A key report from the services sector was issued earlier today, in which the Institute for Supply Management reported that nonmanufacturing activity had increased in August, but at a lesser rate than in July. The improvement also was at a slightly more subdued pace than had been expected in the latest month.
The U.S. economy received some rare good news to start the new month in the form of a report from the Institute for Supply Management, which indicated that manufacturing activity had increased further in August, rising to a modestly comforting 56.3 in August from 55.5 in July. On the whole, the news was good and followed other upbeat signs emanating from China and Australia to start the new month. The response on Wall Street was favorable, with the market rising further after the issuance of the data.
The feared other shoe has dropped on the housing front, with the government's report detailing that sales of new homes plunged anew in July, falling to their lowest reading since such data have been recorded. In all, the report showed that such sales, which had been expected to nudge upward last month, had tumbled to an annual rate of just 276,000 units.
The bad news keeps coming from Wall Street these days. In fact, the news is getting progressively worse along most fronts, especially in the housing area, where the National Association of Realtors reported that sales of existing homes plunged by 27.2% last month, to an annualized rate of just 3.83 million units. Meantime, the stock market, after a brief further plunge to a mid-morning loss of some 180 points in the Dow Jones Industrial Average, following the housing report's release, has stabilized. It now shows a loss of some 100 points.
Support for higher quality stocks improved in the second quarter. This contrasts with the March period when the market favored small-cap and low-priced issues, and the four value strategies regularly tracked here outperformed the Value Line Group 1s. However, the market's decline in the June quarter pulled all strategies into the red, with those that preformed best in the first quarter losing the most.
The stock market hit the proverbial wall in the second quarter, following a 12-month run that had yielded one of the great bull markets in history. Not only did the averages slide broadly, but individual groups and stocks fell in almost lock step. Chilling news out of Greece and the ill winds blowing from other nations on the Continent were the opening salvos. Those upheavals were soon followed by angst about a falling euro, fears about fading growth in parts of Asia, and concerns about a series of dour economic reports on this side of the Atlantic (most notably in housing and employment). With all of this bad news, the case for stocks would not seem to be all that strong. Historically, though, market comebacks have often started in times of despair. Thus, the recent setbacks could be setting the stage for a new push higher. The economic and profit pieces may need to fall into place for that to happen, however.
Housing continues to disappoint, even when the news is technically better. This morning's report on homebuilding was a case in point. At 8:30 AM (EDT), the U.S. Census Bureau reported that housing starts increased in July by a somewhat greater-than-expected 1.7% to an annualized rate of 546,000 units. Originally, June's housing starts had been measured at 549,000 units. Thus, July's total was actually less than the initial June tally, but better than the downwardly revised 537,000 units for that month. In truth, these survey results--even the more upbeat projections--are all downbeat. Housing is in the doldrums and there is no quick or easy fix for what ails this moribund sector.
Major media outlets have made a big fuss over the poor loan repayment rates at for-profit colleges, like Capella Education (CPLA), Washington Post’s (WPO) Kaplan schools, and Corinthian Colleges (COCO). While the loan repayment rates are, indeed, poor at many of these institutions, averaging just 36% by some measures, that is not ultimately worse than the average rate for public universities (54%) and private nonprofits (56%). The real problem here is not the for-profit schools at which loans aren’t being repaid—the real problem is that too many students, overall, aren’t paying their school loans.
This week we are updating our forecast for The Value Line Industrial Composite (last published in Selection & Opinion on November 6, 2009). The Industrial Composite represents the pooled results of 886 major industrial companies and provides a yardstick for evaluating the historical performance and future prospects of the diverse industrial businesses reviewed by Value Line. All of the companies included in the Composite must possess operating histories of at least eight years.
The economy, which has been recently forced to absorb one piece of disquieting news after another, received a mild reprieve this morning when the Commerce Department reported that sales at U.S. retailers rose by 0.4% last month. However, even that apparent good news was not uniformly upbeat, as sales came in a tad below expectations.
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Nonmanufacturing Stumbles Anew - September 3, 2010
A key report from the services sector was issued earlier today, in which the Institute for Supply Management reported that nonmanufacturing activity had increased in August, but at a lesser rate than in July. The improvement also was at a slightly more subdued pace than had been expected in the latest month.
