4 Reports to Pay Attention to Amid Earnings

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The “washing machine” market is back, folks. Practically every day the market goes up, it is followed by a down day — and vice versa. This mostly played out this week, as markets bounced back on Monday after Friday’s routing, only to dip again on Tuesday and then climb higher on Wednesday, Thursday and even Friday.

Weeklys Can Offer a Better Way to Play the NewsWhy does this happen? We tend to see selling pressure on Friday. Last week, nice weather, coupled with China lifting short-selling restrictions, had traders selling earlier so that they could cut out and enjoy the weekend. And then Mondays and Tuesdays tend to be up days.

Right now, though, the market is being driven mostly by first-quarter earnings releases. Many big-name companies like Yahoo! Inc. (NASDAQ:YHOO), Facebook Inc (NASDAQ:FB) and McDonald’s Corporation (NYSE:MCD) announced results last week, and their reports impacted the overall direction of the market.

So, the bottom line is that earnings are in focus. It’s going to be an interesting earnings season, as many analysts have been cautious due to the strong U.S. dollar.

Expectations are lower, and there is the possibility of a lot of surprises. Those that have good earnings results will do just fine, but those that miss estimates will take it on the chin.

Regardless of earnings, almost every day a major government agency or private organization releases new information covering the status of some pocket of the economy.

Let’s work together to help you sift through the barrage of economic data out there and determine what this will mean for your stocks.

Existing Home Sales

House For Sale SignWhat It Measures: The report is a good indicator of activity in the housing sector. Aside from total sales, two other indicators are worth watching in this report: the inventory of homes for sale and the median price.

The Breakdown: Sales of existing homes surged 6.1% in March to a seasonally adjusted annual rate of 5.19 million, the biggest increase since December 2010 and the fastest growth in 18 months. This was nicely higher than economists’ expectations for a 5.03 million pace. Housing inventory grew 5.3% to two million last month, and it would take 4.6 months to sell all of the homes currently on the market.

The Bottom Line: We are now in the heart of home-buying season. So, the increase in existing home sales last month was a positive sign. And now, some economists are predicting that this will be the best year for existing home sales since the economic recovery got underway.

Initial Claims for Unemployment

jobs reportWhat It Measures: It is an indicator of the direction of the job market. Increases in jobless claims show slowing job growth; decreases in claims signal accelerating job growth. On a week-to-week basis, jobless claims are volatile, so one of the best ways to track this measure is to look at the four-week moving average. It usually takes a jump or decline of at least 30,000 claims to signal a meaningful change in job growth.

The Breakdown: For the week ending April 18, initial claims for unemployment increased to 295,000, which was well above expectations for 287,000. The four-week moving average also ticked up last week, rising to 284,500.

The Bottom Line: While this is the second week in a row that unemployment claims have climbed higher, claims still remain below 300,000 threshold, which is a good sign for the labor market.

New Home Sales

House For Sale SignWhat It Measures: This report, released by the Commerce Department, shows how many new privately owned single-family houses were sold and for sale for in the past month. The report also calculates median home price, which is an indicator of inflation in the housing sector. Personally, I prefer the existing homes sales report because its data pool is four times larger, but this is still an important gauge of the housing market’s health.

The Breakdown: Last month, sales of single-family homes slipped 11.4% to an annual rate of 481,000 units. That’s the largest drop since July 2013, and snaps three-straight months of gains. Economists were looking for new home sales to fall to a 513,000 pace in March. February’s sales pace was increased from 539,000 to 543,000 units, which was the highest level in seven years.

The Bottom Line: Obviously, this was a disappointment after the strong sales growth the past few months. The biggest decline came from the Northeast, where new home sales fell 33.3%. Winter weather apparently may have taken its toll last month.

Durable Goods Orders

smokestack industrial manufacture plant 185

What It Measures: Orders are a leading indicator of manufacturing activity. So, every month the Census Bureau and the Department of Commerce measure the dollar volume of orders, shipments and unfilled orders of durable goods. Durable goods are those that last at least three years. This report is different from the Factory Orders report, which covers both durable and non-durable goods.

The Breakdown: In March, durable goods orders increased 4%, which was well above economists’ expectations for a 0.6% gain. Core orders, which excludes aircraft and military goods, dipped 0.5%, while shipments of core capital goods fell 0.4% last month. February’s durable goods orders were revised lower to a 2.2% decline.

The Bottom Line: This was the biggest gain in durable goods orders in the past eight months. However, core orders have fallen for seven-straight months, which shows the manufacturing sector is still struggling.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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