In quite the twist, today it's the Dow Jones Industrial Average and the S&P 500 making positive gains while the NASDAQ has been weighed down by highly volatile biotech names. Following Janet Yellen's quarterly press conferences last week, several Fed officials will deliver speeches over the course of this week and could easily lead the market to higher volatility. This morning, Federal Reserve Vice-Chair Stanley Fischer stated at a speech in New York that an interest rate hike is likely warranted before the end of the year, and also sees benefits of global appreciation being offset by the strengthening US dollar. Also today, the German chancellor and Greek prime minister are meeting for more debt talks, while tomorrow, consumer price index (NYSEARCA:CPI) figures will be released for both the US and the UK.
Domestic economic data was light during today's session; however the two noteworthy releases give more mixed messages. Firstly, the Chicago Fed National Activity Index (NYSE:NAI) clearly points to the economy starting off 2015 incredibly slow at a reading of -0.11 in February versus a revised -0.10 reading in January. This puts the 3-month average in negative territory at -0.08 for February versus 0.26 in January. The weakest component of the index was personal consumption & housing at -0.17, while the component for production-related indicators was at -0.07. Ultimately, these readings offer some tangible evidence that both housing and manufacturing are responsible for the pulldown of economic growth so far. Most importantly, there is a glimmer of hope in the form of employment, which continues to be the bright spot of the economy at a reading of +0.11. The chart below shows the performance of the NAI since the peak of the recession.
Next, it appears that there's some hope to be found in the housing market going into the spring selling season. In February, existing home sales bounced by 1.2% month-over-month to an annual pace of 4.88 million, which was above the 4.82 million pace from January, but still remains relatively weak. In fact, 2015 opened with the two weakest months for existing home sales since April 2014. However the year-over-year rate is showing some strength at +4.7% in February for the strongest reading since October 2013. The data is divided between single-family and condos with the single-family component ahead, which is encouraging to us. Existing single-family home sales were up 1.4% in February for a 4.10 million annual pace and a year-over-year gain of 5.9%. Sales in the South (the largest region) surged in the month, while the West and Midwest remained unchanged and the Northeast dropped substantially over the same period last year. Existing homes that are available for sale on the market remain on the scarce side, with only a 4.6-month supply which was unchanged from January's reading. In February 2014, the number of homes on the market was a supply of 4.9 months. Prices also firmed during the month, increasing by 2.5% to a median price of $202,600 and up a strong 7.5% over last year. Ultimately, the housing market remains soft, but there are some signs of life in single-family sales which is very encouraging. The data for new home sales will be released tomorrow, and these have been known to be soft so far in 2015, too.