- Stocks pause after string of record highs. (10:29am ET) U.S. equities are largely unchanged this morning after all three major indexes posted a fifth consecutive record close on Wednesday, fueled by further gains in financials (+0.7%), as well as healthcare (+1.2%) and consumer staples (+0.8%). Energy (-0.4%) and utilities (-0.4%) lagged as oil prices slipped and interest rates continued to tick higher. Overseas, Asian markets finished mixed amid a relatively quiet session; the Shanghai Composite rose 0.5% on the heels of strength in bank stocks while comments from a Bank of Japan governor weighed on the Nikkei (-0.5%). Turning to Europe, major indexes are mostly lower midday as traders eye corporate earnings reports amid little economic data; the STOXX 600 (-0.4%) is poised to snap a seven-day win streak. Elsewhere, WTI crude oil ($53.09/barrel) is steady, COMEX gold ($1241/oz.) is moving higher, and Treasury rates are pulling back with the yield on the 10-year note down 4 basis points (0.04%) to 2.46%.
- Housing data lean positive despite headwind from rising rates. Several housing market data releases over the last two days have painted a guardedly optimistic picture of the housing sector. Yesterday’s NAHB Housing Market Index for February, a measure of homebuilder sentiment, declined modestly from its post-election surge but remains solidly in positive territory. Housing starts for January topped consensus expectations but declined from upwardly revised December levels. Permits, which tend to be more of a leading indicator, easily topped consensus estimates and accelerated from December’s upwardly revised data. On the other side of things, mortgage applications fell in the week of February 10 for both purchases and refinancing. The housing market will continue to see the competing impact of higher prices and rising rates compared to a strong consumer, economic growth prospects, and supportive demographics, likely resulting in net upside if rates rise at a modest pace.
- Industrial production falls. Industrial production contracted in January, missing consensus expectations, weighed down by a sharp decline in the utilities component that was more reflective of the weather than economic activity. Other internal data were modestly stronger. Manufacturing grew 0.2% but with a decline in capacity utilization, although the number was more robust ex-autos. Mining, which includes oil and gas, jumped an impressive 2.8%. It’s the smallest component of industrial production, but has been watched closely.
- Still no signal from claims. Initial claims for unemployment insurance came in at 239,000 last week, remaining near 40-year lows and continuing to signal that the labor market is tightening. We have found that claims provide a recession signal when they rise between 75,000 and 100,000 over a six-month period. Six months ago, the four-week average for claims was 265,000. Over the last four weeks, claims have averaged 245,000 per week, so claims are running roughly 20,000 below six-month-ago levels and are not signaling a recession.
- The best win streak in 25 years. The Dow, S&P 500, and Nasdaq have all hit all-time highs for five consecutive days for the first time since January 1992 (that streak ended at six days in a row). The Russell 2000 (small caps) has made a new high four days in a row, with the last time all four major indexes made new highs four days in a row being June 1995. Turning to the S&P 500, it has now gained for seven consecutive days. It last reached eight up days in a row in July 2013 and nine in a row in November 2004.
- Housing Starts (Jan)
- Philadelphia Fed Mfg. Report (Feb)
- G-20 Foreign Ministers meeting
- Eurozone: Account of the 01/19/17 European Central Bank meeting released
- Leading Indicators (Jan)