Since Monday, the stock market has been trading in a relatively narrow range. “Narrow” is a relative term in that a swing of 100 or 150 points these days does not seem out of the ordinary.
In a week of light economic data the only major announcement that could have significantly moved the markets was delivered on Wednesday. The Fed released the FOMC Minutes from their last meeting. Surprisingly the release of the minutes had minimal impact on the markets.
What is surprising is that there appears to be more division amongst the board members as to when an interest rate hike should occur. Some members are in favor of seeing a small increase as early as June. Other members indicate that they think that rates may have to remain where they are into late 2015 and even possibly all the way into 2016.
Investors, who would normally cheer any language in the FOMC Minutes that indicate a delay in an interest rate increase, remained on the sidelines. It appears that investors are starting to focus more on the corporate profit data rather than interest rates.
The profit concerns stem from the fact that despite interest rates remaining unchanged at a very low lever, corporate profits seem to be thinning. There are indications the economy may be slowing and that has investors somewhat spooked at the present time.
Great news in the housing market is taking place. The Mortgage Bankers Association Purchase Index has been flat all year but is now moving higher at a quick pace. Mortgage applications for home purchases surged for the 3rd week in a row to the highest level since July of 2013. The index is up 7.0 percent from the prior week and 12.0 percent higher from the same time last year.
The Refinance Index dropped by 3.0 percent. Mortgage rates have creeped up slightly over the last week and that has had a direct impact on refinance activity.
First time jobless claims are up a more than expected 14,000 from the prior week’s report. Claims for the week ending April 4th were 281,000. This number, although an increase, is still below the threshold of 300k which is considered a healthy labor market.
The final piece of economic data for the week was the ISM-Non Manufacturing Index. Although as of late manufacturing has been showing signs of weakness, the non-manufacturing index, which reflects the service sector of the economy, is showing signs of great strength.
Next week’s potential market moving reports:
– Tuesday April 14th – Producer Price Index & Retail Sales
– Wednesday April 15th – MBA Applications & Industrial Production
– Thursday April 16th – First Time Jobless Claims & Housing Starts
– Friday April 17th – Consumer Price Index & Consumer Sentiment