IMS Reports Service Sector Expanding Faster Than Expected
Stocks were trading higher on Tuesday morning as the Dow Jones Industrial reached it’s all time high within the first hour of trading. The Dow reached 14,200 and broke it’s prior close record of 14,164.53 on October 9, 2007. It also broke its intraday high record of 14,198.10 which occurred on October 11, 2007. The Dow was the first of the major indexes to bounce back after the financial crisis low four years ago. Some are wondering if this is a sign of a brighter outlook. Jim Paulsen, chief market strategist at Wells Capital Management (NYSE:WFC) in Minneapolis, said “With the Dow getting to all-time highs, is this signaling the end of the lost decade? Maybe not. It didn’t last time. But you wonder in some sense if that is the significance to this.”
CoreLogic announced that their U.S. home prices index was up 0.7% in January. The index was up 9.7% over last year which was the largest year-over-year jump since nearly seven years. Every state had an increase in home prices with the exception of Delaware and Illinois. There was also a jump in December of 8.3% over the previous year which also happened to be the biggest gain since April 2006. The rise in demand is further evidence of a housing market recovery because this a time when fewer homes are available and sales are usually slow during the winter months. Prices of previously owned homes continue to rise as there are fewer homes available. The National Association of Realtors said that previously owned home sales were also up in January after peaking at their highest level in five years for 2012. Mark Fleming, chief economist at CoreLogic, said “With these gains, the housing market is poised to enter the spring selling season on a sound footing.”
The hotel chain Marriott (NYSE:MAR) announced this morning that they have teamed up with Ikea’s real estate team to start a European hotel chain. This will be a contemporary budget hotel aimed at younger travelers. Marriott’s European head Amy McPherson said “We see a huge opportunity to expand our market share in Europe with Moxy Hotels.” The first of the chain is expected to be built in Milan early in 2014. They are planning on opening up about 150 hotels in Europe over the next 10 years from Britain to Germany, the Netherlands and Sweden. The décor for the rooms are supposed to have flat screen TVs, USB ports next to wall sockets and wall art the accommodates the charm of the local city. Arne Sorenson, Marriott Chief Executive, said that the rooms are designed to appeal to people “with a younger sensibility, for whom contemporary style is paramount.”
The Institute for Supply Management (IMS) reported that the U.S. service sector expanded at it’s fastest pace in a year during the month of February. The report showed that an increase in new orders and higher demand for exports drove the index higher. The reading came in at 56 which was up from the 55.2 reading in January. Any reading above 50 indicates expansion in the sector. There was also a rise in the new orders index from 54.4 to 58.2 as orders for exports hit their highest level since May 2007.
That’s all for the day
All the best,
Jack Aubrey, Oakshire Financial