Thursday, May 19, 2011

Despite Poor Housing Data, Philly Fed Big Miss, Stocks Rock On

Following yesterday's exercise in exposing how Wall Street makes money at the expense of almost everyone else, confirmation today as stocks gained despite continued horrible data from the housing sector and a huge miss in the Philadelphia Fed's latest report on economic conditions in the region.

According to the NAR, existing home sales for the month of April dipped 0.8% nationally to a seasonally adjusted annual rate of 5.05 million.

Chief economist, Lawrence Yun said:
“Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger...”
Naturally, Mr. Yun, an economist, hasn't set foot outside his office for some time and hasn't taken into account the facts that banks aren't lending, jobs are scarce and those who do have regular jobs haven't received a raise in a while, all along dealing with higher energy and food prices.

Median price for a single-family home fell 5.4% year-over-year, to $163,200. Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, and the NAR feels this is amount is a 9-month supply. Their figures are probably not inclusive of the two to four million homes in the so-called "shadow inventory" which includes houses in foreclosure, off the market and in the hands of the banks (REO) and other distressed properties.

That, my friends, was the good news.

The report from the Philadelphia Fed was a little more alarming, where its business activity index slumped to 3.9 from 18.5 in April. Ah, yes, that recovering economy just continues to click along in places like the Northeast business section of the country.

Stocks actually lost ground for a few moments after these two sets of data reached Wall Street at 10:00 am EDT, but then the computers running the trading floor were reminded that tomorrow is stock option expiration and their human masters would be in need of more money for hookers and cocaine, so back up they went, on volume so thin Charlie Sheen was brought in to cut it.

That was, except for the darling IPO of the day, LinkedIn (LNKD), the business/social website that was priced at $45/share, but opened at $85 and traded as high as 122 before setting for the day at 94.25. That price places the company's market cap at around $10 billion, which is more than 65% of the companies listed on the S&P 500. The trading frenzy over what amounts to a web-based rolodex brought back memories of the 1999 tech bobble. Some traders actually shed tears of nostalgia.

Dow 12,605.32, +45.14 (0.36%)
NASDAQ 2,823.31, +8.31 (0.30%)
S&P 500 1,343.60, +2.92 (0.22%)
NYSE Composite 8,427.95, +20.47 (0.24%)

Advancing issues held sway over decliners, 3603-2911. On the NASDAQ, 81 new highs and 38 new lows, while the NYSE showed 179 new highs and a mere 17 new lows. Volume was slight, though the A/D line hints that there was a smattering of caution, likely concerning the forward-looking trends set by the Philly Fed and housing data, to say nothing of the impending end of QE2, which accepted 1.9 billion in outright coupon purchases today. Ted Fed has released the schedule through June 9. Some time after that, the operation is supposed to end, though few doubt that the easy money will come to a complete halt.

NASDAQ Volume 1,739,600,875
NYSE Volume 3,625,738,000

The price of oil eased, down $1.66, to $98.44 per barrel of WTI. Gold traded down $2.30, to $1494.60. Silver was off seven cents, at $34.95 per troy ounce.

With options expiring tomorrow and the Fed dealing another $5-6 billion in POMO, unless nuclear war breaks out somewhere - and even if it does - stocks should show more gains, at least in the morning.

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