Tuesday, March 29, 2011
Today’s two economic reports — the Case-Shiller Index of home prices and the Conference Board’s Consumer Confidence index — may not do much to help the market get out of its wait-and-see mode.
Even by housing’s dismal standards, the tone of recent reports has been quite weak. Sales of new homes reached a 50-year low in February while the median price of a new home is now at the 2003 level. Granted, the Case-Shiller Index reflects existing single-family homes, but the situation is not much different at that end either. Also, since the report comes out with a two-month lag, it may not reflect the full extent of current housing deterioration.
Today’s consumer confidence report from the Conference Board will most likely confirm the signficant drop reported by the University of Michigan last week. High energy and food costs, not to mention global turmoil and uncertainty, have been weighing on consumer sentiments.
One thing that is different in the Conference Board’s gauge of consumer confidence is the relatively more weightage it gives to labor-market conditions. As such, a significant deterioration in today’s number may be a sign that consumers are getting less optimistic about the jobs situation.
But it may be premature to gauge the health of the labor market from transitory consumer confidence data. We are getting a slew of labor-market reports this week, with the all-important March non-farm payroll report due Friday morning. I am looking for continued improvement in the jobs picture and expect the Friday report to be in-line with or better than what we saw in February.
And it will be this jobs report on Friday that will get the market out of its wait-and-see mode. I don’t expect much from stocks between now and then.
Sheraz Mian
Director of Research
Zacks Investment Research
