Thursday, March 01, 2012
Stock Market Commentary:
China’s PMI, EU MFG Contracts, & Spanish Yields Fall, & U.S. Economic Data:
On Thursday stocks opened higher as investors digested a slew of economic data. China said its purchasing managers index (PMI) topped estimates in February. The index swelled to 51.0 which topped the Street’s estimate for 50.7 and January’s reading of 50.5. However, the final reading for the HSBC PMI was at 49.6, a touch higher than January’s reading of 48.8, but still under the boom/bust level of 50. Economic data in Europe was mixed. The Euro zone’s manufacturing sector contracted for the 7-consecutive month in February which increases the odds for the Euro Zone to fall into a recession later this year. The Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 49.0 last month which matched estimates but remains below the boom bust line of 50. Meanwhile, yields for Spanish debt fell which is a small sight of optimism for the debt-laden nation.
Economic data in the U.S. was mixed. Jobless claims fell by 2,000 to 351,000 which bodes well for the rebounding jobs market. Personal income rose +0.3% vs +0.4% estimate while spending rose by +0.2%. On average, auto sales rose which is a net positive. Finally, the ISM MFG index unexpectedly fell to 52.4 which was the first decline in 3 months.
Market Outlook- Confirmed Rally
Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December and are extended by any normal measure. At this point, all this means is that the odds for a pullback increase. However, markets can very easily go from overbought to extremely overbought so trade accordingly. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!