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Weak U.S. housing data is tempering enthusiasm stoked by upbeat
earnings reports from some of America's best-known corporations.
From technology giant
Apple to construction-equipment maker Caterpillar, a flurry of
corporate heavyweights have topped earnings and profit expectations for
the third quarter of the year, turning in strong performances in one of
the toughest global economic climates in decades.
reports would seem to validate an upward march by stock markets in the
United States, where the Dow Jones Industrial Average recently topped
10,000 for the first time in a year.
But economic soft spots
remain, including America's beleaguered housing sector. It was a rash
of mortgage defaults that helped precipitate last year's financial
meltdown and sent an already-weakened U.S. economy deeper into
recession. In addition to continued high home foreclosure rates,
applications for home-building permits fell in September by the largest
amount in five months.
Drops in permit applications usually forecast a slowdown in home construction.
Capital Research Institute Chief Investment Strategist Douglas Roberts
says America's housing sector will likely remain weak well into next
"I do not think it is going to be an engine of growth like
it was before," he said. "I think right now it is like we are scraping
along the bottom [of the U.S. housing market], and I think you could
have weak numbers in this area for a while."
The U.S. Commerce
Department says new home construction edged up .5 percent in September,
less than many economists had anticipated.
And what of a U.S. stock market that has seen the Dow rise by 50 percent since March?
York-based equity strategist Peter Boockvar says sustaining the rally
will become more challenging, even if corporate earnings continue to
"Going into the second quarter, expectations
were very low," he said. "We beat those. Now we have greater
expectations. We are getting those fulfilled, but the market is only
up 2 to 3 percent [in recent days]. I think we have priced in a lot of
these good numbers and that is why the market is showing signs of
getting tired here."
Boockvar spoke on Bloomberg television.
Labor Department reports that U.S. wholesale prices fell .6 percent
last month due primarily to falling energy prices. During the past
year, core wholesale prices have risen a modest 1.8 percent, a sign
that U.S. inflation remains in check.