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Wednesday, March 25, 2009

Market Good News Upstages Bernanke, Geithner, and Obama

Wednesday was all about "surprising" good news. Most thought that the spotlight would be on rehashing congressional testimony by Fed Chair Ben Bernanke and Treasury Secretary Timothy Geithner -- or on digesting the President's prime-time news conference the night before.

Instead durable goods orders in February shocked economists (and the markets) by showing sharply better numbers than anyone had expected. The consensus estimate from the experts called for a 2 percent decrease. The strong 3.4 jump surprised even the most optimistic prognostications that had only forecast a paltry 1.0% rise.

Several industry segments reported significant gains. Machinery orders shot up 13.5%. Orders for computers spiked up 10.1%, with defense aircraft and parts surging by 32.4%. The closely watched special category of nondefense capital goods orders pushed higher by 7.4%.

The readings were no doubt a pleasant shock to many. There is clearly more resilience in the manufacturing sector than most believed and this report confirmed that more indicators are starting to fall in the improved or no longer falling categories.

Then thanks to the Fed's aggressive work to free up mortgage lending, new home sales, like existing home sales earlier in the week, also came in higher than expected. With good news on a roll, the mortgage application data from the Mortgage Bankers Association was also reported to register striking improvement.

By the end of the day, treasury testimony and presidential press answers were forgotten. The ongoing rally in the stock market took center stage, advancing strongly late in the day to post its best monthly gain since 1991.

1 comment:

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