Stocks closed essentially flat after their recent rallies as mixed economic reports showed a big gain in manufacturing activity in the Philadelphia area but also slower housing starts in several major U.S. regions.
The Dow rose 7 points, with 15 of its 30 components advancing; the S&P 500 Index lost 2; and the Nasdaq slipped 4. Decliners led advancers by four to three on the NYSE and the Nasdaq. The prices of Treasuries strengthened. Gold futures gained $8.50 to close at $1,241.60 an ounce, and the price of crude oil rose 15 cents to settle at $53.75 a barrel.
In other business news:
- Initial claims of unemployment rose 5,000 last week to a still historically low 239,000, according to the Labor Department. The four-week moving average rose 500 to 245,250. It was the 102nd consecutive week of claims falling below 300,000.
- Housing starts pulled back 2.6% in January, according to the Commerce Department, leading to a seasonally adjusted annualized rate of 1.25 million starts. Declines came from the Midwest and particularly the West regions, where starts sank 41%. Building permits, an indication of future construction, jumped 4.6% in January to a seasonally adjusted annualized rate of 1.29 million.
- The Philadelphia Fed manufacturing index nearly doubled in January, jumping from 23.6 to 43.3. It was the best reading for the index since 1984, and well above the reading of 20 that was expected by a survey of economists. A reading above zero indicates expansion. The new orders and shipments components were strong.
- A report that oil-production cuts from the Organization of the Petroleum Exporting Countries (OPEC) competed with supply reports showing growing supplies of crude oil, leading to a choppy day of oil trading that left the commodity closing slightly higher. OPEC said it would consider extending its production-cut agreement with non-OPEC members, as well as consider even further cuts if inventories don’t start to fall.
- Snap Inc., parent company of the popular messaging app Snapchat, said it would seek a valuation of between $19.5 billion and $22.2 billion when it launches its initial public offering, likely sometime in early March. It would be one of the biggest tech IPOs in several years, and analysts are watching it closely to see how much appetite there is for the offering after a slow year for tech IPOs. The valuation could still be adjusted after Snap gets investor feedback on its upcoming pre-IPO roadshow.
Today in automobiles:
–Most car owners know the daily routine. Wake up early, put on a pot of coffee, and sit down at the kitchen table with a printout of the latest auto recalls. Then they have to plan which of the three days they’ll need the car to drive this month and which of the other 27 days they’ll plan to have it in the shop repairing its radio Bluetooth connectivity, sticky steering column, misaligned mud flaps, and a dozen other items on the recall list.
People who might be unaccustomed to such a flurry of recall notices are those who pay $4 million or so for their wheels. Now they, too, are in the same camp (at least, a dozen of them are). Lamborghini has issued a recall for its Lamborghini Venenos hardtop, of which only three were sold, and nine Veneno Roadsters. The recall includes these super-rare cars among 5,900 of its much more modestly priced Aventadors (costing only about $400,000). The defect involves a faulty evaporative emissions control system, which could set fuel vapors on fire in certain conditions, such as over-revving the engine. As I couldn’t imagine driving a Lamborghini and normally revving an engine, this is probably a very common risk.
Despite the fact that it would probably be quicker for Lamborghini to call each affected owner about the problem, a recall is a recall, and a formal notice had to go out. So owners of affected vehicles should figure out how to drive the car without over-revving the engine and head to their nearest dealer (slowly).
–In other luxury car news, Jaguar announced it’s teaming up with Shell gas stations to offer in-car payments at gas pumps. With the new in-car payment feature, drivers don’t have to ever leave their car to pay for gas. They only have to leave their car, pump the gas, then get back in the car to pay for it.
The main efficiency here is all the time customers save from not having to reach for their wallets. Instead, all they have to do is hook up their smartphone to the in-dash infotainment system, type in their pin, wait for the geo-locating capabilities to find the particular pump number, type it in, get out of the car, gas up the car, get back in the car, verify that this particular pump is reporting the same amount of gallons that’s showing up on the infotainment screen, press some more buttons, and drive off. The truly luxurious nature of this service is having the time to use it.
Paying for gas this way sounds inconvenient, but in Jaguar’s defense, the company is working on ways to broaden its in-car payment capabilities. Drivers could pay for parking this way, for example, without having to worry about keeping a parking pass. Or they could pay for food at a drive-thru without having to worry about handing cash or credit cards out the window.
The real breakthrough here would be being able to order food using the car’s in-dash screen without shouting at a speaker, hearing static in return, and hoping they heard the order correctly. Drivers would know instantly that the order was transmitted as intended, which means the disappointment at discovering the order was filled wrong anyway will be even more of an event to savor.