Stocks fell over uncertainty regarding a slowdown in emerging markets, falling energy and the timing of a US interest rate hike. The Dow closed the day off 312 to 16,001 on heavy volume. Energy and biotech stocks were hit while defensive sectors like utilities were winners. Some are thinking we could retest the lows seen on August 24th meaning the Dow could fall another 4% from current levels.
US economic data continues to be good. The Commerce Department reported that personal incomes were up 0.3% in August which was just below estimates. July’s number however was revised up to 0.5%. Spending by consumers gained a robust 0.4% in August beating expectations. Core inflation was up a tenth of a point and is now higher than last year by 1.3%. These data points seem to indicate that low gas prices are starting to benefit consumers. The Dallas Fed’s production gauge went from contraction to expansion mode in September with a reading of plus 0.9%.
In housing news, the NAR Pending Home Sales index fell in August by 1.4%. The expectations had called for a slight gain but the index is still up 6.1% from a year ago. Analyst attributed the drop to tight inventory and surging prices. NAR is predicting a 7% rise in sales for 2015 to 5.28 million units. This is still 25% below the peak reached in 2005.
Oil continues to pull back as WTI crude fell 2.7% to trade at $44.44 a barrel. This is near the low it hit back on August 17th and the current move down could be a retest of that low. There was a major acquisition in the energy space as Energy Transfer Partners today agreed to buy Williams Co. in a $37.7 billion deal. Nice try fellas but the news failed to boost the shares of either company.