The markets are looking a little toppy and sputtered on Friday after a record setting 10-day run for the Dow Jones Industrial Average that set a new all-time high at 14,539.29 on Thursday. The S&P 500 peaked as high as 1,563.62 on Friday before settling lower at 1,560.70, still just shy of its record intraday high of 1,576.09 on October 11, 2007. The S&P’s highest closing level stands at 1,565.15 on October 9, 2007. The economic slate was a key driver last week with a steady influx of data beating economist predictions and showing the health of our nation’s economy remains on the mend with growing momentum.
If economic data will serve as catalysts to keep the market bears at bay again this week, investors will be turning to:
Housing Starts for February – The Commerce Department said last month that housing starts cooled in January, falling 8.5 percent to a seasonally adjusted annual 890,000 home pace. The fall was completely attributable to a 24.1 percent nosedive in the volatile multi-unit category (i.e. apartments) as single-family homes, which are the vast majority of starts actually increased by 0.8 percent in January. Permits for future construction increased 1.8 percent from December to a 925,000 annual pace. For February, economists are expecting housing starts to climb upward to a 920,000 annual pace and for permits to basically be flat for the month compared to January.
Federal Open Market Committee Commentary – Investors and economists alike will be hawking words from the FOMC, the policy making division of the Federal Reserve, to glean any hints about how long the Fed’s $85-billion-per-month bond buying program, known as quantitative easing will continue. This meeting will also include the Fed’s decision on short-term interest rates, which are expected to remain unchanged at historic lows. Further, the FOMC will also release its first of four quarterly forecasts for the year, which includes key measures of the U.S. economy such as gross domestic product and the civilian unemployment rate. Fed Chairman Ben Bernanke will hold a press conference discussing all of the details and conduct a question and answer session that has the close attention of Wall Street.
Initial Jobless Claims for the Week Ended March 16 – The Labor Department shocked last week by saying that first time filings for jobless benefits (a gauge of new lay-offs) dropped by 10,000 to 332,000 from the prior week’s upwardly revised 342,000 claims. Economist thought claims would rise to 350,000. The four-week moving average fell to 346,750, the lowest level in nearly five years. Economists are predicting that the claims report this week will show a rise to 340,000 claims .
Existing Home Sales for February – The National Association of Realtors reported last month that existing home sales rose 0.4 percent in January to a seasonally adjusted 4.92 million annual rate, marking the second highest level since November 2009. Inventories of pre-owned homes on the market shriveled to 1.74 million units, the lowest on record since 1999. Despite the dwindling inventory, economists are expecting existing home sales for February to total 5.01 million.
Philadelphia Fed Survey for March – The Federal Reserve said last month that factory activity in the Philadelphia region contracted for the second straight month in February, falling to its lowest level in eight months. The bank’s index dropped from a -5.8 reading in January to a -12.5 reading in February, missing the predictions of economists for a +1.0 level. The index scoring above zero indicates expansion in manufacturing activity, while marks below zero signal contraction. Economists calling for a third straight month of contraction with a -1.5 reading anticipated, although the higher mark does signal that manufacturing is slowing, but not as drastically as in February.
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