June gloom looms for the stock market
Analyst sees any early-summer weakness as a buying opportunity
As bulls and bears continue to fight for control of the stock market, the winner could be decided by something as simple as a flip of the calendar: June has been the worst month of the year for stocks over the past decade.
But while bears could win the battle over the short term, bulls could still win the war, as history suggests the market could snap back sharply in July, according to data provided by MKM Partners market technician Jonathan Krinsky.
The market has been stuck in one of the narrowest trading ranges to start a year in its history, leading market watchers to believe it is getting ready to bust out, in either direction, sooner rather than later. Since the S&P 500 SPX, -0.63% has averaged a 1.32% decline over the last 10 months of June, according to Krinsky, led by weakness in the financial sector, a selloff could be imminent.
The SPDR Financial Select Sector exchange-traded fund XLF, -0.89% has lost more than 3%, on average, over the last 10 Junes, making it the by far the worst monthly performer of the key sector-tracking ETFs. http://www.marketwatch.com/story/june-gloom-looms-for-the-stock-market-2015-05-29
U.S. auto sales speed toward 17 Million
Hot sales in May could put the U.S. auto industry well on its way to delivering 17 million new vehicles this year–a level unseen since 2001.
On Tuesday, auto makers are expected to report May sales, and analysts are forecasting 1.59 million vehicles for the month. While that would be down about 1% from the same month last year, the result would still put the auto sales on pace for a seasonally adjusted annual rate of 17.3 million vehicles, based on the first five months of the year, according to market researcher Kelley Blue Book. An improving economy and Memorial Day deals are helping offset the recent uptick in gasoline prices, say auto analysts.
Most major manufacturers are expected to post slight declines in volume due to one less selling day for the month this year. Fiat Chrysler Automobiles NV could be the outlier here, as surging Jeep demand is expected to pull the auto maker’s year-over-year increase in sales to a streak of 62 months, according to Kelley Blue Book.
Whether sales will be able to keep up the pace for another seven months is a matter of debate among analysts, who are toggling between forecasts for the full year.
Some are predicting car sales to finish the year at 16.9 million, just shy of the 17 million bragging right. Others, such LMC Automotive’s Jeff Schuster and Kelley Blue Book’s Alec Gutierrez, say strong consumer enthusiasm leading into the second-half of the year could help the industry “reach the elusive 17 million-unit mark.” http://www.marketwatch.com/story/us-auto-sales-speed-toward-17-million-2015-05-30-124851753
Steady jobs growth best thing going for up-and-down U.S. economy
WASHINGTON (MarketWatch) — The one thing the U.S. economy unabashedly has in its favor is a boom in hiring.
So long as companies continue to hire at a steady clip — the U.S. has gained an average of 243,000 new jobs a month since 2014 — the economy is likely sidestep the occasional potholes that keep cropping up in its path.
Take the first quarter. The economy contracted by 0.7% in the first three months of the year, bludgeoned by harsh weather, falling exports, lower business investment and a dockworker’s strike.
Yet even though hiring also slowed, the U.S. has still added an average of 194,000 jobs so far in 2015. Economists say that’s more than enough to outstrip the increase in the working-age population and nudge the unemployment rate lower over time.
The week’s employment report for May is expected to produce another solid gain in jobs: economists surveyed by MarketWatch predict a 218,000 increase. The unemployment rate is likely to remain at 5.4%.
The employment report is the best single bellwether of how well the economy is doing. The official report on gross domestic product appears to have significant flaws and it’s generally viewed as more backward looking. Other indicators are too narrow in scope.
When companies increase hiring, however, they are making a firm bet that demand for their goods and services will continue to increase, or even accelerate. That appears to be the case in the second quarter. U.S. growth has rebounded in the spring and the economy is forecast to grow around 3%, the MarketWatch forecast shows.
Yet with the unemployment rate closing in on 5%, a growing number of analysts predict the pace of job creation will soon taper off, perhaps by the end of the year.
“You do need to expect employment growth to slow substantially over the next few years,” said Jeremy Lawson, chief economist of asset manager Standard Life Investments. “You can’t continue to get 200,000 to 250,000 jobs a month in an economy growing just 2% to 2.5% a year.”
The only way to sustain those kind of employment gains is through higher consumer spending that lifts annual U.S. growth much closer to its historic 3.3% average. But that in turn would require either businesses to boost wages, giving Americans the cushion to spend more, or households dipping into savings to go out to eat more and get that big HDTV they’ve been ogling.
More bullish economists pin their hopes on bigger increases in the size of paychecks after years of sluggish wage growth. They see hourly wages rising 3% or higher from the post-recession rate of 2%, as the tightening labor market forces companies to pay more to attract or hold onto talented workers. http://www.marketwatch.com/story/steady-jobs-growth-best-thing-going-for-up-and-down-us-economy-2015-05-31