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By Nicholas
Jasinski | Thursday, May 27 Data
Galore. Several economic
data releases this morning drove today's trading, with their combined message
underlining the strength of the ongoing recovery. Cyclical and
economically sensitive pockets of the market outperformed more growth and
pandemic-oriented areas. Released
this morning, U.S. orders
for durable goods unexpectedly fell 1.3% in April, while
economists on average had been anticipating an increase of close to 1%.
But a key subset of the data showed a much stronger economy, wrote Barron's Lisa
Beilfuss. Durable
goods orders are closely watched because they’re seen as a decent proxy for
business investment. They include orders for things like vehicles and
airplanes, industrial machinery, computer equipment, and other goods meant to
last at least three years. Economists
like to zoom in on orders for nondefense capital goods excluding aircraft.
That leaves out the more volatile military and transportation categories of
the headline index. And by that measure, orders jumped a
better-than-expected 2.3% in the month, their best gain since last August. Joel Naroff, president
and chief economist of Naroff
Economics, noted today that the
increased business investment is stepping in right as federal stimulus
spending begins to fade. "The
first sign of that was the Conference
Board’s CEO
Confidence Index, which hit its highest
level in the 45 years of the measure’s existence," he wrote
to clients today. "But action speaks louder, and the CEO exuberance is
translating into increasing investment spending...Businesses are voting with
their money and the voting is starting to go solidly in favor of strong
future growth." Accordingly,
industrials stocks were the biggest winners in the S&P
500 today, up 1.4%. General
Electric stock surged 7.1%, Boeing added 3.9%, and Honeywell
International rose 3.1%. Defensive consumer staples and
utilities were the day's laggards, while technology stocks also closed in the
red. The Dow
Jones Industrial Average closed up 0.4%, and the
S&P 500 added 0.1%. The Nasdaq
Composite was virtually unchanged today. Other strong
data out this morning included the lowest weekly initial jobless claims
number since the start of the pandemic, and a marked decline in continuing
claims to boot. Plus, the Bureau of
Economic Analysis kept its first-quarter GDP growth
number unchanged at 6.4%. Lisa has
more on all of that here,
and Matthew Klein digs deeper into the durable goods report here. Tomorrow
morning brings more data: The BEA will report figures on consumer
earnings and spending in April. |
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DJIA: +0.41% to 34,464.64 The Hot
Stock: General
Electric +7.1% Best Sector:
Industrials +1.4%
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