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Economic Data Takes the Wind Out of the Market's Sails By: Charles Payne

The knot twisted a little more as yet another economic data release came in below consensus. The recurring theme from last week is that maybe the folks that cobble this stuff together are too giddy or maybe "green shoots" are beginning to fade. I'd say it's more of the former as trends are still in place but the pace of increases is worrisome. And, of course, there is the housing market that for the most part is still in neutral, and if you take out government tax credits and distressed buying, the sector would be even more of a disaster. The Chicago PMI number was a legitimate disappointment too as it moved from expansion back into contraction. Of course, of all the data out late last week and early this week, the GDP report this morning was uplifting. But, with just a couple days before the jobs report higher anxiety is expected.

Economic Data

Mortgage Applications

Mortgage applications fell slightly last week following the nice 12.8% gain the previous week. Average 30-year mortgage rates declined once again, to a rate of 4.94% from 4.97% previously. It is encouraging to see that mortgage rates are being held once again below 5.0% as it makes home purchases more desirable, and those troubled homeowners who refinance have modestly lower payments to make each month. Even though the overall rate of applications did tick downward during the week, applications could well still be in a general uptrend.

Purchases, which generally indicate future home sales, also came down by 6.2% week to week. Purchase activity has been waffling higher and lower in recent weeks without a clear direction, but has been trending lower in recent weeks. Purchase activity is well below a year ago, and we would like to see it go higher, although it is likely that a larger proportion of these applications are being converted into sales than a year.

Chicago PMI

The report that took all the wind out of the sails of the market, the Chicago PMI report, was weighed down by a decline in new orders. Interestingly, the revised GDP report saw inventories weak as well, although that means replenishing during the rest of the year I guess/hope.

I will say that even though we aren't forcing the issue I'm impressed the market is climbing off the canvass.

Written by Charles Payne, CEO and Principal Analyst of Wall Street Strategies ( providing independent stock market research to over 30,000 subscribers, in more than 60 countries. Mr. Payne is a regular contributor to the Fox Business and Fox News Networks. For more information about Mr. Payne, please refer to the company’s website