Saturday, September 25, 2010

Durable Goods Report Day-Review

The broad market saw its strongest single-session gain in two weeks and thus boosted the indexes to their fourth straight weekly gain after a few days of shallow consolidation. This puts the S&P 500 to a four-month high. Some market commentators however question the underlying fundamental economic strength of this rally saying instead that it is largely about 'window dressing' for the upcoming end of quarter.

Today, we did however see positive economic data releases (with the exception of housing data - see below). August durable goods orders data was released today and appeared to have a positive impact on trading. While durable goods order were actually down last month, slipping by 1.3% (which made for the worst monthly drop in a year), that decline was still better than the anticipated loss of 1.4% had economists had been expecting. When the transportation component of these goods orders is excluded, orders in fact spiked two percent higher (consensus estimate: an increase of only 0.6%).

The Commerce Department said today that August new home sales were largely unchanged month-over-month, coming in at an annualized 288,000 units, meeting consensus estimates. This data hardly indicates any recovery in the housing market, as the number of new homes sold was the second-lowest on record; August 2010 sales were in fact 29% below those registered a year earlier for the same month. One market analyst called this a 'pitiful performance', adding that a 'meaningful pickup in sales' would not be seen until next year.

According to the National Association of Realtors, in August sales of previously occupied homes were up 7.6% as compared to July, rising to a seasonally adjusted annual rate of 4.13 million. This number, too, is very low: it represents the second-poorest month in more than 10 years (note that July was the worst month for previously owned home sales in 15 years). In August 2010, the median sales price for a new home came in at $204,700, off by 1.2% compared to one year earlier (sales prices are now at their lowest levels since late 2003).

No comments:

Post a Comment