Stock market close, June 27, 2014: The Dow Jones Industrial Average today (Friday) was flat despite a rise in consumer sentiment. Next week, look for a heavy slate of economic reports, including the June unemployment report, factory orders, and the ISM manufacturing composite index.
- Stock Market Close: GPRO Soars Again, While GM, DG, and CZR Run into Trouble
- March Jobs Report: Still Stuck in Second Gear
- July Fed Beige Book Round Up
- Stock Market Today: Europe Waits as Housing Rebounds
Periodically, each Federal Reserve Bank gathers anecdotal information on current economic conditions in its geographic district.
Banks take into consideration the outlook of regional Fed bank directors, interviews with key business contacts, economists, market experts, and other sources.
This information comes out 8 times per year in a compilation report dubbed the "Beige Book" - it's essentially a summary of economic activity in the 12 Fed bank districts as prepared by a designated Federal Reserve Bank on a rotating basis.
Today (Wednesday), the Federal Reserve released its latest.
Therein, manufacturing reportedly expanded in most districts.
Consumer spending, auto sales, transportation, commercial real estate, and banking has improved.
Hiring activity modestly improved, but three districts noted businesses' reluctance to hire permanent workers. We're likely seeing the effects of Obamacare.
Notably, housing demand and construction activity increased at a moderate to strong pace in all districts.
Meanwhile, tourism and agricultural conditions seemed bogged down by bad weather.
In sum, overall economic activity has reportedly continued to increase at a modest pace since the last Beige Book, released on June 5.
Sounds good, but how about some specifics?
Here are some interesting economic tidbits I came across while perusing July's Beige Book, broken down by district:
The two-day meeting, which involves the leaders of all 27 EU nations, starts Thursday and many are hoping for signs of deeper integration and building blocks for a new foundation of EU policies.
"What is at stake is not only the economic integration, it is also the overall economic confidence in the euro area, and indeed, our commitment to the European project," said European Commission President Jose Barroso, in a speech Tuesday. "This is why we need to be bold and define the way forward."
After Cyprus became the fifth country to seek a bailout following Greece, Ireland, Portugal and Spain, investors have become more and more pessimistic as to what can be accomplished at the summit. German Chancellor Angela Merkel stiffly opposed the idea of common Eurozone bonds proposed by Italian Prime Minister Mario Monti and preferred by Spain and France as well.
At a meeting of lawmakers from her Free Democratic coalition partners in Berlin on Tuesday, Merkel made her opinion clear.
"I don't see total debt liability as long as I live," said Merkel, a day after calling the idea of euro bonds "economically wrong and counterproductive," according to people who attended the closed-door session.
As investors awaited the summit, economic reports on durable goods orders and pending home sales spurred the markets forward today.
Orders for durable goods climbed 1.1%, the first rise in three months and far ahead of economists' expectations of a 0.5% increase. Pending home sales matched a two-year high.
The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 5.9% to 101.1. The index level matched the two-year high reached in March, while the gain was the largest since October 2011.
These reports could keep the momentum going for a housing recovery, following positive home prices and new home sales reports earlier this week.
Beyond Europe and housing, here are some companies making headlines in the stock market today.
Facebook (Nasdaq: FB) stock can now receive opinions and analysis for the first time since its IPO from the 33 underwriters who handled the offering, as the "quiet period" ends today. This period is a 40-day timeframe following an IPO that prohibits the firms involved to publish recommendations.
So far there are mixed reports from many of the larger firms.
Goldman Sachs (NYSE: GS) initiated its coverage with a "Buy" rating and a $42 price target for the next twelve months, Royal Bank of Canada (NYSE: RY) offered an "Overweight" rating and a $40 price target, and Morgan Stanley (NYSE: MS) also offered an "Overweight" rating and a $38 target equal to the IPO price.
On the less positive side were Bank of America (NYSE: BAC) and Citigroup (NYSE: C), who both offered a "Neutral" weighting and price targets of $38 and $35, respectively.