Data surprises, crude dip bolster small caps
Small-cap stocks finished out the week with a flourish, riding a wave of surprisingly stout economic reports and a slide in crude oil prices to a solid advance Friday. The Russell 2000 (NYSE:IWM) closed up 7.95, or 1.13%, at 710.34. For the week, the small-cap benchmark rose 17.26 points, or 2.49%.
Coming into this week’s action, the economic calendar was quite tame and one would have expected earnings news and energy gyrations to dominate trading direction. While that played out early in the week, today’s session was actually influenced heavily by new home sales and durable goods – two reports that usually are quickly cast off by stock market traders for more influential input.
However, with earnings coming in on a mixed tone the market focused attention toward upside data surprises on durables and home sales, both of which topped analyst forecasts. The bullish surprise on the data front helped soothe investor worries about the consumer spending picture going forward.
As for the data itself, the durable goods report headline figure was reported up 0.8%, well above the median projection for a slide of 0.3%. It should be noted that durables figures can be volatile, the report is somewhat dated (June data) and even today’s rise was questioned in some corners as susceptible to reporting quirks. However, when the new home sales report came in at an annualized rate of 530,000 units, compared with a forecast of 500,000, it kept the economic naysayers in check. What’s more, the previous new home sales report was revised upward. Although it’s too soon to say that the housing market is bottoming, it was a welcome sign of good news just . . .
Coming into this week’s action, the economic calendar was quite tame and one would have expected earnings news and energy gyrations to dominate trading direction. While that played out early in the week, today’s session was actually influenced heavily by new home sales and durable goods – two reports that usually are quickly cast off by stock market traders for more influential input.
However, with earnings coming in on a mixed tone the market focused attention toward upside data surprises on durables and home sales, both of which topped analyst forecasts. The bullish surprise on the data front helped soothe investor worries about the consumer spending picture going forward.
As for the data itself, the durable goods report headline figure was reported up 0.8%, well above the median projection for a slide of 0.3%. It should be noted that durables figures can be volatile, the report is somewhat dated (June data) and even today’s rise was questioned in some corners as susceptible to reporting quirks. However, when the new home sales report came in at an annualized rate of 530,000 units, compared with a forecast of 500,000, it kept the economic naysayers in check. What’s more, the previous new home sales report was revised upward. Although it’s too soon to say that the housing market is bottoming, it was a welcome sign of good news just . . .
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