What’s the Story?

by CC April 12, 2012 9:04 am • Commentary

Reuters

New claims for unemployment benefits rose last week to their highest level since January, a development that could raise fears the labor market recovery was stalling after job creation slowed in March.

Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said on Thursday. The prior week’s figure was revised up to 367,000 from the previously reported 357,000.

Economists polled by Reuters had forecast claims falling to 355,000 last week.

The four-week moving average for new claims, considered a better measure of labor market trends, rose 4,250 to 368,500.

The claims data comes in the wake of Friday’s disappointing employment report for March, which showed the economy created 120,000 new jobs, the smallest amount since October.

Despite the rise in claims last week, both first-time applications for unemployment aid and the four-week average held below the 400,000 mark, implying job gains above March’s tally.

CNBC

Meanwhile, U.S. producer prices were unexpectedly flat in March as a drop in gasoline costs offset rising food prices, according to a government report on Thursday that also showed moderate underlying inflation pressures.

The Labor Department said its seasonally adjusted producer price index was unchanged last month after advancing 0.4 percent in February.

Economists polled by Reuters had expected prices at farms, factories and refineries to rise 0.3 percent.

Wholesale prices excluding volatile food and energy costs rose 0.3 percent after February’s 0.2 percent gain.

That was a touch above economists’ expectations for a 0.2 percent advance and marked the fifth successive month of increases in core PPI.

CNBC

The U.S. trade deficit narrowed unexpectedly in February as exports hit a record high, imports from China and other key suppliers declined and oil import volume fell to the lowest in 15 years.

The monthly trade gap shrank 12.4 percent to $46.0 billion, the biggest month-to-month decline since May 2009, the Commerce Department report said. Analysts surveyed before the report had expected the deficit to narrow only slightly from January’s revised estimate of $52.5 billion.

U.S. exports edged slightly higher to a record $181.2 billion, led by record exports of services and capital goods, such as civilian aircraft and industrial machines.

Bespoke

Today’s rally in US equities was certainly a welcome respite from the five-day losing streak, but the fact that the S&P 500 traded up to its 50-day moving average and then drifted lower as the day went on is certainly not the type of trading that bulls want to see.

We noted a similar situation with gold a couple of weeks back, and while that commodity is off its lows, it still has yet to fully recover.

Dshort

The S&P 500 posted broke its five-day losing streak with a Wednesday gain of 0.74%. The index hit its intraday high about 90 minutes into trading at 1,374.71, just slightly above the 50-day moving average. The drama was whether that 50-MA would provide support. Alas, the index remained above the 50-MA for only about 15 minutes. A few hours later it rallied back to the 50-MA, which this time offered impenetrable resistance, and the index closed about five points below the line. The S&P 500 is up 8.84% year to date, which is 3.55% off its interim closing high set six sessions ago.

From an intermediate perspective, the S&P 500 is 102.3% above the March 2009 closing low and 12.6% below the nominal all-time high of October 2007.