Durable goods report subdues US industrial sector
The SPDR Industrial Select Sector ETF (XLI) dipped 1.70% on Wednesday on a weak durable goods order report. On March 25, the Bureau of the Census released its durable goods orders report for February 2015. The manufacturing sector in the US continues to show weakness as durable goods orders declined by 1.4% in February over the previous month.
An increase in durable goods orders is desirable for the US economy (SPY) (IVV), as it translates to increased manufacturing and economic activity, leading to growth. Investors and players in the industrial sector are keenly interested in these numbers.
The reading came in weak against median expectations of a 0.7% gain and against the 2% gain reported in January. On a year-over-year basis, new orders for durable goods changed by 0.6% in February 2015 as compared to February 2014.
Shares of durable goods firms such as Corning (GLW), TE Connectivity (TEL), and Amphenol (APH), which are involved in the manufacture of electronics, lost about 3%, 2.5%, and 2.5%, respectively, on the durable goods reports’ weak figures.
US economy faces mixed signals of growth
The US economy is, however, getting mixed signals with respect to growth. Mortgage activity picked up for the week ending March 20, with mortgage purchase applications rising by 5% and refinancing applications surging by 12% against the previous week.
Plus, the consumer sector is doing well with the food company Kraft Foods Group (KRFT) gaining about 30% over the past month, as well as retail sector players such as Urban Outfitters (URBN) gaining 18% in the same period. Also, beverage giant Monster Beverage (MNST) gained 10% during the past month. The price appreciation for Kraft Foods occurred due to its merger with Heinz Company, announced on March 25. The new company, to be called The Kraft Heinz Co., will be the fifth largest food company in the world.
With such conflicting numbers, the US economy doesn’t seem to be getting any closer to its expected rate hike. While US indicators continue to perplex investor expectations associated with a rate hike, Germany continues to grow stronger, with positive indicator reports flowing in these days. Let’s take a look.