Markets pared earlier losses as US data, including durable goods and new home sales, posting better than expected. Also, German IFO data helped to raise optimism despite initially having little effect on markets. Dow and S&P500 indices are hovering three-tenths of a percent above yesterday’s close, while European equities have erased larger losses and remain mixed. Commodities have faired poorly this morning with WTI crude down 1.45% at just above $71 per barrel while the dollar strengthened against major crosses.
[B]Mortgage Applications[/B] this morning rose 7.5% in the week ended August 21, capping an increase for the second week as the refinancing index climbed 12.7% while purchases rose 1.0% as rates for loans saw a small increase from the previous week. Also in the housing sector, [B]New Home Sales[/B] released at 10:00 EST came in with a 9.6% gain to 433K for July, well ahead of expectations for a 1.6% rise to 390K from 384K. Also, the June figure was revised higher to 395K. The annual rate marks the highest seen in the measure since in eleven months and follows similarly strong performance in existing home sales. Dwelling deeper into the release, sales climbed in three of the four regions, with the South posting the largest gain while the Midwest lagged.
Also released, [B]Durable Goods[/B] for July came in at a 4.9% gain, the highest monthly change in two years. The jump came in well ahead of expectations for a 3.0% gain, while the core index, which excludes transportation, saw a smaller than expected gain of just 0.8%. Specifically, shipments rose two percent in the measure while inventories continued to decline by 0.8%, a smaller pace than in recent months. Shipment gains included a 7.4% rise in computer electronics shipments, driven by a 43% rise in the highly volatile semiconductor industry, as well as a 6.3% increase in primarily metals and a 1.4% rise in transportation. Aircraft also saw considerable volatility as new orders of nondefense aircraft rose 107.2%. Sectors posting the highest gains in new orders included an 18.4% gain in transportation as well as a 14.8% rise in defense and a 9.5% gain in capital goods.