Markets Dip on Weak Economic Data, Some Gains from Supreme Court

In both the US and abroad, the markets were as the two-day European Summit begins and attentions were directed to domestic economic data and the Supreme Court’s review of the healthcare bill.

The Supreme Court upheld its ruling on the healthcare bill, which mandates that most citizens carry insurance or pay a penalty. The Court found that it was within its rights to require this, upholding the mandate as a tax, as explained in the opinion entered by Chief Justice John Roberts. However, the Supreme Court did not look favorably upon the way the new healthcare law would expand Medicai and it made some changes to that part of the law in turn.

The Supreme Court’s ruling allows drug makers and health insurers more certainty, a fact that investors did not miss. The morning saw the stock prices of such companies rise considerably, prompting several short term trading halts as momentum started to drive prices into the stratosphere on some companies.

The US GDP was reported today. It met consensus estimates at 1.9%, holding steady from the last quarter. Analysts had been estimating a range of 1.7% to 2.3%. The GDP Price Index did much better. It increased to 2.0%, topping consensus estimates of 1.7% on a range 1.7% to 1.9%.The Index also topped last quarter’s 1.7%. All in all, the second quarter showed a modest improvement in GDP, after the soft growth seen in the first quarter, but the improvement is negligible.

Natural gas inventories increased well over the consensus expectation of 50 billion cubic feet (bcf), coming in at 57 bcf in June 22 week and bringing the total to 3063 bcf. Natural gas levels were well under the prior week’s 62 bcf, and companies with high exposures to natural gas felt the difference.

Jobless claims fell in the latest week as well. They came in at 386,000, a modest but welcome improvement from the prior period’s 387,000 and just beating consensus estimates of 385,000 (range 378,000 to 390,000). These values still pushed the 4-week moving average higher. It ended at 386,750 over the last period’s 386,250, which is decidedly in the wrong direction.

The Bloomberg Consumer Comfort Index was more hopeful. At -36.1, it rose to its highest level in two months. Personal finances rose to 4.4, its highest level since April and a solid improvement from -2.3 the prior week. The Index’s gauge as to whether it is a good time to buy also rose considerably. It came in at minus 40.9, a solid improvement from the previous week’s 41.7 and its highest level since April. Unfortunately, it was not all good news, as the Index’s gauge state of the economy fell to minus 71.9 from minus 69.8.

The Dow Jones Industrial Average was down 157.95 (-1.25%) at 12,469.06. The NASDAQ Composite was down 43.12 (-1.5%) at 2,832.20. The S&P 500 was down 15.53 (-1.17%) at 11,316.32. In Europe, the FTSE 100 index is down 75.49 (-1.375%) to 5,448.43. The DAX is down 110.29 (-1.77%) to 6,118.70. and the CAC 40 is at 3,038.77, down 24.35 (0.79%). The DOW Global is at 1,765.96, down 14.76 (-0.83%).