Though the major equity indices experienced a sizable drop in the early part of the session, all have since made a reversal to the upside and are now roughly flat. The S&P 500 was green for the last 6 sessions, but we will see where it closes today. Also, the NASDAQ once again managed to reach a new intra-day high last seen in 2000. Contributing to the selloff today were five massive global banks being fined for manipulating currency markets. UBS, the Royal Bank of Scotland, JP Morgan, HSBC and Citibank were all fined more than $3.2 billion by authorities in Switzerland, the UK, and the US. There were only two minor economic releases this morning, and one points to potential improvement for the coming shopping season.

While not a major market mover, the level of wholesale inventories provides a good look into how quickly retailers and dealers may be stocking their shelves in time for the holidays. For the month of September, wholesale inventories were up 0.3% and held steady relative to sales, which were slightly higher. Wholesale sales increased by 0.2% in September, which subsequently helped keep the stock-to-sales ratio unchanged at 1.19 in the month. While this ratio isn’t that bad, we note that this is at the higher end of the recent trend. The highest wholesale inventories were recorded with the autos, which increased heavily relative to the sales in August, and came back slightly to a stock-to-sales ratio of 1.58 from 1.59 the month before. Unit sales among vehicles slightly firmed up in September, which implies that wholesale auto inventories might be a little on the light side right now, which would be great for manufacturers since they will have to replenish this stock. Inventories for apparel goods and hardware also lightened up in September. However, sectors that indicated unwanted inventory builds included computers, machinery, drugs, and paper products. Last week’s report on factory orders showed no major unwanted inventory pressures for manufacturers during the month. The missing piece is now retail inventories, which will be released on Friday. While leaner inventories among wholesalers might be negative for GDP revisions, they are a plus for production pickup as well as the outlook for employment.

Additionally, the housing sector is continuing to throw out mixed signals as low mortgage rates have yet to do anything to lift the weekly purchase applications for home mortgages. In the week ended November 7^th, the purchase index increased only 1.0% and is down 11.0% from a year ago. We note that the year-on-year rate is little changed from September when rates started to move lower in the first place. The refinancing index did move higher previously, but it’s been in retreat in recent weeks, down a sharp 11.0% from the prior week. The average rate for 30-year conforming mortgages ($417,000 or less) increased by 2 basis points during the week to 4.19%. Below is a chart that shows the weekly changes year-to-date for the composite index, refinancing and purchase applications.