US Economy Gaining Momentum in Q-4

US Economy Gaining Momentum in Q-4

US Economy Gaining Momentum in Q-4

$DIA, $SPY, $QQQ, $VXX

US factory activity at 5-month high in November due to a pickup in new orders and production, offering more evidence that the economy gained further momentum early in Q-4.

Other data Thursday showed the number of Americans claiming unemployment benefits hitting a 5-month high last week, labor market strength remains intact, with layoffs falling 12% in November.

The Institute for Supply Management (ISM) said its index of national factory activity rose 1.3% to a reading of 53.2 last month, the highest since June. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12% of the US economy.

The production sub-index increased 1.4% and a gauge of new orders rose 0.9%. A measure of factory employment, however, fell 0.6%. Still, manufacturing employment remained above expansion territory.

The report added to data on consumer and construction spending that have suggested the economy continued to gain strength in the fourth quarter after growing at a 3.2% annual rate in Q-3.

Manufacturing is slowly regaining its footing as some of the drag from the USD’s past rally eases and Crude Oil prices continue to stabilize after last year’s dive.

Gains in factory activity are likely to be modest on the back of renewed strength in the USD following the election of Donald Trump as US President.

Since the November 8 election, the Buck is up more than 4% Vs it peers, as investors view Donald Trump’s proposed fiscal policy as inflationary.

A strong USD is bad for exports and will squeeze profits of multinational corporations, which could have an impact on their capital spending budgets.

But President Elect Trump’s plan to increase infrastructure spending could offer some boost to manufacturing and benefit heavy machinery makers such as Caterpillar (NYSE:CAT), whose profit has been hurt by poor demand for construction equipment.

The Fed is expected to hike the fed funds rates at its FOMC 13-14 December policy meeting. I last raised its benchmark overnight interest rate last December for the 1st time in nearly a decade.

Thursday, the US major stock market indexes finished at: DJIA+68.35 at 19191.93, NAS Comp -72.57 at 5251.11, S&P 500 -7.73 at 2191.08

Volume: trade was heavy, with over 1.1-B/shares exchanged on the NYSE

  • Russell 2000 +16.3% YTD
  • DJIA +10.1% YTD
  • S&P 500 +7.2% YTD
  • NAS Comp +4.9% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.46) Bullish (0.33) Very Bullish (0.60) Bullish (0.44)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.19) Neutral (0.03) Bullish (0.39) Neutral (0.16)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (-0.06) Neutral (-0.13) Neutral (-0.10) Neutral (0.06)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.38) Bearish (-0.40) Bearish (-0.42) Bearish (-0.33)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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