Posted on August - 25 - 2011
Durable goods orders rose 4% in July
New York – Orders for big ticket items that last three-years or more, like automobiles or airplanes, rose 4% in July, the U.S. Department of Commerce announced. While core durable goods orders, less transportation, rose 0.7%.
The news helped boost stocks and cause an expected sell off in gold, though auto stocks didn’t fair well in the news despite the optimistic view that buyers were in the market in July purchasing transportation.
Toyoto Motor Co. fell $1.64, or 2.25%, to trade at $71.24. General Motors gave up 10 cents, or 0.45%, at $21.96 and Ford Motor Co. matched GM, losing 10 cents, or 0.92%, to trade at $10.22.
Boeing Co. gained 11 cents, or 0.18%, at $60.88.
Core durable goods orders, which is less transportation, gained 0.7% in July, marking the third consecutive montly gain. Primary metals soared, rising 10.3% in orders, though the spike may be attributed to higher copper prices.
August copper futures were trading up a penny at $4.00 per pound.
The Department of Commerce reported that total durable goods orders rose to a seasonally adjusted $201.5 billion in July, which was 35% above recession levels during the April low in 2009, though it was still 18% below December 2007 levels when the recession began.
Demand for autos rose 11.5 %, its biggest increase in five years. While orders for 100 fuel-efficient airplanes from American Airlines through Boeing helped boost July airplane orders.
Economists are eyeing factory orders as a sign of economic weakness and with a spike in gasoline prices, consumers were spending less. That has economic pundits worried as well as the Fed.
Notes from the August 9th FOMC meeting show the Fed is expecting slower growth in the coming months with limited options to stimulate economic recovery. Still, investors are awaiting Ben Bernanke’s speech Friday when the Federal Reserve Bank conducts its annual meeting in Jackson Hole, WY.
Gold dropped 4% this morning, a signal that investors were returning to the equity market, but if Bernanke continues to be tight-lipped as he was following the S&P U.S. sovereign downgrade, little direction will be given as to the Fed’s plans of economic stimulus.
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