Dow rose 144, but decliners ahead of advancers 3-2 & NAZ dropped 5 on a weak tech sector. Bank stocks are leading what rally there is (maybe bargain hunting).
The MLP & REIT indices keep sliding, down another 1+ each. Junk bond funds were a little soft & Treasuries were lower. Oil fell to the lowest level in almost 7 weeks on bets that Europe’s sovereign debt crisis may worsen, crimping growth & fuel demand, & as sales of new US homes dropped to a 6-month low. Selling is continuing in gold. It went below $1600 briefly.
Get the latest market update below:
Photo: Yahoo
Sales of new homes fell to a 6-month low in Aug, the 4th straight monthly decline during the peak buying season suggests the housing market is years away from a recovery. The Commerce Dept said that sales fell 2.3% to an annual rate of 295K, less than half the roughly 700K pace that are sold in a healthy housing market. New-homes sales are on pace for the worst year since the gov began keeping records a half century ago. While new homes represent less than 20% of the housing market, they have an outsize impact on the economy. Each home built creates an average of 3 jobs in a year & generates about $90K in taxes. Last year was also the 5th straight year that sales have fallen after 5 straight years of record highs, when housing was booming. The median sales price of a new home fell nearly 9% to $209K, the lowest price since last Oct. That suggests builders are slashing prices in order to compete with comparably lower-priced previously occupied homes. Housing is critical to an economic recovery & it's still stuck in the mud.
New Homes Sales Fall to Six-Month Low, Prices Decline
The gov faced strikes & protests as the prospect of a debt default hung over Greece. New austerity measures needed to appease the rescue creditors are not going over well with the nationals. Even Greek police held their own protest, with the Special Guards unit hanging a giant black banner reading "Pay day, day of mourning." Faced with mounting anger from the intl creditors, the gov recently announced new austerity measures to secure the next €8B ($10.7B) installment of bailout loans from the €110B rescue package agreed to last year. Without the funds, Greece only has enough funds to see it through mid-Oct, when it faces the prospect of a messy default. Debt inspectors from the IMF, European Commission & ECB, known collectively as the troika, are expected to return to Athens this week to resume a review amid talk of delayed implementation of reforms. But no specific date has been set for their return, & the European Commission made clear that no decision on releasing the funds would be reached during a meeting of eurozone finance minister in Luxembourg next Mon. The Greek drama will not end soon.
PIMCO, which runs the world’s biggest bond fund, is forecasting that European economies will stall over the next year as Europe slides into a recession. There will be little-to-no economic growth in industrial nations in the coming 12 months as Europe’s economy shrinks by 1-2% & the US stagnates. That will leave worldwide expansion at about 2.5%, less than the 4% forecast by the IMF. Finance ministers & central bankers are urging European officials to intensify efforts to contain their 18-month debt crisis as Greece teetered on the edge of default. The US Treasury Secretary called on govs to unite with the ECB to beef-up the capacity of their €440B ($594B) bailout fund, warning that failure to act threatened “cascading default, bank runs and catastrophic risk.” More gloomy thoughts regarding Europe & its financial mess.
Pimco Forecasts Europe Recession Next Year
Markets are just muddling along. Buying in bank stocks is a mystery, probably on hopes about a magic cure for European debt woes. MLPs & REITs are drifting lower (along with the tech sector) which gives a better feel of what's really going on in the markets. Eastman Kodak (EK) dropped a whopping 60¢ to $1.79 (probably a 100 year low). It borrowed $160M against its line of credit & that's viewed as a sign of weakness. While not material to the overall stock market, another sign of sluggish economic conditions.
S&P 500 Financials Sector Index
| Value | 160.08 | |
| Change | 2.60 (1.7%) |
The MLP & REIT indices keep sliding, down another 1+ each. Junk bond funds were a little soft & Treasuries were lower. Oil fell to the lowest level in almost 7 weeks on bets that Europe’s sovereign debt crisis may worsen, crimping growth & fuel demand, & as sales of new US homes dropped to a 6-month low. Selling is continuing in gold. It went below $1600 briefly.
ALERIAN MLP Index (^AMZ)
DJ REIT INDEXDJR (^DJR)
Treasury yields:
U.S. 3-month | 0.005% | |
U.S. 2-year | 0.214% | |
U.S. 10-year | 1.861% |
| CLX11.NYM | ...Crude Oil Nov 11 | ...78.31 | .... 1.54 (1.9%) |
| GCU11.CMX | ...Gold Sep 11 | .....1,626.00 | ... 11.50 | (0.7%) |
Get the latest market update below:
Photo: Yahoo
Sales of new homes fell to a 6-month low in Aug, the 4th straight monthly decline during the peak buying season suggests the housing market is years away from a recovery. The Commerce Dept said that sales fell 2.3% to an annual rate of 295K, less than half the roughly 700K pace that are sold in a healthy housing market. New-homes sales are on pace for the worst year since the gov began keeping records a half century ago. While new homes represent less than 20% of the housing market, they have an outsize impact on the economy. Each home built creates an average of 3 jobs in a year & generates about $90K in taxes. Last year was also the 5th straight year that sales have fallen after 5 straight years of record highs, when housing was booming. The median sales price of a new home fell nearly 9% to $209K, the lowest price since last Oct. That suggests builders are slashing prices in order to compete with comparably lower-priced previously occupied homes. Housing is critical to an economic recovery & it's still stuck in the mud.
New Homes Sales Fall to Six-Month Low, Prices Decline
The gov faced strikes & protests as the prospect of a debt default hung over Greece. New austerity measures needed to appease the rescue creditors are not going over well with the nationals. Even Greek police held their own protest, with the Special Guards unit hanging a giant black banner reading "Pay day, day of mourning." Faced with mounting anger from the intl creditors, the gov recently announced new austerity measures to secure the next €8B ($10.7B) installment of bailout loans from the €110B rescue package agreed to last year. Without the funds, Greece only has enough funds to see it through mid-Oct, when it faces the prospect of a messy default. Debt inspectors from the IMF, European Commission & ECB, known collectively as the troika, are expected to return to Athens this week to resume a review amid talk of delayed implementation of reforms. But no specific date has been set for their return, & the European Commission made clear that no decision on releasing the funds would be reached during a meeting of eurozone finance minister in Luxembourg next Mon. The Greek drama will not end soon.
PIMCO, which runs the world’s biggest bond fund, is forecasting that European economies will stall over the next year as Europe slides into a recession. There will be little-to-no economic growth in industrial nations in the coming 12 months as Europe’s economy shrinks by 1-2% & the US stagnates. That will leave worldwide expansion at about 2.5%, less than the 4% forecast by the IMF. Finance ministers & central bankers are urging European officials to intensify efforts to contain their 18-month debt crisis as Greece teetered on the edge of default. The US Treasury Secretary called on govs to unite with the ECB to beef-up the capacity of their €440B ($594B) bailout fund, warning that failure to act threatened “cascading default, bank runs and catastrophic risk.” More gloomy thoughts regarding Europe & its financial mess.
Pimco Forecasts Europe Recession Next Year
Markets are just muddling along. Buying in bank stocks is a mystery, probably on hopes about a magic cure for European debt woes. MLPs & REITs are drifting lower (along with the tech sector) which gives a better feel of what's really going on in the markets. Eastman Kodak (EK) dropped a whopping 60¢ to $1.79 (probably a 100 year low). It borrowed $160M against its line of credit & that's viewed as a sign of weakness. While not material to the overall stock market, another sign of sluggish economic conditions.
Dow Industrials (INDU)
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