Labor Data Doesn't Help Us Markets
Despite data showing further improvement in the US labor market, share prices have generally moved downward today.
Thursday, February 19, 2015 - 00:00
Sentiment has dragged the markets lower becasue of the now familiar issues of lower oil prices and lack of resolution over Greece’s debt dilemma.
By early afternoon in New York, the Dow Jones was down 0.25% or 44 points at 17,985, following Wednesday’s modest decline. The broader benchmark of the S&P 500 Index also lost ground, dropping 0.12% to 2091.1, after setting a new intraday record earlier in the session.
The number of first-time claimants for unemployment insurance in the US dropped by an impressive 21,000 last week to 283,000, after an unrevised 304,000 in the week prior. The consensus estimate had pointed to 290,000 for initial claims. The result leaves the four-week moving average at an improved level of 283,250, the fourth successive week in which it has shrunk, and now stands at its lowest level in over three months. Significantly, the week of this report (the week ending February 14) is also the sample period that will be used by the Bureau of Labor Statistics in compiling both its Household and Establishment surveys for the February Employment Situation report, and things look well improved from the comparative period in January, which will boost hopes for a healthy February non-farm payrolls report.
Financial news out of Europe has not been encouraging, though, with hopes that Greece might secure further emergency funds suffering a major setback after Germany blocked the country’s formal application to extend its loan facility. Germany’s rejection, which said the bid was ‘not a substantial solution’, came shortly after the European Commission had described the request as ‘positive’. The expiration date of Greece’s bailout program draws ever closer, but with Greek Prime Minister Alexis Tspiras and German Chancellor Angela Merkel now in direct talks, there remains some chance of an agreement, provided the respective parties are willing to be make the necessary concessions. The euro has weakened 0.3% against the US dollar today, falling to $1.1364.
Oil prices were pressured today by inventory data released by the Energy Department that show US supplies at record levels. US inventories of crude oil increased 7.7 million barrels last week to 425.64 million barrels, rising faster than analysts had expected, including a 3.66 million-barrel build at Cushing, Oklahoma, the price settlement point for West Texas Intermediate futures contracts. The rise in oil stocks brings the issue of oversupply back into focus, and US crude oil futures slipped below $50 a barrel at one point in the trading session, before recovering to $51.80 later in the day.
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