Economic Indicators: What to Watch

The Empire State Manufacturing Survey, Housing Starts, PPI, Initial Jobless Claims, and CPI may impact the market the most this week, according to Arthur Cashin, Managing Director of Floor Operations at UBS Financial Services. He expects traders will closely watch the super committee that was recently named by Congress to make recommendations on the debt ceiling and budget. He also believes the European sovereign debt crisis will continue into the foreseeable future, with the potential for one or more member default and / or a possible breakup of the union.

Cashin says traders will be watching the Federal Reserve Board of Governors’ Senior Loan Officer Opinion Survey, which is expected to be released around 2 p.m. on Monday. The survey is expected to show the results of the Fed lowering interest rates for two years, with business and household demand for loans anticipated to pick up. Investors will also look for the CSC-Goldman Store Sales report on Tuesday measuring same-store sales. Traders will scan it for a snapshot of how major retailers are performing in the lagging economy as consumer spending has decreased with shoppers saving instead of making purchases.

Other indicators covering manufacturing, real estate, the cost of living, consumer sentiment and the broader market will be coming out. The announcement schedule for the week of August 15th includes the following:

  • Monday:  Empire State Mfg Survey
  • Tuesday:  Housing Starts, Import and Export Prices, and Industrial Production
  • Wednesday:  Producer Price Index
  • Thursday:  CPI, Jobless Claims, Existing Home Sales, Philadelphia Fed Survey, and Leading Indicators
  • Friday:  None

Highlights from the week of August 8 thru 12: Big ups and big downs, in a week of very volatile trading, the Dow ended the week down 1.7% and the S&P ended the week down 1.8%. Early this week, the markets sold off as the Dow tumbled over 600 points and the S&P 500 sank close to 80 points. Market watchers attributed the decline to several factors including: S&P’s downgrade of the nations credit rating to AA+ from AAA, the ongoing political bickering in Washington over the budget and debt ceiling, and the continuing effects of the European sovereign debt crisis and global economic slowdown. On Tuesday, the equity markets experienced a short lived rally as investors sought for a safe haven for their investments. The government reported that productivity dropped from April through June for the second consecutive quarter which accelerated labor costs. There was not a significant market reaction to this report. Separately, the FOMC repeated its pledge to keep interest rates exceptionally low until Mid 2013 as the economy is expected to slow considerably.  The market bounced back on Tuesday with wild swings; the Dow climbing 3.7% and the S&P soared 4.1%. Then on Wednesday, the markets plunged back in the opposite direction on concerns over the European debt crisis, as investors focused in particular on French banks. Towards the end of the week, the Labor Department reported that jobless claims unexpectedly fell, with a drop in applications for jobless benefits, a sign that the job market is slowly improving. The Commerce Department reported that the trade deficit unexpectedly increased as a slump in exports exceeded a decline in shipments from overseas. On Friday, retail sales came in better-than-expected showing consumers are holding up even as employment slows. However, consumer sentiment was disappointing as a result of weak employment and the choppy stock market.

Click this link for the full economic calendar for the week.


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