Stocks will likely discount this morning's soft Durable Goods
report and maintain the positive momentum of recent days in an
otherwise light-volume session ahead of the Thanksgiving holiday.
The Jobless Claims data was broadly positive this morning and we
have a number of other economic data coming out later today as
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The October Durable Goods report was broadly on the weak side,
both on the 'headline' as well as the 'core', spotlighting the
continued weak capital spending trends in the economy. The
'headline' weakness wasn't unexpected, largely a function of
fewer orders for
), but the soft reading for the 'core' (nondefense capital goods
excluding-aircrafts) maintains the weak trend in this key capital
The October numbers may have been dragged down a bit by
uncertainty from the government shutdown that likely prompted
companies to hold off on placing new orders. But capital
expenditures have been weak for quite some time and haven't
played their typical role in this recovery despite the steady
improvements in the labor markets and very strong corporate cash
levels. That's what we have been seeing consistently in quarterly
GDP reports lately. Apparently, companies see better returns on
buying back their own shares than investing in their business.
Unlike the Durable Goods report, the weekly Jobless Claims
numbers were broadly positive, with initial claims falling by 10K
to 316K. The 4-week moving average, a less volatile series, also
declined. Coming out a little later, we have the Chicago PMI and
the University of Michigan Consumer Sentiment numbers. The
Chicago PMI, which is considered a good proxy for the national
manufacturing ISM index that comes out on Monday, is expected to
pullback from October's level.
The Consumer Sentiment numbers are expected to modestly improve
from the preliminary 72 reading, though the Conference Board's
Consumer Confidence index lost ground on Tuesday. Commentary from
) and others on the Q3 earnings calls has not been very
encouraging about the holiday shopping season thus far. But we
will have a good sense of spending trends by early next week
after seeing developments over the Thanksgiving weekend.