Tuesday data: Less unhappy days are here again

Reuters

Tuesday data: Less unhappy days are here again

Sep 17, 2024 at 3:08 pm GMT

<html xmlns="http://www.w3.org/1999/xhtml"><head><title>LIVE MARKETS-Tuesday data: Less unhappy days are here again</title></head><body>

Main U.S. indexes green; S&P 500 scores record intraday high

Cons disc leads S&P 500 gainers; healthcare weakest group

Euro STOXX 600 index up ~0.5%

Dollar up slightly; crude up >1%; bitcoin jumps >5%; gold dips

U.S. 10-Year Treasury yield edges up to ~3.64%

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TUESDAY DATA: LESS UNHAPPY DAYS ARE HERE AGAIN

Across the board, Tuesday's data beat expectations by a nose, suggesting that while the economy might be softening, it's not quite as soft as analysts thought.

Whether this affects the size of the Fed's first rate cut in 4-1/2 years, remains to be seen.

Retail sales USRSL=ECI unexpectedly eked out a meager gain last month, rising 0.1% on the shoulders of July's upwardly revised 1.1% growth.

Consensus called for a 0.2% decline.

Year-over-year, receipts at U.S. retailers have increased 2.13%, a deceleration from the prior month's 2.86%, according to the report from the Commerce Department.

Scraping beneath the headline, a 1.2% drop in gasoline station receipts - owing to cooling energy prices - and a 1.1% slide in the beleaguered department store segment were offset by a 1.7% gain at miscellaneous store retailers and a 1.4% increase in non-store retail, which includes online sales.

Food/beverages and groceries dipped by 0.7% and 0.6%, respectively.

So-called "control" or "core" retail sales - which strips away motor vehicles/parts, gasoline, building materials and food services, corresponds closely with the consumer spending element of GDP - increased by 0.3% as analysts expected.

"Today's retail sales number is solid but not a game-changer," writes Ken Tjonasam, portfolio strategist at Global X. "The market is still left with the same question: Will the Fed go for 25bps or 50bps?"

"While retail sales are holding steady, it wasn't the game-changing data point that could tip the Fed's hand either way."

Separately, a report from the Federal Reserve showed U.S. industrial output USIP=ECI jumped by 0.8% in August, bouncing back from the previous month's downwardly revised 0.9% slide and blasting past the 0.2% consensus.

It was the strongest monthly increase since February.

Even so, production data from the recent ISM survey is "pointing to sharp falls in output over the next few months," says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "High interest rates, weak external demand, depressed home sales, and anemic measures of investment intentions all point to a poor outlook for manufacturing."

"A weak industrial sector looks set to be a headwind to growth over the rest of this year."

Capacity utilization USCAPU=ECI, a gauge of economic slack, tightened to 78.0% from July's 77.4% print.

Moving to the housing market, the mood amongst builders has grown a shade less morose this month.

The National Association of Home Builders' (NAHB) Housing index USNAHB=ECI added 2 points to deliver a reading of 41, a tad less pessimistic than the even 40 projected by economists.

An NAHB number below 50 indicates net pessimism among survey participants.

"With inflation moderating, the Federal Reserve is expected to begin a cycle of monetary policy easing this week, which will produce downward pressure on mortgage interest rates and also lower the interest rates on land development and home construction business loans," says Robert Dietz, NAHB's chief economist. "Lowering the cost of construction is critical to confront persistent challenges for housing affordability."

And finally, the value of goods stacked in the store rooms of U.S. businesses USBINV=ECI increased by 0.4% in July, a bit stronger than the 0.3% analyst estimate.

That bodes well for current-quarter GDP.

Private inventories was a net contributor to second-quarter GDP after pulling the topline lower for the two previous quarters:

(Stephen Culp)

*****

FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:

S&P 500 FLIRTS WITH RECORD HIGHS - CLICK HERE

ACTIVE INVESTING BACK IN VOGUE AMONG RETIREMENT ADVISERS, SURVEY SHOWS - CLICK HERE

S&P 500 INDEX EYES ITS RECORD HIGHS, GETS SET FOR FED - CLICK HERE -CLICK HERE

YEN RALLY: SLAM DUNK OR WIDOWMAKER? - CLICK HERE

EUROPEAN CYCLICALS READY TO REBOUND - MORGAN STANLEY - CLICK HERE

EUROPEAN BANKS CHEAP ENOUGH TO ABSORB RATE CUTS - UBS - CLICK HERE

CAN TRUMP WEAKEN THE DOLLAR? - CLICK HERE