Macro Data, Earnings Lift Us Stock Indices
The first few months of the year have produced some soggy performances from key economic indicators, dampening expectations for how first-quarter GDP will turn out, but some firmer data released today suggests the economy has begun pulling out of this heavy-weather-hampered soft stretch.
Tuesday, April 14, 2015 - 00:00
Retails sales rebounded nicely in March, showing a 0.9% bounce following three consecutive months of declines. Sales in February were revised upward a notch from an originally-reported -0.6% to -0.5%. The healthy performance in March does appear to add weight to arguments that the slow start to 2015 was a transitory phase, and should serve to firm expectations for a Fed rate hike sometime later this year,.
Also dovetailing with this notion are indications of price rises at the wholesale level. The producer price index for final demand rose 0.2% in March, its first increase after four months of price falls. Perhaps more importantly than the rise at the headline level, the core rate (which excludes the volatile components of food and energy) also advanced 0.2%, which could be seen as heralding some warming up in inflation.
Along with these encouraging signs at the macroeconomic level, early earnings reports have been upbeat. Financial bellwethers JP Morgan ($JPM) and Wells Fargo ($WFC) both beat expectations for earnings and revenue, as did health care giant Johnson & Johnson ($JNJ).
That helped lift the major stock index benchmarks on Wall Street. Shortly after the opening, the Dow Jones was up 57 points or 0.36% at 18,034, while the broader measure of the S&P 500 Index rose 0.15% to 2095.6.
Intel reports after the market close tonight.
In the forex market, the euro posted sharp gains against the US dollar, advancing close to 1% to 1.0667. Eurozone industrial production data for February came in much stronger than expected, expanding a robust 1.1% versus expectations of a 0.3% gain. Industrial production has a close correlation to overall economic activity, and the healthiness of today’s report will provide a timely shot in the arm for eurozone first-quarter GDP expectations, coming as it does just a day ahead of Wednesday’s ECB meeting.
The yen has also had a good day against the dollar, after comments from Koichi Hamada, an economic advisor to Japanese Prime Minister Shinzo Abe, suggesting he thought the yen was too weak at current levels. USD/JPY fell 0.54% to 119.47.
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