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The Markets Now: S&P 500 Nears Record as Home Prices Rise, Consumer Confidence Falls

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Plus, Monsanto resolves dispute with DuPont.

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Stocks remained higher today as investors reacted positively to home prices and durable goods data despite a sharp drop in consumer confidence. The Dow (INDEXDJX:.DJI) increased 0.63% to 14,538.58. The S&P 500 (INDEXSP:.INX) climbed 0.58% to 1,560.68, and the Nasdaq (INDEXNASDAQ:.IXIC) rose 0.34% to 3,246.40. The S&P 500 is near its all-time closing record of 1,565.15.

S&P Dow Jones Indices reported today that the 10-City Composite and the 20-City Composite of its S&P/Case-Shiller Home Price Indices increased 7.3% and 8.1%, respectively, on an annual basis. All 20 cities showed year-over-year gains, with New York City posting a gain after 28 months of negative annual returns. Phoenix house prices gained the most at 23.2%. With the exception of Detroit, all cities showed acceleration in year-over-year gains. The 10-City Composite gained 0.2% month-over-month, and the 20-City Composite gained 0.1% month-over-month.

As prices increased, sales of new single-family homes cooled in February to a seasonally adjusted 411,000, a 4.6% decrease from the revised January figure of 431,000. The Census Bureau and US Department of Housing and Urban Development stated that the median price of new homes was $246,800, and the average price was $313,700. The departments also estimate that the seasonally adjusted number of new houses still for sale stands at 152,000, or 4.4 months worth of supply, given the current sales rate.

Today the Federal Reserve Bank of Richmond released its separate surveys of manufacturing activity and service sector activity. The seasonally adjusted composite index of manufacturing activity fell from 6 in February to 3 in March, indicating slower growth in the central Atlantic region. Two of the three components of the index decreased: The shipments component fell from 10 to 8, and the new orders component dropped from 0 to -4. The jobs component added one point to reach 9. Expectations improved in March, though, as the index for expected shipments increased from 28 to 31, and the index for planned capital expenditures lifted from 10 to 17. The index for expected manufacturing employment increased from 12 to 14.

The service sector indices also weakened in March. The revenues index fell 11 to 4, and the expectations index dropped from 11 to 6. Hiring strengthened, though, as the employee index went up from 3 to 6.

New durable goods orders increased by $12.4 billion, or 5.7%, month-over-month in February to $232.1 billion, according to the US Census Bureau. Led by aircraft orders, the transportation component climbed $13.3 billion, or 21.7%, to $74.4 billion. In January, new orders decreased by 3.8%. Excluding transportation orders, new orders slipped 0.5%. Excluding defense orders, new orders increased 4.5%.

Shipments of manufactured durable goods increased $2.2 billion, or 1%, in February to $229.3 billion. Unfilled orders for manufactured durable goods climbed $9.4 billion, or 0.9%, to $999.8 billion in February. Inventories of manufactured goods lifted $1.6 billion, or 0.4%, to $376.9 billion in February, the highest reading since the series was first published on a NAICS (North American Industry Classification System) basis in 1992. Non-defense new orders for capital goods rose $7.4 billion, or 10%, to $80.8 billion in February. New defense orders for capital goods spiked $3.3 billion, or 68%, to $8.1 billion in February.

The Conference Board reported that the Consumer Confidence Index dropped from 68.0 in February to 59.7 in March. The Present Situation Index fell 61.4 to 57.9, and the Expectations Index declined from 72.4 to 60.9. The Conference Board cited fears concerning economic outlook tied to the sequester as a main cause for the sharp decline. Individuals describing business conditions as "good" dropped from 17.6% to 16%, and the individuals describing business conditions as "bad" ticked up from 28.2% to 29.3%. The Conference Board surveys three thousand households across the US on current business and employment perceptions along with their six-month perceptions on business conditions, employment, and income.

The International Council of Shopping Centers, or ICSC, reported today that the ICSC-Goldman same-store sales index decreased 1.7% week-over-week for the week ending March 23. The ICSC stated average temperatures 15 degrees below last year's averages caused people to hold off on spring shopping. Year-over-year, the index has increased 1%, the lowest level of the recovery. The index measures comparable store sales at major retail chains, accounting for 10% of total retail sales.

Redbook Research reported today that the Johnson Redbook Index increased 2.6% year-over-year for the week ending March 23. Conflicting with the ICSC report, Redbook stated that consumers stocked up on spring goods. The index measures sales at chain stores, discounters, and department stores, which accounts for 10% of total retail sales.

State Street Global Markets reported today that its State Street Confidence Index fell from 94.8 in February to 88 in March. Lower demand for equities and higher demand for fixed income products dragged down the index. State Street constructs the index based on actual levels of risk in investment portfolios of institutional investors. Increased holdings of equities signals more confidence.

Today, the US Treasury auctioned $45 billion worth of 4-week Treasury bills with a rate of 0.075% and a bid-to-cover ratio of 4.10, the lowest of the quarter.

Monsanto Company (NYSE:MON) rose 3.80% to $103.18. Monsanto has settled its lawsuit with DuPont (NYSE:DFT) over the rights to technology for genetically modified seeds. Both companies will drop antitrust and patent claims. Also, rather than paying Monsanto $1 billion, DuPont will pay $1.75 billion over several years for use of Monsanto's genetic technology.

Walgreen (NYSE:WAG) increased 2.55% to $47.37. Yesterday, the drug store launched its second "Well Experience" flagship store in the Empire State Building in New York City.

Bank of America (NYSE:BAC) fell 1.13% to $12.26. The bank launched services today for financial institution clients to help them comply with the new requirements established by Dodd-Frank Remittance Regulation 1073 for cross-border payments.

JC Penney (NYSE:JCP) dropped 1.31% to $14.98. Lisa DeStefano-Orebaugh left the retail chain as its vice president of strategic marketing to become vice president of marketing and brand management at Home Depot (NYSE:HD), making her the third high-profile executive to leave the company in 10 months.

First Solar (NASDAQ:FSLR) dropped 2.96% to $27.19. JA Solar (NASDAQ:JASO) dragged down the solar energy industry after reporting its fourth-quarter loss increased because of weak global demand for solar products.
Twitter: @ChrisWitrak
No positions in stocks mentioned.
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