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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • MARKETS ENTER GREEN TERRITORY By WSS Research Team 0 comments
    Apr 30, 2013 1:41 PM

    By Carlos Guillen

    Quite remarkably U.S. stocks have been able to recover after being mostly down for most of the morning trading session today in reaction to economic data that illustrated a contraction in Chicago-area manufacturing.

    Perhaps serving to strengthen the perception of slowing U.S. economic growth, data from ISM-Chicago showed that the region unexpectedly contracted. April Chicago PMI dropped to 49.0 from the 52.4 level reached in the prior month, landing below the Street's consensus of 52.0. It should be noted that levels below 50 signify contraction, so the result means that the region's manufacturing industry is now shrinking after experiencing four months of expansion. So far, overall economic indicators have been rather weak; a broader economic measure of manufacturing comes out on tomorrow, and this should shed more light on the direction the manufacturing industry is taking.

    Quite encouraging today, and perhaps barely enough to put markets into winning territory, was data from the Conference Board that showed that consumer confidence reversed and landed better than expected. According to the Conference Board, its consumer confidence index increased to 68.1 in April from the 61.9 reached in the prior month, landing well above the Street's consensus estimate of 61.0. Consumers were considerably more upbeat about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months increased to 16.9 percent from 15.0 percent, while those anticipating business conditions to worsen decreased to 15.1 percent from 17.7 percent. The proportion of consumers expecting their incomes to increase rose to 16.8 percent from 14.6 percent, while those expecting a decrease declined to 16.0 percent from 17.7 percent. It is apparent that consumer are beginning to feel better about their income possibilities and about the economy in general; however, confidence has been volatile and has been derailed in the recent months as a result of our dysfunctional government and increased taxes, so despite the sudden uptick, an uptrend in consumer confidence may not have been established just yet.

    In all, equity markets have managed to move into winning territory despite the poor manufacturing data, but this could just be a matter of volatility. The rest of the week can go in either direction with more important economic data being displayed, including the infamous jobs data on Friday.


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