Dow Lower Despite Positive Economic Reports

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Positive economic reports are not enough to pull the Dow Jones Industrial Average (DJINDICES: ^DJI  ) higher today. As of 1:15 p.m. EDT the Dow is down 37 points to 15,639, while the S&P 500 (SNPINDEX: ^GSPC  ) is down three points to 1,722.

There were four U.S. economic releases today.

Report

Period

Result

Previous

New unemployment claims

Sept. 7 to Sept. 14

309,000*

294,000*

Current account

Q2

($99 billion)

($105 billion)

Existing home sales

August

5.48 million

5.39 million

Leading indicators

August

0.7%

0.5%

*Results affected by computer glitch.

New unemployment claims rose by 15,000 to a seasonally adjusted 309,000. However, the number of claims was again affected by delays in processing in California and Nevada after the states updated their computer systems last week. Analysts had expected the level of claims to rise to 338,000. Until the backlog is fixed, we must wait to see what the true level of claims actually is. In any event, it's well below last year's average of 370,000, signaling a steadily improving job market.

US Initial Claims for Unemployment Insurance Chart

US Initial Claims for Unemployment Insurance data by YCharts.

Second was the National Association of Realtors' existing-home sales report, which surprised analysts on the upside, rising 1.7% in August to a seasonally adjusted annual rate of 5.48 million. That beats analyst expectations of a drop to 5.2 million and July's level of 5.39 million and marks the highest level since early 2007.

US Existing Home Sales Chart

US Existing Home Sales data by YCharts.

NAR chief economist Lawrence Yun said it could get worse from here:

Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions. Tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn't as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.

Mortgage rates jumped over the summer as the market sold off ahead of a possible drawdown of the Federal Reserve's asset purchases. Yesterday the Fed announced it would not take any action, continuing its $85 billion-per-month bond purchases for the time being.

Lastly, the Conference Board's Leading Economic Index jumped 0.7% in August to 96.6.

The index was led higher by the widening interest-rate spread between the 10-year Treasury and the federal funds rate, as well as improvements in the average number of hours worked per week, average weekly new unemployment claims, and the Institute for Supply Management's New Orders Index. The rising Leading Economic Index shows that the economy is poised to improve going forward.

 

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