After durable goods orders rose 2.8% in December, orders plunged 7.8% in January, on reduced demand for transportation equipment, especially commercial aircraft and excess inventories. Consensus estimates had been for a drop of between 3% (Bloomberg) and 5.5% (MarketWatch) and for a drop ex-transport of just 0.3%. Commercial aircraft orders fell 60% while transport orders on the whole fell 18%. Ex-transport, durables were down 3.1% - their biggest drop since July 2005. Orders for core capital equipment were another area of weakness falling 6% - their biggest drop since January 2004. Futures, which were already lower on weakness in Asian and European markets, fell further on the news.
• Sources: Bloomberg, MarketWatch
• Commentary: Greenspan: Recession Possible by End of 2007 • Earnings Trends: Materials Expected to Drop in Q1 • Economic Report Summary: Core Inflation Rose, Broad Equity Markets Weakened
• Stocks and ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
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