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Stock futures decline

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Stock futures are showing weakness this morning with S&P futures down 43, NASDAQ futures lower by 43 and Dow futures are off 38 points. Bond YIELDS are lower this morning as we are seeing some buying in treasuries. Yesterday, the 5-year YIELD rallied right up to our long-term downward trend at 5%, but was unable to get through this trend. I don't think that's what is necessarily causing stocks to look weak this morning, but it does tell us shorter-term (compared to the 10-year and 30-year) that money isn't as eager to leave the shorter end of the bond market just yet. This then tells us that we're going to see some days of weakness for stocks as it and the economy try to digest the Feds rate cuts and monitors the economy for signs of strength.

Prices still tame

Inflation remained relatively tame as this morning's consumer price index rose just 0.3%, which was less than economists' expectations for a rise of 0.4%. The core rate, which excludes the volatile food and energy components, gained 0.2% and that was right in line with expectations.

Housing starts increased

April housing starts rose 1.5% to a 1.609 million rate, which was slightly higher than the 1.6 million rate many analysts had expected. Building permits fell 2.5% to a 1.587 million rate.

Jeff Bailey
Senior Market Technician

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