Manufacturing Eases In August, 2010
The U.S. economy received some rare good news to start the new month in the form of a report from the Institute for Supply Management, which indicated that manufacturing activity had increased further in August, rising to a modestly comforting 56.3 in August from 55.5 in July. On the whole, the news was good and followed other upbeat signs emanating from China and Australia to start the new month. The response on Wall Street was favorable, with the market rising further after the issuance of the data.
New Home Sales Plunge - August 25, 2010
The feared other shoe has dropped on the housing front, with the government's report detailing that sales of new homes plunged anew in July, falling to their lowest reading since such data have been recorded. In all, the report showed that such sales, which had been expected to nudge upward last month, had tumbled to an annual rate of just 276,000 units.
Sales of Existing Homes Plunge in July, 2010
The bad news keeps coming from Wall Street these days. In fact, the news is getting progressively worse along most fronts, especially in the housing area, where the National Association of Realtors reported that sales of existing homes plunged by 27.2% last month, to an annualized rate of just 3.83 million units. Meantime, the stock market, after a brief further plunge to a mid-morning loss of some 180 points in the Dow Jones Industrial Average, following the housing report's release, has stabilized. It now shows a loss of some 100 points.
Stock Market Strategies - First Half, 2010
Support for higher quality stocks improved in the second quarter. This contrasts with the March period when the market favored small-cap and low-priced issues, and the four value strategies regularly tracked here outperformed the Value Line Group 1s. However, the market's decline in the June quarter pulled all strategies into the red, with those that preformed best in the first quarter losing the most.
The Stock Market Review: Second Quarter, 2010
The stock market hit the proverbial wall in the second quarter, following a 12-month run that had yielded one of the great bull markets in history. Not only did the averages slide broadly, but individual groups and stocks fell in almost lock step. Chilling news out of Greece and the ill winds blowing from other nations on the Continent were the opening salvos. Those upheavals were soon followed by angst about a falling euro, fears about fading growth in parts of Asia, and concerns about a series of dour economic reports on this side of the Atlantic (most notably in housing and employment). With all of this bad news, the case for stocks would not seem to be all that strong. Historically, though, market comebacks have often started in times of despair. Thus, the recent setbacks could be setting the stage for a new push higher. The economic and profit pieces may need to fall into place for that to happen, however.
Housing Still In The Doldrums - August 17, 2010
Housing continues to disappoint, even when the news is technically better. This morning's report on homebuilding was a case in point. At 8:30 AM (EDT), the U.S. Census Bureau reported that housing starts increased in July by a somewhat greater-than-expected 1.7% to an annualized rate of 546,000 units. Originally, June's housing starts had been measured at 549,000 units. Thus, July's total was actually less than the initial June tally, but better than the downwardly revised 537,000 units for that month. In truth, these survey results--even the more upbeat projections--are all downbeat. Housing is in the doldrums and there is no quick or easy fix for what ails this moribund sector.
Repayment Rates at ALL Colleges are a Problem
Major media outlets have made a big fuss over the poor loan repayment rates at for-profit colleges, like Capella Education (CPLA), Washington Post’s (WPO) Kaplan schools, and Corinthian Colleges (COCO). While the loan repayment rates are, indeed, poor at many of these institutions, averaging just 36% by some measures, that is not ultimately worse than the average rate for public universities (54%) and private nonprofits (56%). The real problem here is not the for-profit schools at which loans aren’t being repaid—the real problem is that too many students, overall, aren’t paying their school loans.
The Value Line Industrial Composite - August 13, 2010
This week we are updating our forecast for The Value Line Industrial Composite (last published in Selection & Opinion on November 6, 2009). The Industrial Composite represents the pooled results of 886 major industrial companies and provides a yardstick for evaluating the historical performance and future prospects of the diverse industrial businesses reviewed by Value Line. All of the companies included in the Composite must possess operating histories of at least eight years.
A Modest Gain At The Retail Counter - August 13, 2010
The economy, which has been recently forced to absorb one piece of disquieting news after another, received a mild reprieve this morning when the Commerce Department reported that sales at U.S. retailers rose by 0.4% last month. However, even that apparent good news was not uniformly upbeat, as sales came in a tad below expectations.