US stocks mostly lower on a quiet August day, despite Intel’s boost to its sales forecast, as the rally shows some signs of flagging strength.
DJIA loses 36 (0.4%) to 9544, still up about 0.4% on the week, although the index blew its eight-day winning streak. S&P 500 eases 2 to 1029, Nasdaq adds 1 to 2029, helped by Intel’s sales boost, which lifts tech shares. Healthcare stocks fall, but financials eek out a gain, with that curious quintet of Citi, BofA, Fannie, Freddie, AIG all rising.
This morning’s income and spending report was mixed, and a take on consumer confidence was weak. Tiffany’s earnings better than expected, company boosts outlook.
You might be tempted to draw a bright picture from the numbers out of the Commerce Department and Tiffany. After all, on a monthly basis, consumer spending did rise for a third month. And Tiffany beat expectations, which must means consumers are scooping up those pretty Tiffany-blue boxes with the expensive gifts inside them.
US stocks trading lower, with the Dow’s eight-day winning streak in jeopardy, as new data show consumer sentiment dropped this month.
But as the broader indexes fall, a handful of high-profile financials that have skyrocketed this month keep rising. Shares of AIG, Citigroup (C), Bank of America (BAC), Fannie Mae (FNM) and Freddie Mac (FRE) were all up early on heavy volume, yet again. (BofA has since slide into the red.) The five stocks have combined to account for more than 30% of trading volume since Aug. 5, according to WSJ’s Market Data Group.
Speculators are feasting off these names, as AIG, FNM and FRE have all surged more than 230% since July 31, while BofA’s more than doubled and Citi’s up 59%.
Enjoy the gains while they last, however, as the massive rally in these stocks doesn’t look sustainable. The run-up in these financial stocks may also be the final piece of evidence that causes the market’s six-month rally to finally run out of steam, says Chad Brand, founder and president of Peridot Capital Management.
I see where Japan’s core consumer prices fell 0.2% on the month, the fifth month in a row it’s dropped, and are down 2.2% from a year ago, a clear sign that deflation is stalking the Land of the Rising Sun as unemployment’s spiking.
This reminded me of something I’ve been thinking about this week: that if you want to get a good reading on just where the US and global economy stands, just think about how close it is to deflation.
I am not suggesting we are in a state of outright deflation. But given the trillions of dollars thrown into the economy in an effort to stem deflation and reflate assets prices, a good measure of that effort’s success will be to observe how close the economy remains to a state of deflation.
I think we’re closer to deflation, both here and abroad, than most people realize or care to acknowledge.
Premarket US stock futures point to some early strength, influenced by a variety of inputs, including stronger tone in commodities, gains in Asia and European markets and favorable reaction to Dell’s 2Q results and outlook. Upside in Tiffany’s 2Q and a higher outlook isn’t hurting either.
July personal income & spending due at 8:30am, an important insight into the state of the consumer and end demand. Reuters/Univ of Michigan final read on August consumer sentiment due for release at 9:55am.
S&P futures up 5.00; DJ futures up 29. Ten-year lower, yield at 3.49%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
President Reagan’s former budget director David Stockman says Edward Snowden performed a heroic act, the Patriot Act should be repealed, and this whole spying-on-U.S.-citizens thing is a symptom of an out-of-control military-industrial complex. Click here to watch him go on YahooFinance. The author of “The Great Deformation: The Corruption of Capitalism in A […]