US equities rose throughout today's trading despite poor economic data. March personal income rose 0.2% vs. expectations of 0.4% and personal spending rose 0.2% vs. expectations of 0.0%. Spending expectations had anticipated a greater drop due to higher fuel costs. Spending on services reached a multi-decade high. The savings rate remains near historical lows at 2.7% this past month and at 2.6% this year as taxes have accounted for a major jump in costs. Annual income figures only rose 2.5% at the slowest rate since the last recession.
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Pending home sales showed a 1.5% monthly gain, above the 1% expectations. Yearly pending home sales grew 5.8% vs 6.1% expectations. The Dallas regional manufacturing survey dropped to -15.6 from 7.4 the past month, which was well below the 5.0 estimate. The downturn was led by sharp drops in production, new orders, and order growth.However , the employment subindex did show a monthly gain. We are not too concerned about this miss as the national ISM manufacturing index released on Wednesday and the Chicago regional survey set to be released tomorrow are more reflective of economic conditions.
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European equities rose with the prospect of a finalized Italian government. The Italian FTSE MIB was the top performing major European index for the day, up 2.2%.
In individual stock news, JC Penney (JCP) got a boost on chatter of 5%-10% passive stakes from two major hedge funds. Deutsche Bank (DB) announced a $3.6 billion secondary equity offering to raise capital ratios to the new Basel III mandated level of 9.5%.
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Tomorrow's Financial Outlook
Tomorrow, the pace of rampant economic data releases will continue. Set to be released are the Chicago regional manufacturing PMI survey, the consumer confidence survey from the Conference Board, and the Case-Shiller home price indexes. Notably, the Chicago PMI is expected to expand to 53 from 52.4 in March, consumer confidence is expected to move to 60 from 59.7 in March, and home prices are expected to show an annualized gain of 8.9%.
Globally, Japan will release housing starts, the eurozone will release employment figures, and Canada will release GDP. In the eurozone, unemployment is expected to increase to 12.1% in March from 12.0% the month prior, while German unemployment for April is forecast to remain unchanged at 6.9%. Canadian GDP is expected to grow 1.3% year-over-year for February, up from 1.0% the month prior.
Earnings reports will be a bit slower tomorrow, but they remain robust for the week. Notable reports tomorrow include Archer Daniels Midland (ADM), Valero Energy (VLO), Legg Mason (LM), Office Depot (ODP), Cummins (CMI), Sirius (SIRI), and Avon Products (AVP).
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