Stocks Rise for Fourth Day in a Row

(page 2 of 4)

In economic news Wednesday, U.S. new home sales dropped 5.3% to a 433,000 pace in October from a downwardly revised 457,000 in September (464,000 previously; August was revised fractionally higher for a net 17,000 drop). Weakness was seen in the South and West. The drop in sales saw the months' supply rise to 11.1 from 10.9, though homes on the market slipped to 381,000 from 414,000 previously, reports Action Economics. The median sales price fell to $218,000 from $221,700, a 7% year-over-year decline.

U.S. consumer sentiment fell further to 55.3 in the final reading of the November Reuters/University of Michigan survey. That compares to the 57.9 for the preliminary print, and the 57.6 in October. The economic conditions index was 57.5 vs. the 61.4 preliminary (58.4 in October). The outlook index was 53.9 from the 55.7 preliminary (57.0 in October). The one-year ahead expected inflation index was steady at 2.9%. It was 4.3% in September and 5.2% in May. The 5- to 10-year inflation index was also flat at 2.9%. The data are also worse than expected.

U.S. durable goods orders plunged 6.2% in October from an upwardly revised 0.2% decline in September (0.9% before). Even taken into consideration the upward revision, the data is much weaker than 2.5% drop expected, says Action Economics. Transportation orders fell 11.1% after a 6.1% September rebound. Nondefense capital goods orders excluding aircraft, a key indicator for capital spending, were down 4.0%, extending the decline to three straight months. Shipments fell 2.4% after falling 0.2% in September, and are now down three consecutive months. Inventories rose 0.4%, pushing the inventory-shipment ratio up to 1.68 from 1.63, which is the highest I/S ratio in over a decade.

U.S. Chicago PMI tumbled further to a new record low at 33.8 in November after sliding to 37.8 in October (the prior record low) as the pace of contraction in the region accelerated. Activity remains very depressed in the area given the region's exposure to the collapsing auto and steel industries. Weakness was broadbased across most components. The employment index dropped to 33.4 from 41.5. New orders fell to 27.2 from 32.5. The prices paid indec continued to decline and fell to 50.7 from 53.7.

U.S. personal income edged up 0.3%, a bit stronger than the 0.1% increase expected. Spending dropped 1.0% in October, in line with market expectations. The 0.2% income gain in September was revised down to 0.1%, while the 0.3% decline in spending in September was not revised. Income rose at a 3.3% rate over last year, decelerating from a 3.9% rate in September. Spending growth slowed sharply to a 2.3% year-over-year pace from 3.8% previously. Disposable income rose 0.4% on the month. The savings rate climbed to 2.4% from 1.0% previously. The PCE price index dropped 0.6% , while the core PCE price index was flat. On a year-over-year basis, the PCE deflator slowed to a 3.2% pace from 4.1% previously, and the core rate slipped to 2.1% versus 2.3% previously.