It's hard to make out heads or tails of what kind of market we're experiencing during today's session. Earnings from Apple Inc. (NASDAQ:AAPL) initially lifted the market higher, but in addition to some mixed economic data, there was word that Iran seized a US cargo ship. After the initial freefall, the major equity indices have reversed to the upside and the price of oil has pulled back from its initial pop following the Iran news. The Federal Reserve Open Market Committee (FOMC) will begin its meeting today to determine the near-term direction of monetary policy, namely interest rates. The minutes from the meeting will be released tomorrow afternoon at 2:00PM EST, and judging by the highly mixed economic data that's been released over the last month, it is unlikely that the Fed will give an interest rate hike announcement pointing to any specific date. Nevertheless, we still expect the market to get antsy ahead of the Fed's announcement.
Domestically, economic data was light, yet mixed, and is a large driver behind market volatility. Firstly, the Conference Board noted that consumer confidence has fallen back considerably in the month of April to a lower-than-expected 95.2 reading. This is quite a poor result when compared to the consensus estimate of 103.3 and much lower than the lowest estimate of 100.5. According to the components, the weakness is the result of a poor assessment of the jobs market, both current and expected. Weather-depression is likely to lift confidence for the second quarter of the year, but judging by the expectations data, it won't be a robust lift. April's expectations component was down a whopping 8.5 points to 87.5, for the weakest reading going all the way back to early last year. As mentioned above, the most shocking sub-component reading was in employment, where fewer people see jobs opening up in the next six months and fewer people are seeing a wide availability of jobs. This ultimately spills over into the income component, where more expect wages to decrease in the near-term. The present component was also weak at a reading of 106.8; 2.5 points from March for the weakest reading since December 2014. Interestingly, consumer buying plans were mixed with automobile and vacation plans down, but home plans up. However, don't expect home buying to be robust if the report is pointing to a slowdown in employment. Ultimately, this report can be added to the arsenal of data in the favor of the Federal Reserve doves.
Lastly, as the consumer confidence indicated, there is a comeback in the demand for housing and this was supported by another release this morning. The Case-Shiller adjusted 20-city index increased by a very strong 0.9% in February 2015, beating expectations for 0.7% and subsequently beating its best performance since late 2013. Year-over-year, the index also gained ground rising by 5.0% for a 0.05-point gain from the prior month and the best reading since summer 2014. Ultimately, this report should boost hopes for a strong spring rally in the housing sector. This size of this month's gain is very convincing since none of the 20 cities surveyed have shown a decline since September. The unadjusted data tells a very similar story to the adjusted data, both reflecting the relatively light activity in housing during the winter months. Ultimately, we would have a very positive stack of housing data if it weren't for the shocking weakness in March's report on housing starts & permits. Despite this report being upbeat, we don't expect it to move the needle much for the hawks in the Fed.