Dow slid back 52, decliners over advancers 3-2 & NAZ fell 40. The MLP index fell 2 to the 232s & the REIT index went up 1+ to the 409s (close to recent record highs). Junk bond funds fluctuated & Treasuries were in demand again. Oil was off to the 55s & gold crawled up 2 to 1515.
Stocks slide after release of whistleblower's complaint
Buyers are back in the housing market, but they are still having a hard time finding what they want & what they can afford. The pending home sales index from the National Association of Realtors (NAR) rose 1.6% in Aug, compared with Jul, & was 2.5% higher year over year. This index measures signed contracts to buy existing homes. The Aug gain reversed a slump in Jul & was likely fueled by falling mortgage rates. “It is very encouraging that buyers are responding to exceptionally low interest rates,” said Lawrence Yun, NAR's chief economist. “The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.” Regionally, pending home sales in the Northeast rose 1.4% monthly & were 0.7% higher than a year ago. In the Midwest, sales increased 0.6% monthly & were 0.2% higher annually. Sales in the South increased 1.4% monthly & 1.8% annually, & in the West sales jumped 3.1% monthly & were 8.0% higher compared with Aug 2018. Mortgage rates fell throughout the summer with the deepest dip in Aug, when these buyers were out applying for loans & signing contracts. The average rate on the 30-year fixed was up around 4.2% in early May but fell to around 3.5% by Aug, according to Freddie Mac. That gave buyers significantly more purchasing power. Home prices are still gaining, & those gains are now starting to accelerate, due to the lack of supply of homes for sale. The price pain is worst on the lower end of the market, where supply is leanest. Most of the sales action is now happening on the higher end of the market & also in the new construction market, which is comparatively more expensive. Sales of newly built homes, which are also measured by signed contracts, jumped unexpectedly in Aug, up 18% annually. The supply of newly built homes also fell & is now lower than a year ago. That is the first annual decrease in new construction inventory all year. Builders are clearly benefiting from both lower interest rates & the lack of supply in the existing home market.
Pending home sales rebound in August as the slump in the West appears to be over
Stocks are looking for direction today. Whistleblower comments are getting a lot of attention, but nobody knows what to make of them. US-China trade talks are stumbling along & the GDP report didn't add much to what has already been reported. The popular stock averages are at the low end of today's limited range. For the time being, the selling emotion has the upper hand with limited demand for safe haven gold & Treasuries.
Dow Jones Industrials
| CL=F | Crude Oil | 55.87 | -0.62 | -1.1% |
| GC=F | Gold | 1,517.20 | +4.90 | +0.3% |
Stocks were mixed following the release of a
whistleblower's complaint concerning Pres Trump's Jul call with
Ukraine's pres. The release of the
complaint comes hours after China's Commerce Ministry said the US &
China remain in close communication ahead of trade talks that are
scheduled for next month. Speaking at the UN, Trumps said China wants "to make a deal very badly" & that one "could happen sooner than you think." The
Dow was up 40 at the opening, while the S&P 500 & Nasdaq were little
changed. West Texas Intermediate crude oil was lower while gold was firm. Treasury yields were lower, with the 10-year yield down 4.4 basis points at 1.692%. Trump signed a trade deal with Prime Minister
Shinzo Abe of Japan yestetrday that covers farm, industrial &
digital trade but leaves tariffs on autos & parts at 2.5%. In
Asia, the major averages finished mixed. Hong Kong's Hang Seng gained
0.4% & China's Shanghai Composite slid 0.9%. Chinese
markets will be closed next week for holiday. In Europe, London's FTSE paced the advance, trading up 1.1%.
