By Carlos Guillen
Quite encouragingly, equity markets are trading near the highs of the session, with the Dow Jones Industrial Average up over 70 points. However, economic data has been mixed
For starters Initial Claims data posted earlier today was somewhat of a disappointment. According to the Department of Labor, initial claims during the week ended February 22 totaled 348,000, increasing from the 334,000 revised figure reported for the prior week and landing above the Street's estimate of 335,000. It is likely that the snowstorms on the East Coast could have had somewhat of an impact on the data, but we will see next week after revisions are made to the data. The initial claims' four-week moving average was 338,250, remaining constant with the prior week's average of 338,250. While this metric is still showing some stability at the moment, it is finding itself rather close to 350,000, which is the threshold where economists see stronger jobs growth. So far it is becoming apparent that the jobs market is reaching a point of stagnation, which is that there are less layoffs but there is also less hiring.
The main bit of economic data that was rather mixed today was durable goods orders. According to the U.S. Census Bureau, new orders for manufactured durable goods during January decreased month-over-month by 1.0 percent to $225.0 billion, better than the Street's consensus estimate calling for a 1.1 percent month-over-month decline. Concurrently, non-defense capital goods, excluding aircraft, rose by 1.7 percent after decreasing by 1.8 percent in the prior month. These orders are considered a proxy for future business investment in items such as computers, engines and communications gear, so its sudden tick higher could bode well for overall economic growth in the short term. However, given the rather continuing tough weather conditions in February, along with a rise in borrowing costs, things could look different in the upcoming data.
Perhaps, serving to alleviate the rather overall negative housing data, today the Commerce Department revised U.S. building permits for the prior month. January building permits were originally reported as being down 5.4 percent, but were revised to down 4.6 percent from December. Given that this metric is a forward indicator, this improvement to the revision is received with open arms.
In all, we are certainly on track for a fourth week of gains, but let us sit tight as we still have lots more data to look at tomorrow, which could shake markets in a negative direction.