Cyprus will more than likely be the early week influencer on the market as the tiny island nation in the Eastern Mediterranean Sea seemingly managed to avert a financial collapse through a last-second bailout agreement with its European partners. Last week, Cyprus, a country that only makes up about 0.2 percent of the euro zone economy rattled the markets with news that it may lose emergency funding if it doesn’t strengthen its banking sector and raise some capital for additional funds, primarily by hitting large depositors with a sizeable levy.
As the Cyprus situation begins to take shape this week, there will economic plate will be relatively full in the U.S. as well as a market motivator/hammer. Investors will be looking for:
Durable Goods Orders from February – Last month, the Commerce Department said that new orders for durable goods, items from toasters to airplanes meant to last more than three years, contracted by 5.2% in January, largely because of a sharp drop in aircraft orders. “Core” durable goods orders, those that exclude the volatile transportation and defense sectors, increased by 6.3 percent in January from December, the largest one-month move in more than two years. Economists are expecting total new orders to have gone back on the rise in February from January by about 3.8 percent.
New Home Sales from February – The Commerce Dept. reported that purchases of new homes in the US surged by 15.6 percent in January from December to a seasonally adjusted 437,000 annual pace, representing the highest level since July 2008 and far outpacing predictions of a 380,000 annualized rate. The report also showed that the median sales price of new houses sold in January was $226,400 and the average price was $286,300. For February the consensus is that the annual rate will slow a bit to about 422,000.
Also being delivered on Tuesday and followed to a lesser extent are the S&P/Case-Shiller Home Price Index and Consumer Confidence from the Conference Board.
Gross Domestic Product for the Fourth Quarter – In the first revision of fourth-quarter GDP, the broadest measure of combined economic activity in the nation, the Bureau of Economic Analysis in February said that the US economy actually grew by 0.1 percent in the October to December period, rather than contracting by 0.1 percent as it originally estimated. Economists are expecting that expansion figure to swell to show growth of 0.6 percent for Q4 in the latest revision this week.
Initial Jobless Claims for the Week Ended March 23, 2013 – First-time filings for jobless benefits, a measure of new lay-offs, have been steadily beating economist predictions and showing that the US labor market continues to strengthen. Last week, the Labor Department said that initial jobless claims eked upward by 2,000 to 336,000. The four-week moving average dropped to 339,750, its lowest level in five years. Economists are expecting another slight increase to 340,000 claims for the latest week.
The Chicago Purchasing Manager’s Index from the Institute for Supply Management will also come on Thursday, but does not carry the weight of the other two pieces of data.
Personal Income and Outlays for February – The Commerce Dept. said that personal income plunged 3.6 percent to a 20-year low in January as higher income taxes were imposed with the fiscal cliff, following a sharp rise in December because of special dividend payments being dispensed early to avoid the rise in taxes companies saw coming. Consumer spending was not negatively impacted with the higher taxes as forecast, however, with outlays still increasing by 0.2 percent from the month. The core rate of inflation increased by 0.1 percent after a flat December reading. For February, economists are predicting personal income to rebound to a 1.0 percent rise and consumer spending to increase by 0.6 percent. Core inflation is anticipated to have risen by 0.2 percent.
To a lesser extent, investors will also be watching for the Reuters/University of Michigan Consumer Sentiment Index on Friday as well.
Take note that equity markets are closed on Friday in observance of Good Friday.