Stocks slide after release of whistleblower's complaint
The US & China continue to prepare for the next round of trade talks in Oct. China's
Commerce Ministry said that the 2 countries are in close
communication about the next round of talks. The next round is scheduled in 2 weeks. Pres Trump said the US may reach a trade deal with China “sooner than you think,” sending stock markets to the highest levels yesterday. “We
have created the greatest economy in the history of our country, the
greatest economy in the world,” Trump said, referring to his administration's loosening of corp regulations & GOP-led tax
cuts. “Had my opponent won, China would right now be the No. 1 economy by far," Trump said. "Right
now, China is way behind us, and they’ll never catch us if we have
smart leadership. We've picked up trillions of dollars, and they’ve lost
trillions of dollars. And they want to make a deal very badly and it
could happen sooner than you think.” The
pres has imposed tariffs on Bs of $s in Chinese
imports, which he says will force Beijing to negotiate a pact ending
decades of trade-secret theft & giving US companies greater access
to the world's 2nd-largest economy. American
businesses have repeatedly complained, however, that they're paying the
import duties & their costs are rising as a result.
US, China in close communication ahead of next round of trade talks
Business investment in the spring was much weaker
than the US gov initially believed, contributing to a slowdown
in growth from the start of the year, according to data released today. Although updated estimates of GDP expansion from Apr thru Jun remained unchanged at 2%, the Commerce Dept said,
the data showed business investment dropped 1% as the US-China
trade war weighed on manufacturing, while spending on new office
buildings, stores & plants plummeted by 11.1%. Consumer
spending, which accounts for more than 2/3 of the US economy,
ticked down to 4.6% from a 2014 high of 4.7%. One bright spot was gov investment, with state & local spending much higher than initially thought. The
economy had grown 3.1% in the Jan-to-Mar period, closer to
the performance targets Trump has pitched on the campaign trail. Most economists expect the record-long economic expansion in the US to
continue but at a slower pace, amid lingering geopolitical
uncertainties, such as Brexit & the US-China trade war. While economists largely attributed the slowdown
between the first & 2nd qtrs to softer business investment, a
side-effect of the trade war, they noted the deterioration in consumer
sentiment surveys in Aug was worrisome.
Slow business investment drags US growth to 2% in the spring
Buyers are back in the housing market, but they are still having a hard time finding what they want & what they can afford. The pending home sales index from the National Association of Realtors (NAR) rose 1.6% in Aug, compared with Jul, & was 2.5% higher year over year. This index measures signed contracts to buy existing homes. The Aug gain reversed a slump in Jul & was likely fueled by falling mortgage rates. “It is very encouraging that buyers are responding to exceptionally low interest rates,” said Lawrence Yun, NAR's chief economist. “The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.” Regionally, pending home sales in the Northeast rose 1.4% monthly & were 0.7% higher than a year ago. In the Midwest, sales increased 0.6% monthly & were 0.2% higher annually. Sales in the South increased 1.4% monthly & 1.8% annually, & in the West sales jumped 3.1% monthly & were 8.0% higher compared with Aug 2018. Mortgage rates fell throughout the summer with the deepest dip in Aug, when these buyers were out applying for loans & signing contracts. The average rate on the 30-year fixed was up around 4.2% in early May but fell to around 3.5% by Aug, according to Freddie Mac. That gave buyers significantly more purchasing power. Home prices are still gaining, & those gains are now starting to accelerate, due to the lack of supply of homes for sale. The price pain is worst on the lower end of the market, where supply is leanest. Most of the sales action is now happening on the higher end of the market & also in the new construction market, which is comparatively more expensive. Sales of newly built homes, which are also measured by signed contracts, jumped unexpectedly in Aug, up 18% annually. The supply of newly built homes also fell & is now lower than a year ago. That is the first annual decrease in new construction inventory all year. Builders are clearly benefiting from both lower interest rates & the lack of supply in the existing home market.
Pending home sales rebound in August as the slump in the West appears to be over
Stocks are looking for direction today. Whistleblower comments are getting a lot of attention, but nobody knows what to make of them. US-China trade talks are stumbling along & the GDP report didn't add much to what has already been reported. The popular stock averages are at the low end of today's limited range. For the time being, the selling emotion has the upper hand with limited demand for safe haven gold & Treasuries.
Dow Jones Industrials
No comments:
Post a Comment