After opening much deeper in the red, all of the major equity indices have made similar reversals to the upside and are presently trading around where they closed yesterday. The reversal is primarily based on earnings, a stronger market outlook, and a whole bunch of initial public offerings (IPOs). Etsy (ETSY) and Party City (PRTY) are among the two most notable IPOs that began trading a few hours into the session. Both are up phenomenally, but ETSY shocked many on the Street as the stock rose over 110% from its opening price. Optimism surrounding these new stocks basically negated the negative weekly jobless claims report, which dragged the market down substantially in the premarket.

However, the initial market weakness was justified based on more disappointing economic data in addition to the jobless claims. Firstly, it appears that the housing market may be slightly more sluggish than originally expected. In March, housing starts rebounded slightly over last month by 2.0% after dropping by 15.3% in February. Expectations were for a 1.04 million seasonally adjusted annual rate (SAAR), but the actual number came in at 0.926 million, down 2.5% on a year-over-year basis. On a regional basis, home starts gained 114.9% in the Northeast, clearly due to a weather-related rebound in an already small region. The Midwest gained 31.3%, also due to better weather while the South and West both declined by 3.5% and 19.3%, respectively. Housing permits were a little stronger in March but still came up short of expectations. For the month, permits declined 5.75 after gaining 4.0% in February. The SAAR of 1.039 million was up 2.9% over last year but the forecast was still for a pace of 1.085 million. We note that the housing market is sensitive to weather changes, and with warmer weather coming this will translate to more good things to come. However, this latest data is one more data point that will keep the Fed wary on raising interest rates.

As was hinted yesterday, the Philadelphia Fed District noted some improvement in its composite reading from March. The Philly Fed index came in at a reading of 7.5 for April versus 5.0 in March, but notes a slowdown in new orders at 0.7 for the lowest monthly growth since May 2013. Backlog orders were also in contraction for the second month in a row, coming in at -7.1. Ultimately, the weakness in orders is being blamed on export weakness, and is very similar to those in the Empire State report from yesterday, noting a slowdown in manufacturing activity. Shipments for the month are also negative at -1.8, however employment remains strong at 11.5, but it is sure to come down if orders and shipments don’t improve. Also weak were the price readings, with prices paid at -7.5 and prices received at -4.1. Despite the negative readings, this report mirrors the Empire State’s 6-month outlook reading, which is increasingly upbeat at 35.5. This is a 3.5 point gain from March and suggests that manufacturers see near-term pressures as a temporary phase. Much of the data in the Philly Fed report is negative, although not all of it is gloom and doom. Nevertheless, both the Philly Fed and Empire State reports point to an early Q2-2015 slowdown in the manufacturing sector.

Lastly, the Federal Reserve released its third of ten Beige Book readings for 2015 yesterday afternoon. The report noted that five of the twelve Fed districts are expanding moderately, and the focus was primarily on the labor markets with conditions either being stable or improving modestly. Overall, the Beige Book is modestly positive but still sluggish, and does not imply that a rate hike will occur anytime soon. Below is a composite table of each of the 12 districts – how did your Fed district fare since March?