U.S. manufacturing powers ahead, but housing gets hazy

The manufacturing sector looked particularly strong this week, while housing data was mixed.

Robert Johnson, CFA 30 September, 2014 | 6:12AM

I don't quite know how to characterize the markets this week other than to say they gyrated. There was no place to hide except maybe U.S. government bonds, which were little changed. U.S., European and emerging equity markets were all down about 2%, while broad commodity indexes were down a little less than 1%.

More important, the gyrations this week were a new phenomenon with the Dow swinging 100 points or more per day with no ability to develop a clear trend in either direction. Also unique is that the news flow was very muted and certainly not the cause of the wild moves. This type of thing can happen--especially given jitters over relatively high valuations, the longevity of this bull market and the market's generally weaker performance in many August and September periods. The temptation to take at least a few profits appears to have become irresistible to some.

U.S. economic news was generally good. The manufacturing sector in the United States looks particularly strong, with continued strength in purchasing manager surveys and strong durable goods orders (when adjusting for those pesky transportation orders). Housing data was really mixed with existing-home sales falling back just a touch but new home sales hitting a new recovery high.

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Robert Johnson, CFA

Robert Johnson, CFA  Robert Johnson, CFA, is director of economic analysis for Morningstar.