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US stock market daily report (September 20, 2012, Thursday)

September 21, 2012, Friday, 04:56 GMT | 23:56 EST | 09:26 IST | 11:56 SGT
Contributed by Millennium Traders

According to data released Thursday from the Federal Reserve, American households accumulated debt at the fastest rate during Q2 then in more than four years and total domestic debt grew at the fastest rate in three-and-a-half years. In its flow-of-funds report, the Federal Reserve said household debt grew at a seasonally adjusted annual rate of 1.2% during Q2, marking only the second increase in 17 quarters. Growing consumer credit - student and car loans offset a decline in mortgage debt. Household net worth fell by $322 billion, as a declining stock market offset rising home values. Nonfinancial business debt grew 4.9% in Q2 while at the same time, corporate stockpiles of cash fell slightly to $1.73 trillion from $1.75 trillion. Total domestic debt which includes household, business and government debt grew 5% to $39.06 trillion, or roughly 2.5 times the size of the U.S. economy.

The Labor Department reported Thursday that applications for U.S. jobless benefits fell by 3,000 to a seasonally adjusted 382,000 in the week ended September 15. Initial claims from two weeks ago, partly inflated by hurricane Isaac, were revised up to 385,000 from an original reading of 382,000, based on more complete data collected at the state level. The average of new claims over the past month rose by 2,000 to 377,750, striking the highest level seen since late June. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends. Labor reported continuing claims - which reflect the number of people already receiving benefits - decreased by 32,000 to a seasonally adjusted 3.27 million in the week ended September 8. Nearly 5.17 million people received some form of state or federal benefit in the week ended September 1, down 217,823 from previous week. Total claims are reported with a two-week lag.

Eric Rosengren, president of the Boston Federal Reserve Bank, on Thursday said the aggressive nature of the Federal Reserve's third round of asset purchases or QE3, was designed so that the U.S. does not suffer a prolonged economic stagnation like Japan. Rosengren said in a breakfast speech to a business group in Quincy, Ma that Japan's two decades of subdued growth "is a sobering real-world reminder of why forceful and timely action is appropriate." Rosengren was one of the first Fed officials to call for QE3 this summer. "In my view, these policies are essential to achieving a strong sustainable recovery that is resilient, despite inevitable disruptions," he said. Even with the QE3 programs, and assuming no further negative shocks from Europe or domestically, "it will be several years before we are likely to return to full employment," Rosengren said.

Shares of Trulia Inc. (TRLA) jumped 34% to $22.80 - with an initial public offering price of $17, above its initial range of $14 to $16 - on Thursday as the online real-estate listing company began trading on the New York Stock Exchange. According to the company's filings with the Securities and Exchange Commission, as of the end of June, Trulia says it had 22 million monthly unique visitors, and more than 360,000 real-estate professionals using the site.

Conference Board said Thursday that U.S. economic growth is "unlikely to change much" in the near term, as it reported that its leading economic index ticked down 0.1% in August, while a longer-term trend remained positive. "The economy continues to be buffeted by strong headwinds domestically and internationally. Weak domestic demand continues to be a major drag," said Ken Goldstein, an economist at the Conference Board, a New York research group. The LEI - which is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs - increased by a revised 0.5% in July, compared with a prior estimate of 0.4%. Out of the 10 indicators, six indicators made negative contributions in August, led by new orders for manufacturers with the biggest positive contribution coming from the interest-rate spread.

The Philadelphia Federal Reserve’s index of business conditions released Thursday rose to -1.9 in September from -7.0 in August. Readings under zero for the index indicate that manufacturing is shrinking instead of growing. Per the survey, new orders rose modestly, as shipments of products dropped and inventories jumped which is a negative signal suggesting a slowdown in sales. For five consecutive months, the index has been in negative territory for the first time since the end of the 2007-2009 recession. The Phili index is sharply off 2012 high in March of 12.5. The most positive part of the Philly Fed report was the new-orders index as it made its move to 1.0 from -5.5 in previous month, striking the best reading since April and sharply improved upon a -18.8 figure in June. The shipments index plunged to -21.2 from -11.3 and inventories component sank to -21.7 from -6.9. The decline in these numbers imply businesses are having a more difficult time completing sales and inventories could be over stocked. The Philly Fed’s employment index was little changed at -7.3, compared to -8.6 during August. Anxiety about U.S. tax hikes and deep spending cuts slated to take effect January 1 are weighing on manufacturers, especially those that make military goods. The Philadelphia Federal Reserve indexes measure the attitude of executives which can swing sharply in the short run, depending on the recent events around the world.