Despite continued worries about European debt issues, the US equity market performed well. The S&P 500 Index reached a critical technical level of 1115. This was not the case for other risky assets, as Crude Oil finished the trading session down $1 per barrel and both the Euro and the Pound were down on the day. The pound has come under heavy pressure today falling below $1.48 and the move could prompt talk of a UK crisis. The currency’s drop has occurred amidst heavy cross selling and despite a firm PMI report that saw the export component improve, a sign that the weak pound could be supporting the export sector. The data have been outweighed by concerns about UK debt and uncertainty over the elections and by headlines just before the NY open indicating the UK’s largest insurer, Prudential Plc, will purchase an Asian life insurance unit from AIG for $35 billion, $25 billion thought to be in cash. The headlines were a catalyst for sterling sellers pushing cable through $1.50 own through $1.4800. The PMI survey released Monday showed the purchasing managers index for the U.K.’s manufacturing sector was unchanged at a 15-year high of 56.6 in February.
In US economic news, Personal income increased by 0.1% compared to the prior month, while personal spending climbed by 0.5%, according to the Commerce Department. The saving rate slowed to the smallest since 2008. Economists surveyed forecast a 0.4% increase in income and a 0.4% increase in spending for January. Income has gone up six straight months and spending has increased four straight times. The saving rate in January was the lowest since 2.9% in October 2008. The rate was 3.3% in January, compared to 4.2% in December.
Construction spending declined 0.6% as expected, at a seasonally adjusted annual rate of $884.1 billion compared to the prior month, according to the Commerce Department. December outlays were unrevised at a drop of 1.2%. November spending tumbled a revised 2.5%. Economists surveyed estimated spending in January on construction would tumble 0.6%. Residential construction project spending in January increased 1.1% to $269.15 billion, after dropping a revised 2.6% in December. Construction spending declined 0.6% as expected, at a seasonally adjusted annual rate of $884.1 billion compared to the prior month.