Spurred by some further dovish comments by Fed Chair Yellen and some good earnings numbers, US stocks made healthy gains on Wednesday as the S&P 500 gained 1%.
The day started with some important data for housing but unfortunately, it was another string of disappointing data for the builders. Building permits, an indicator of future demand for housing, fell 2.4% in March to an annual rate of 990,000, led by a drop for apartments. Analysts were expecting a 0.6% gain. Housing starts rose 2.8% to a seasonally adjusted annual rate of 946,000, led by single-family homes, the U.S. Commerce Department said. Market expectations had been for a 6.4% increase.
In better news, US Industrial output rose for a second straight month in March. Overall industrial production was up 0.7%, beating analysts’ expectations of a 0.5% gain.
The Fed’s beige book for April, which was released yesterday, also supported the industrial production data. The beige book showed that the economy was starting to gain some steam after a slowdown from the rough winter.
Despite an important day for macro data and a lot of Fed speak, the discussion among the participants on the Hammerstone Forum still revolved around the recent revaluation in growth/momentum vs value stocks. Many participants on the Hammerstone Forum are closely monitoring some beaten down stocks but are waiting for such stocks to cross important technical barriers before moving in. Participants on the Forum also noted that Friday is option’s expiry date for April, so there could be some out of the ordinary activity in the market tomorrow.
The initial jobless claims just came out at 304k vs 315k expected, and we have the Philly Fed index coming out at 10:00. There’s virtually no Fed speak today, and most of the important earnings have already come out before the open, so let’s see if the market can continue its strong run this week.
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