Markets are lower but seem to be treading water until Friday's job data is released. On the economic front, the Institute for Supply Management (ISM) non-manufacturing survey for February of 53.4 showed a contraction from January’s 53.5. While the service sector expansion slowed from the previous month, it is still expanding. An area of concern was the employment component, which for the first time in two years dipped below 50. A reading below 50 indicates contraction.
After two months of decline, factory orders in January rose 1.6% to a seven month high driven by demand in commercial aircraft, which jumped 54.4%. Durable goods orders rose to 4.7% in January, but it was revised down from 4.9% in the preliminary release. Orders for machinery jumped 4.6% from a surge in mining, and oil and gas equipment. Considering the decline in oil and the capex cutbacks in the energy companies, this could be significant – is a bottom in place?
Oil is relatively flat, but natural gas is down and at 17 year lows. The EIA reported a drawdown of 117 billion cubic feet. But with warmer weather on the horizon and the shoulder season around the corner, natural gas simply continues to decline.
Gold is moving higher once again and is over $1,250 an ounce as the dollar falls against the euro and US Treasury yields slip ahead of the jobs report.