By Carlos Guillen
Quite impressively, equity markets are still attempting to move even higher after reaching all time highs just yesterday. Yes, that is correct; at the close of yesterday's trading session the Dow Jones Industrial Average clocked in at 14,253.77, surpassing its all-time intraday high of 14,198.10 reached on October 11, 2007, right before our economy fell into a financial precipice. More encouraging, however, is that the Dow is managing to hold above yesterday's closing level as ADP private-sector payrolls and factory orders data came in better than investors expected.
Quite encouraging this morning was the ADP report, which showed that more than expected jobs were added to the economy and gave hope for a stronger than expected result this Friday when the government's numbers are delivered. According to ADP, non-farm private sector jobs increased during February by 198,000, much better than economists' average forecast calling for a 150,000 increase, making 36 months of nonfarm gains. The data showed that payroll gains were achieved across the board but were predominantly driven by small businesses, which added 77,000 jobs. Medium business payrolls increased by 65,000, and large businesses added 57,000. As usual, most of the added jobs came from the services sector, which ADP said added 164,000 jobs, while the goods-producing sector experienced a gain of 34,000 positions. At the moment, economists are predicting for this Friday that private sector businesses will have added 178,000 jobs in February, and the unemployment rate will likely remain flat at 7.9 percent.
Also serving to add to the market's enthusiasm today was that factory orders landed above expectations. According to the U.S. Census Bureau, new orders for manufactured goods during January decreased month-over-month by 2.0 percent to $472.9 billion, better than the Street's consensus estimate calling for a 2.2 percent month-over-month decline. Negatively affecting factory orders was a slump in demand for Computers and related products, which had orders decline by 16.2 percent month-over-month. Concurrently, new orders for consumer goods rose by 0.6 percent, after decreasing by 0.2 percent in the prior month, and non-defense capital goods (excluding aircraft) rose by 7.2 percent, after decreasing by 0.8 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 an increase in these serves to counter some of the negative sentiment from the decrease in factory orders.
So, "all systems go" at the moment with improving morale on the jobs front and on the capital investment arena. Of course, all this euphoria can reverse if the government jobs data to be released this Friday comes in less than expected. So sit tight ladies and gents as the best is yet to come.