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US Equities Record Fourth Consecutive Down Day


Today's financial recap and tomorrow's financial outlook.

Asian and European markets were flat overnight. The IFO Institute's reading of September economic expectations and business confidence saw a gain from the month prior, but fell short of economists' estimates. Business confidence rose to 107.7 from the prior month's 107.6. In China, the central bank forced the country's banks to raise their deposit rates and money market rates in an attempt to attract more deposits to its banking system. The Chinese government will also discuss a deposit insurance mechanism at its scheduled November meeting.

US equities opened lower for a fourth straight day of losses. Sector performance was very evenly spread out. Industrial and petroleum stocks were the best performers; telecom and financial stocks were the worst performers. In particular for the financials, outflows continued from money centers while super regional banks showed gains.

S&P/Case-Shiller home prices rose 0.62% from the prior month in July, below the 0.88% rate in June and the 0.8% estimate. Prices were up 12.39% from a year ago, higher than the 12.09% rate last month, but below the 12.4% estimate. The Conference Board's consumer confidence index fell to 79.7 in September from 81.8 the month prior. Two weeks ago, the University of Michigan consumer confidence index also showed its second straight month of sharp declines. Lastly, the Richmond regional manufacturing survey dropped sharply in September, offsetting the large gains seen last week in the Philadelphia survey.

Homebuilders KB Home (NYSE:KBH) and Lennar (NYSE:LEN) reported earnings in the pre-market. Both companies experienced larger-than-expected slowdowns in new home orders and cancellations. However, both stock prices jumped. During their conference calls, both companies noted that higher mortgage rates had slowed the acceleration of home prices and hurt the underlying demand for mortgage and new homes. But ultimately, both companies viewed the slowdowns that were attributed to higher mortgage rates as temporary.

Tomorrow's Financial Outlook

August durable and capital goods orders will be the highlights of the day tomorrow. Orders are expected to fallen by 0.2% from last month, due in large part to the lack of pickup in aircraft orders from Boeing (NYSE:BA). Orders ex-transports are estimated to have risen by 1% due to large gains in automobile sales. Capital goods orders are estimated to have risen by 2% during the month after a sharp drop by 3.3% last month.

August new home sales will be released in the late morning. Sales are estimated to have risen by 6.6% during the month to an annualized rate of 420K. Last month, sales showed the second largest one-month drop on record, falling 13.4% to an annual rate of 394K.

Lastly, the Federal Reserve will release the household change in net worth for the second quarter. In the first quarter, net worths rose by $3 trillion.

Global market-moving data is due out from Japan and Europe. Japan will release September small business confidence, and the GfK institute will release its German consumer confidence survey.

The two major earnings reports on the calendar for tomorrow are from AutoZone (NYSE:AZO) and Bed Bath & Beyond (NASDAQ:BBBY).

Twitter: @Minyanville

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