November 7th, 2012 9:36 AM by Mel Samick
Super storm Sandy hit the east coast last week causing unprecedented damage in New Jersey, New York and states up and down the east coast. Even after a week, things remain far from normal, particularly in New York City, the financial capital of the United States. Millions are still without power or basic services and thousands are without homes. With temperatures dropping into the 30’s, finding fuel and staying warm still remains a challenge for many. Financial markets closed early in advance of the storm and for a time afterward. This was the first time the New York Stock Exchange was closed for a day or more because of weather, since 1888.
Despite the volatility in the weather, the markets remained flat for the three trading days last week. The S&P closed at 1,411 while the Dow ended the trading week at 13,107. In major economic indicators released last week, to investors’ surprise, Nonfarm Payrolls increased by 171,000 beating expectations of 125,000 for the month of October. Private Payrolls also topped investor’s expectations and increased by 184,000. The net revisions for August and September were up 84,000. However, the Unemployment Rate ticked up to 7.9 percent as expected, from 7.8 percent last month. The overall slowing labor market remains the major factor in slowing economic growth.
In other economic indicators, the ISM Manufacturing Index posted another mildly improved October, a sign of an improving economy. However, due to aircraft orders, Factory Orders for the month of September were in positive territory to the tune of 4.8 percent after a revised prior month of a 5.1 percent decline. Non-defense Capital Goods, excluding aircraft, showed a 0.2 percent gain for new orders following a 0.3 percent gain in August. In other good news, Construction Spending jumped 0.6 percent in September following a revised 0.1 percent decline in August.
The consumer sector came in strong last week with Personal Income in September up 0.4 percent, following a 0.1 percent increase the prior month. The wages & salaries component also advanced 0.3 percent. Consumer spending was strong with a 0.8 percent increase in September, following a 0.5 percent rise in August. The headline PCE Price Index jumped another 0.4 percent in September, unchanged from the prior month but less than market consensus. The core rate rose a softer 0.1 percent, the same as the month before. Turning to the bond market, which had 3 and half trading days last week, the Ten-Year Treasury yield was nearly unchanged and ended the week at 1.716 percent. Towing the same line, conforming mortgage rates were also unchanged. At the end of week the Conforming Fixed 30-year rate leveled out at around 3.19%, while the Conforming Fixed 15-year rate finished at around 2.75%. Standard 5/1 ARM rates were hovering around 2.75%.
The next time we chat the Presidential election will be resolved and we will know the direction the
Country will be taking for the next 4 years.
Information provided by NYCB Capital Markets