Thursday, January 29, 2015

Markets slide lower on housing data

Dow dropped 33, decliners over advancers 2-1 & NAZ fell 25.  The MLP index sank 9+ to 430 (down more than 125 from its record peak reached last year) & the REIT index did little at 353.  Junk bond funds fluctuated & Treasuries lost some of the recent gains.  Oil inched higher in the 44s (that's called bargain hunting) & gold is drifting lower in the 1200s.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...44.80 Up ....0.35 (0.8%)

GCG15.CMX...Gold Feb 15.....1,269.60 Down ...16.30  (1.3%)

3 Stocks You Should Own Right Now - Click Here!

The fewest Americans in almost 15 years filed applications for unemployment benefits during a holiday-shortened week that typically makes the data more volatile.  Jobless claims plunged 43K to 265K, the lowest since 2000, according to the Labor Dept.  The forecast called for 300K.  Layoffs probably will remain muted & companies will keep adding to payrolls as rising consumer confidence & spending help the economy withstand waning overseas demand.  The 4-week average, a less-volatile measure than the weekly figure, dropped to 298K from 306K in the prior week.  The number continuing to receive jobless benefits declined 71K to 2.39M & the unemployment rate among people eligible for benefits held at 1.8%.

Jobless Claims in U.S. Plunge to 15-Year Low in Holiday Week

Previously Owned Home
Photo:   Bloomberg

Contracts to purchase previously owned homes in the US unexpectedly fell in Dec by the most in a year, a sign the industry’s recovery remains uneven.  The index of pending sales dropped 3.7% after a 0.6% gain the prior month that was smaller than initially estimated, figures from the National Association of Realtors.  The forecast called a 0.5% increase.  Fewer available properties, higher prices & still-tight credit are hurdles for some customers as first-time buyers remain reluctant to enter the market.  At the same time, employment gains & near record-low mortgage rates will help to underpin demand, one reason builders expect the industry’s rebound will be sustained.  “Total inventory fell in December for the first time in 16 months, resulting in fewer choices for buyers and a modest uptick in price growth,” Lawrence Yun, the NAR’s chief economist, said.  “More jobs, increasing consumer confidence, less expensive mortgage insurance and new low down-payment programs coming into the marketplace will likely lead to more demand from first-time buyers.”  All 4 regions saw a decrease, led by a 7.5% drop in the Northeast.  Compared with a year earlier, the index increased 8.5% on an unadjusted basis after a 1.5% gain in the prior 12-month period.  They were projected to climb 10.5%.  The pending sales gauge was 100.7 on a seasonally adjusted basis, the lowest since Apr.  A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic.  Pending sales are considered a leading indicator because they track contract signings.  A Commerce Dept report showed new-home sales jumped last month to the highest level since Jun 2008.

Pending Sales of Existing Homes in U.S. Drop by Most in a Year

The US homeownership rate fell to the lowest in more than 2 decades in Q4 as many first-time buyers stayed on the sidelines.  The share of Americans who own their homes was 64%, down from 64.4% in Q3, according to the Census Bureau.  The rate was at the lowest since 1994.  Rising prices & a tight supply of lower-end listings have put homes out of reach for some entry-level buyers, who also face strict mortgage standards. The share of homebuyers making their first purchase dropped in 2014 to the lowest level in almost 3 decades, the National Association of Realtors reported last week.  The homeownership rate has fallen from a peak of 69.2% in 2004.  From 1965 to 1999, the average was 64.5%.

U.S. Homeownership Rate Falls to a 20-Year Low

Housing data & earnings fail to bring out buyers.  Even Janet could not inspire them yesterday.  Low oil prices, conflicts in the MidEast & Ukraine, & looming interest rate hikes are weighing on the market.  Jan performance for stocks will be a repeat of last Jan.  Bulls are hoping that the remaining 11 months will also be a repeat of last year when stocks rallied. 

Dow Jones Industrials

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