Midday Market Update: Wall Street Wavers Despite Positives

September 21st at 10:00am by Tom Lydon

Midday UpdateThe marketsĀ  and exchange traded funds (ETFs) were sent lower this morning, then clawed their way back to even even though a private sector group’s report that said economic activity rose for the fifth consecutive month in August. It was slightly short of what economist expected.

The Conference Board’s index of leading economic indicators rose 0.6% in August, short of the 0.7% economists had forecast, reports Sara Lepro for the Associated Press. The index is used to project economic activity in the next three to six months.

Oil prices are sinking this morning for the third straight day. The Federal Reserve is meeting to discuss monetary policy in the United States, which has been contributing to higher oil prices for months, reports Dirk Lammers for the Associated Press.

Energy consumption has been down in North America and Europe, but China has been picking up the slack for most of the summer. In August, however, Chinese demand dipped 5.4% from a month earlier. A weakening dollar has been seen as a big factor in oil prices, because oil is priced in dollars, making it cheaper for overseas buyers.

  • United States Oil (NYSEArca: USO): down 3.2% this morning

Computer maker Dell (Nasdaq: DELL) announced this morning that it was going to acquire information technology provider Perot Systems (NYSE: PER) for $3.9 billion, report David Jolly and Ashlee Vance for The New York Times. The combination of the two companies could lead to about $8 billion in services revenue each year. Such deals tend to have higher margins than PCs and computer servers.

International investors seem to be betting the U.S. inflation won’t be a factor, despite the dollar weakening to its lowest level in a year. Those investors bought 43.1% of the $1.41 trillion in notes issued by the Treasury this year (compared with 27.1% of $527 billion issued at this point last year, report Cordell Eddings and Lukanyo Mnyanda for Bloomberg.

The United States will issue $112 billion of 2-, 5- and 7-year notes, a record for this combination of maturities. Foreign investors have little choice but to buy Treasuries – the U.S. dollar accounts for 65% of world currency reserves.

  • Vanguard Short-Term Bond (NYSEArca: BSV): up 1.1% year-to-date

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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