US Economy | Confidence takes hit

U.S. consumers are increasingly worried about jobs and the economy, the Conference Board said Tuesday, as it reported that its consumer confidence index plummeted to 52.9 in June — the lowest level since March — from a downwardly revised 62.7 in May.

Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence and until the pace of job growth picks up, consumer confidence is not likely to pick up.

Earlier this month the government reported that nonfarm payrolls grew by a seasonally adjusted 431,000 in May, but most of the new jobs were temporary jobs at the U.S. Census, with very weak private-sector hiring.

Double dip? While the confidence report could fuel fears of a “double-dip” recession undercutting U.S. gross domestic product, analysts at RDQ Economics said such worries may be misplaced.

Confidence has double-dipped in the last two recoveries (in early 1992 and early 2003) without the economy falling back into recession and the June pullback in confidence is far less severe than either of those two episodes,” according to an RDQ research note. Furthermore, we think that the response to the oil leak in the Gulf of Mexico is depressing confidence.

Meanwhile, analysts at Barclays Capital Research said the confidence report contains volatility, and they expect a positive overall trend in confidence as the job market expands in the new few months.
Buying plans impacted – Consumers with plans to buy a home within six months fell to 1.9% in June – the lowest level since 1982 other than 1.7% in December, according to the Conference Board. In May 2.1% had plans to buy a home.

Those with plans to buy an automobile fell to a record low of 3.7% in June from 6% in May. The data go back to 1967.

Those with plans to buy major appliances fell to 22.9% in June from 26% in May.

While the recession may have technically ended last summer, consumers remain skittish about job and income prospects and are refraining from consuming in a sufficient enough manner as to create substantial growth in GDP, all enhancing an already sluggish US economy.

American Tower (AMT) – Hot Stock Pick

American Tower (AMT) operates wireless communications towers, broadcast communications towers and distributed antenna system networks; the company is involved in with 20,000 towers in the U.S. and 7,000 towers in Mexico, Brazil and India. Technically, the stock has broken out from a three-month, cup-and-handle base and is now within range to make a 10-year.

Its portfolio also includes approximately 200 in-building DAS networks that it operate in malls, casinos and other in-building applications in the United States and Mexico. The company operates in two business segments: rental and management, and network development services.

AMT’s 12-month performance chart shows the stock appreciating 58% versus a 24% gain for the S&P 500 index. So, although AMT has a beta of just 0.83 it has easily outperformed the S&P recently. The stock’s long-term chart shows the stock soaring to a peak of 55.50 back in 2000. The stock then fell sharply during the bear market of 2001 and 2002. I

In previous years (2008 and 2009), it held up fairly well. Now the stock is on the move and trending higher again.  

American Tower (AMT) stock price chart shows the stock rallying strongly in recent weeks from around 38 to 46. The stock has generated a lot of upside momentum.

The stock’s momentum indicator is strongly bullish. Most impressive is that the accumulation – distribution line is trending higher. It did not give much ground when the stock was heading lower in April and May. That shows that the selling was not that strong. Thus, the strong recent rebound.

This year, analysts forecast AMT’s earnings will surge 48% to 87 cents a share from 59 cents a year ago. The stock sells with a price-earnings ratio of 51. That is high. So, one must be watchful of the stock. I would get a piece of AMT now as it doesn’t look like this momentum is slowing anytime soon. More on American Tower Stock News.

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2010 S&P poised for record low

U.S. stocks tumbled Tuesday, with the S&P 500 Index poised for its lowest finish this year, as U.S. consumer confidence fell more than anticipated in June, adding to worries about a global slowdown. This is all part of the global economy we’re worried about, there just isn’t enough growth around to generate steady job growth and after falling nearly 300 points, the Dow Jones was down 248.04 points, or 2.4%, to 9,890.48, with all 30 of its components in the red.

The Dow last fell below 10,000 on June 10, and closed below the psychologically important level the prior day. Current US stock prices and market watch. 

Industrial companies and natural-resource firms were among the hardest hit after the Conference Board revised downward its leading economic index for China. China stock picks that should be on your watchlist. 

The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting the reading to dip slightly to 62.8.

June’s reading marked the biggest drop since February, when the index fell 10 points. The index had risen for three straight months since then.

Both components of the index — one that measures how consumers feel now about the economy, the other that assesses their outlook over the next six months — dropped. The Present Situation Index decreased to 25.5 in June from 29.8 in May. The Expectations Index declined to 71.2 from 84.6.

A key issue is jobs. The Labor Department is expected to report on Friday that employers eliminated 110,000 jobs in June, and the jobless rate is expected to tick up slightly to 9.8 percent, from 9.7 percent in May, according to economists surveyed by Thomson Reuters. That follows a bleak report in May, which showed employers added 431,000 jobs but the vast majority were temporary census positions.

Retailers had a surprisingly solid start to the year as consumers felt better as their stock portfolios rose, but since April, business has slowed. Hastings believes the sluggishness continued into June. He believes sweltering heat in this past month wilted sales of summer’s trendy fashions as consumers stuck to buying the basics like shorts and tank tops to keep cool.