market could go in either direction as the Dow sits near the 10,000 threshold (after closing above it for the first time in a year yesterday).
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