Market Rallies on Weak Data

04/26/2016 1:06 pm EST

Focus: STRATEGIES

Michael Berger

President & Founder, Technical420.com

The market has held onto its gains after the Commerce Department said that orders for durable goods increased by 0.8% during the month of March.

Although this number is an improvement from 3.1% decline in February, it missed the 1.8% forecast.

The increase during March was the result of a 65.7% increase in defense aircraft orders, which lifted bookings for transportation equipment by 2.9%.

Orders for computers and electronic products fell as demand for automobiles, computers and electrical goods slumped.

Factory Sector Downturn is Far from Over

The headline miss suggests that the downturn in the factory sector is far from over.

Manufacturing accounts for 12% of the United States GDP and the sector continues to be affected by lingering effects of the strong dollar and sluggish overseas demand.

While recent manufacturing surveys have led many analysts to be believe that the sector has improved over recent months as the dollar has weakened, hard data such as industrial production and factory orders have remained depressed.

It will be tough for the economy to breakout of its current range without a turnaround in the manufacturing sector.

Consumers Feeling Less Optimistic During April

After digesting weaker-than-expected durable goods data, the market will now have to stomach a lower than expected Consumer Confidence Index report.

According to the report, consumers were feeling less optimistic than expected during April. The Consumer Confidence Index hit 94.2 in April, which came in below the 96 expected by Thomson Reuters consensus estimates.

The survey is a gauge of consumer attitudes and measures sentiment toward business conditions, short term outlook, personal finances and jobs.

Earnings Season Heats Up

Apple Inc. (AAPL) is scheduled to report earnings after the market closes today and iPhone sales are expected to be weak. Sales of the iPhone have accounted for two-thirds of Apple's revenue, so the extent of the drop is crucial for the company.

Other companies reporting earnings after the market closes: Twitter Inc. (TWTR), Fortinet Inc. (FTNT), iRobot (IRBT), Wynn Resorts Inc. (WYNN), Panera Bread (PNRA) and eBay Inc. (EBAY).

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