Stocks went nowhere on Thursday in an extremely quiet and slow session that was, amazingly, not the final trading day of the week.
First, the scoreboard:
- Dow: 17,825, -25, (-0.1%)
- S&P 500: 2,089, -1, (-0.03%)
- Nasdaq: 4,901, +6, (+0.1%)
- WTI crude oil: $49.30, -0.3%
- 10-Year Treasury: 1.83%
The economic data flow in the US this week has been, well, more of a trickle, but on Thursday morning we did get three readings on the US economy with reports on labour markets, business investment, and the housing market crossing the tape.
Initial jobless claims last week totaled 268,000, less than the 275,000 that was expected by economists and down 10,000 from the prior week. This marked the 64th-straight week that initial filings for unemployment insurance were less than 300,000, the longest streak in over 40 years.
This high-frequency reading on the labour market has been probably the strongest piece of economic data in the US economy over the last couple years and more or less suggests the amount of people losing work and seeking financial assistance between jobs remains near historic lows.
Durable goods orders for April also beat expectations with headline orders rising 3.4% against the prior month, more than the 0.5% increase that was expected by economists.
Excluding defence and transportation orders, however, durable goods orders fell 0.8% in April, a big disappointment relative to the 0.3% increase expected by economists. This generally suggests a subdued pace of fixed business investment from America’s corporate sector, with Neil Dutta at Renaissance Macro calling investment “pathetic.”
Pending home sales in April crushed expectations, rising 5.1% against the prior month against expectations for a 0.7% increase. This report brought the number of homes under contract to the highest level in a decade. In a release Lawrence Yun, chief economist for the National Association of Realtors, said, “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”
No one is excited about stocks right now.
Over at The Reformed Broker on Thursday, Josh Brown wrote that investors saying basically “I don’t know” about what’s going to happen to stocks from here is at a 26-year high.
As Josh writes, “If you’re feeling confused about why we’re pushing toward all-time highs with two accomplished liars running for office, declining earnings and a feisty Fed, you’re not alone. Just remember it’s all ETF flows and robots anyway, no one is really making conscious decisions anymore.”
So there’s that.
In related(ish) stock market news, Andrew Adams, a strategist at Raymond James, made waves arguing that the stock market is more or less looking at the perfect conditions to rally higher form here.
“So what happens when the market keeps going up and much of that money starts to flow back into stocks as investors scramble to get back in once fear of missing out takes over?” Adams wrote.
“This ‘dry powder’ on the sidelines could possibly force an explosion higher, assuming we don’t get anything major that comes out of nowhere, and it looks like the match may have already been lit given yesterday’s continuation move of Tuesday’s strong rally.”
Stocks on Thursday, we’d note, did nothing though Tuesday and Wednesday saw big rallies. A number of folks in our inbox this week were talking about a “short squeeze” pressing markets higher, which is a sort of vague hand-wave in search of a justification for why stocks are moving one way or another (the down-market analogue would be “profit taking”).
Alternatively, ahead of a holiday weekend in the US trading desks are bare, volumes are light, and, well, stocks usually go up.