US Home Sales & Goods orders up, markets down

In the US on Thursday Durable Goods orders were up 0.7% in April which, whilst slightly below consensus expectations of 1.0% was made up for by an upwardly revised March number from 4.3% to 5.0%. The Fed's preferred measure which excludes defense orders was up a robust 1.2%.

Turning to housing, new home sales rose a surprising 16.2% in April well above expectations of a flat number. Whilst that might seem wonderful average prices fell 10.9% and inventories declined from an 8.1 month supply to 6.5 months indicating home builders are discounting to get rid of stock. I've noted before the volatility associated with housing data. This article over at THE BIG PICTURE puts it into perspective.

If you ever entertained the notion that markets move in a rational fashion Thursday's action should put that thought to rest. Initially the markets were up - the Dow about 70 points but then the fear of no interest rate cuts seeped in knocking the Dow down more than 150 points to finish 84 points down. So investors are saying they would rather see a slowing economy for the chance of an interest rate rise than signs of a pick-up in the economy which would therefore feed into corporate profits and stock prices - go figure.