Saturday, 25 September 2010

Economic data help drive markets up

Friday's economic data were relatively positive.

Bloomberg reports the US economic reports.

Orders for U.S. capital equipment rebounded in August, signaling business investment is holding up better than some economists projected.

Bookings for goods like computers and communications gear climbed 4.1 percent after a 5.3 percent decline in July that was smaller than previously estimated, according to figures from the Commerce Department issued today in Washington...

Total orders for durable goods dropped 1.3 percent, depressed by a 10 percent decrease in transportation gear like airplanes and automobiles that is often volatile...

Bookings excluding transportation equipment rose 2 percent, twice as much as the median forecast of economists surveyed...

Sales of new homes were unchanged at a 288,000 annual rate last month, matching July as the second-lowest in data going back to 1963, another report from the Commerce Department showed...

Germany also had some positive news to report.

German business confidence unexpectedly rose to the highest level in more than three years in September, suggesting companies can weather weaker demand from abroad as the global economic recovery slows.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 106.8 from 106.7 in August. That’s the highest since June 2007. Economists had expected a drop to 106.4, according to the median of 36 forecasts in Bloomberg News survey.

While the economic data were not, on the whole, unambiguously bullish, they were enough to drive strong gains for stocks on Friday.

Stocks surged, sending benchmark U.S. indexes to the highest levels since May, while Treasuries retreated and the Dollar Index slid to an almost eight-month low as demand for American capital equipment rebounded and German business confidence improved. Silver reached a 30-year high.

The Standard & Poor’s 500 Index climbed 2.1 percent to 1,148.67 at 4 p.m. in New York, its biggest gain in three weeks. The MSCI Emerging Markets Index rallied to the highest level since July 2008. Ten-year Treasury yields rose 5 basis points to 2.61 percent. The Dollar Index, a measure against six major peers, lost 0.9 percent to 79.279 as the Swiss franc touched a record versus the U.S. currency.

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