Before the Bell - It has been a busy week for the stock market, with key inflation data issued this past Tuesday, the Federal Reserve's Beige Book summary of the nation's economic outlook coming out on Wednesday, and reports on jobless claims, retail spending, and industrial production coming out yesterday. On balance, the reports have shown greater strength than expected, along with increasing pricing pressures. Now, in another key issuance, the Commerce Department just reported figures for March housing starts and building permits.
In this latter issuance, the government reported that homebuilding had strengthened as the first quarter wound down, with March starts up 19.4%. Also, building permits advanced, but at a much more muted pace. Interestingly, inflation is creeping in here, as well, with lumber prices soaring to record high. So, pricing is continuing to be a key factor in the strengthening business upturn. Boosted by the housing strength, the equity futures are now pointing to a higher opening when trading commences shortly.
Looking ahead to next week, the calendar is sparse for the first three days of the five-day span. However, Thursday will bring reports on weekly jobless filings and sales of existing homes. Then, on Friday, the government will release data on new home sales. Yesterday, it had been a surprisingly good showing on the unemployment front, where first-time claims had fallen in the latest week that helped spark a strong showing by the stock market.
But it was not just the nation's economy that is helping to lift stocks, but also earnings season, where the start of this closely watched quarterly event has seen some big name banks post better-than-forecast earnings. Among the stalwarts here have been JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC). Positive earnings also were posted by Dow member UnitedHealth Group (UNH) and by PepsiCo (PEP). However, air carrier Delta (DAL) reported another large loss.
As for the stock market, it closed strongly higher yesterday, boosted by supportive earnings reports and the upbeat economic issuances. Looking ahead and following what, as noted, seems likely to be a positive opening this morning, the market will again focus on pending earnings reports. Finally, yields on the 10-year Treasury note, off sharply yesterday, are rebounding this morning, rising from 1.53% to 1.57%. Housing market inflation may be a factor here. – Harvey S. Katz, CFA