9:000am (EST)
The market ended mixed on Wednesday after sales of new homes hit a record low, and the Federal Reserve changed up its tone on the economy. Trading was choppy for much of the session, and stocks stayed in a tight range even after the Fed indicated the problems in Europe could pose a threat to the U.S. economy.
The Fed’s outlook on the economic recovery went from “strengthening” to “proceeding” which was another way of saying “things are getting worse, not better.” They also tried to spin the dearth of good jobs by saying the labor market is “improving gradually.”
We are going to leave that one alone…
The housing data over the last few days has been ugly but not shocking. This was supposed to be a summer of getting the housing market back on its feet, but banks are still being stingy with real estate loans, and there is also an excess supply of homes. Perhaps the Fed changed its wording because they know we need a rebound in housing to boost the overall economy which is why interest rates will remain near zilch.
In any event, the Dow managed to finish the day in positive territory with a gain or 6 points to 10,298. The index did fall below its 10-day moving average and the 10,300 mark could become quick resistance.
The S&P 500 slipped 3 points and closed at 1,092 after reaching a high of 1,099.64 (point 64!). The 200-day moving average is at 1,108, but psychologically, the 1,100 level was a brick wall for the bulls yesterday.
The Nasdaq fell 8 points and settled at 2,254 but dipped below 2,240 yesterday which is where its 200-day moving average comes into play. Tech has been a big player in the bulls run from the March 2009 market lows but could fold like a cheap lawn chair if some of the heavy-hitters pre-warn.
As far as today, we got two key economic reports this morning that lifted the futures off their lows.
The Labor Department reported initial jobless claims fell by 19,000 last week to 457,000, the lowest in six weeks. The 4-week average of new claims was roughly unchanged at 463,000 and is considered a better gauge of the job market than the weekly number. Either way you slice it, the U.S. job market remains very weak.
Durable goods fell 1.1% in May, but wasn’t as severe as the expected 1.4% drop Wall Street had penciled in.
Futures came up off their lows after these both tidbits of news but are still pointing towards a lower open. Dow futures are down 33 points to 10,206 while the S&P 500 futures are lower by 5 points to 1,083. The Nasdaq 100 futures have off by 14 points to 1,860.
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