Markets continued to read on the U.S. jobs progress and conflict in Ukraine

The U.S. job market revived slightly last week with a fall in initial jobless claims and slightly better Job Openings and Labor Turnover Survey (or JOLTS) data. JOLTS data is published by the Labor Department, and it provides a measure on the number of job openings in the U.S.

Hiring in the private and government sector remained muted, unlike the healthcare and recreational sectors. A total of 3.9 million jobs were posted last week for January 2014—little changed from December 2013. Plus, initial jobless claims fell by 9,000 last week to 315,000—well below consensus for 330,000. The four-week average claims also slipped by 6,250 to 330,500, showing that layoffs have been reduced.

Why international tensions offset domestic economic growth

Consumer spending

Major retail sales indexes posted a rebound in consumer spending, except the Redbook sales index, which slipped to 2.5%—from 2.9% last year. The index posted its lowest reading since May last year. In contrast, the International Council of Shopping Centers (or ICSC) Index and the retail sales index prepared by the U.S. Bureau of the Census posted a comeback in consumer spending, with higher-than-expected same-store sales. Comparable same-store sales are published weekly and monthly. They show consumers’ buying patterns. The ICSC and the Census bureau retail sales indexes are better measures of consumer spending than the Redbook Index due to their inclusion of a higher sample size. An increase in the retail sales index will help boost the revenues and valuations of companies in the sector, including Wal-Mart Stores, Inc. (WMT), Costco Wholesale Corporation (COST), Best Buy Co., Inc. (BBY), and Walgreens (WAG).

A fall in housing demand

The Mortgage Bankers Association’s (or MBA) applications index, which is a seasonally adjusted index of mortgage application activity, indicated that both refinancing and home purchase demand declined 2% in the week ending March 14, 2014, after rising 9.4% the week before. The purchase index, including mortgage applications for the purchase of a single-family home, declined 1%. The refinance index was down 3% last week. The index not only provides an outlook on housing demand but also shows economic growth. Increases in the index imply that the economy is growing and people are in good financial positions to buy homes, and the opposite holds true for a decline. There are a range of industries affected by changes in MBA applications, including REITS like Annaly (NLY) and American Capital (AGNC) and homebuilders like Lennar (LEN) and Toll Brothers (TOL).

After several weeks of muted job market and consumer spending due to poor weather, last week indicated an improvement in domestic economy growth. However, tension in Ukraine and Russia and disappointing economic data from China sharply pulled down the U.S. equity market.

Please read on to the next part of this series to learn how the equity and bond markets have reacted on global economic data.

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