A disappointing consumer confidence number sent stocks tumbling lower but the markets are recovering. The Case-Shiller home values data came in better than expected. Commodities are mixed as the U.S. dollar continues to bounce. Overall the trend is still up as we near the end of September and money managers finish some last minute window dressing.
Asian markets mixed. The Japanese NIKKEI gained 0.9% following yesterday's decline. The Hong Kong Hang Seng saw an even bigger bounce. After hitting three-week lows yesterday the Hang Seng rallied over 2% on Tuesday. The Chinese Shanghai is still weak with a 0.33% decline ahead of the upcoming eight-day national holiday that begins October 1st.
European markets saw mild declines after yesterday's big rally. In Britain the September retail sales data came in better than expected. In German the DIW economic institute was forecasting 0.7% growth for the third quarter. For the Euro zone economic sentiment was improving. The German DAX lost 0.4%. The French CAC-40 slipped 0.28%. The English FTSE inched down 0.12%.
Today's big economic report was the Conference Board's consumer confidence index. You may recall that just last week we got the final September read on consumer sentiment produced by the S&P/University of Michigan. The consumer sentiment numbers had come in positive. Today's consumer confidence index offers a conflicting viewpoint with confidence falling from 54.5 in August o 53.1 in September. Economists had been predicting a rise to 57.0. We want to see a reading of 90, which indicates a healthy economy. The Conference Board said that consumer's current assessment of the economy had fallen from 25.4 5o 22.7 and the expectations index slipped from 73.8 to 73.3. We've all heard that consumer spending accounts for nearly 70% of the U.S. economy and falling confidence numbers might forecast a slow down in consumer spending.
While on the topic of consumer spending there was a new report out on Halloween and how much consumers expect to spend this year. Halloween has grown to be the second biggest holiday of the year behind Christmas. Unfortunately, it looks like consumers are a little spooked. A survey of 8,500 people revealed that the average consumer plans to spend 20% less this year. They're going to spend less on candy and more people were planning to make their own costumes instead of purchasing one. This certainly doesn't bode well for the retailers and it cast an ugly shadow towards the holiday shopping season.
Offering some positive news today was the S&P/Case-Shiller 20-city home price index. Economists were expecting a rise of 0.5%. The jump from June to July came in at +1.2%. This was the biggest monthly gain since October 2005 and marked the third monthly gain in a row. Prices are still down sharply from a year ago and off more than 30% from their highs but it is improvement.
Currently the S&P 500 index has rebounded from its intraday lows and is just crossing over the unchanged line into positive territory. The NASDAQ is also bouncing but is still trading in negative territory but not by much. The Dow Industrials are off less than ten points near 9780. The small cap Russell 2000 index is also back in positive territory.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
A quick review of the OptionInvestor.com play list reveals that for the most part stocks are trading sideways. I'm not seeing any significant moves. However, the oil service stocks DO and DRQ are both showing relative strength today.