A turbulent day for the markets ended with a slight gain. The markets started out strong due to the release of strong economic data on housing and durable goods. The Dow and NASDAQ closed at 7749.81 and 1528.95 respectively. The S&P was up 0.96% to close at 813.88. Oil was down as news was released that US inventories were at a 16-year high. Oil settled at $52.77. Gold was up today settling at $938 as the dollar weakened. The 10-year price was down and yields settled at 2.786%
The Commerce Department recently released data showing that demand for durable goods increased 3.4% in February. If transportation goods were not included orders were up 3.9%. Orders for capital goods increased 11% in February as well as machinery orders increasing 13.5%. Despite strong order numbers the likes of Caterpillar (CAT: 28.91, -0.49 (-1.67%)) and John Deere (DE: 34.67, -0.30 (-0.86%)) were down slightly today. These companies could not recover from the mid-day decline and closed slightly below their opening prices. The mid-day decline was heavily influenced by the weak auction of the 5-year treasury and this news overshadowed strong news about durable goods and housing.
In other news today, new home sales in February were up 4.7%. Commercial real estate service firm CB Richard Ellis Group (CBG: 4.92, +1.92 (+64.00%)) benefited from the news up 64%, homebuilder D.R. Horton (DHI: 10.06, +0.55 (+5.78%)) was also up over 5% today. Data released shows new home sales going up and prices continuing to fall. The housing market has recently received news on sales increasing, but investors need to see prices bottoming out to be reassured that housing is safe for long term investment.
As the dollar weakened today the share price of Goldcorp (GG: 34.73, +1.14 (+3.39%)) and Barrick Gold Corporation (ABX: 33.00, +0.94 (+2.93%)) increased with each company up over 2.5%. Investors sought a safe haven as the dollar has quickly lost value against other currencies. Traders sought precious metal companies as a safe play in the market today. Investors are beginning to fear inflation as the government plans to print trillions of dollars in an effort to boost the economy. You have to begin to wonder if government spending in an effort to help the economy is worth the cost of inflation. Short term government spending might look beneficial, but the long term consequences could come back and haunt us.
Check back here tomorrow for another market recap.
- Matt Shannon
Disclosure: None.
