Dow went up 86, advancers over decliners 3-1 & NAZ gained 119. The MLP index climbed 3+ to the 213s & the REIT index added 1+ to the 431s. Junk bond funds rose & Treasuries had limited buying, reducing yields. Oil crawled higher to 110 & gold dropped 17 to 1948.
AMJ (Alerian MLP index tracking fund)
Orders at US factories for long-lasting goods inched slightly higher in Apr but came in below expectations as manufacturers confronted a worsening supply-chain crisis that continued to weigh on business investment. Bookings for all durable goods – products that are intended to last at least 3 years – rose 0.4% last month, the Commerce Dept reported. The forecast called for a 0.6% increase. It followed a downwardly revised gain of 0.6% decline in Mar. Passenger planes & autos – volatile measurements that tend to swing sharply month to month – fell 0.4% in Apr. A more precise measure of demand that excludes transportation and military hardware, known as core orders, climbed 0.3% in Apr, down from a 1.1% gain recorded in the previous month. The figures suggest that business investment is still chugging along & that factories are producing large amounts of goods, even as they confront snarled supply chains, a labor shortage & the highest inflation in decades. It'is unclear, however, whether persistently high inflation, coupled with rising interest rates & concerns over a slowing economy, will eventually force businesses to reconsider the current pace of investment. There are some signs that manufacturing activity is slowing: A survey from the Federal Reserve Bank of Philadelphia released last week showed that a key gauge measuring manufacturing activity in the mid-Atlantic region posted the weakest growth since the early days of the coronavirus pandemic. There is a growing sense of pessimism over concerns that the Fed may drag the economy into a recession as it seeks to tame inflation, which remained elevated at 8.3% in Apr.
US durable goods orders rise less than expected in April
Mortgage rates turned lower for the 2nd straight week, but it wasn't enough to boost demand for either new purchase loans or refinances, according to a weekly report from the Mortgage Bankers Association. Rates are still much higher than they were for the past 2 years. Last week the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647K or less) decreased to 5.46% from 5.49%, with points dropping to 0.60 from 0.74 (including the origination fee) for loans with a 20% down payment. Applications to refinance a home loan dropped 2% for the week & were 75% lower than the same week one year ago. "Most refinance borrowers continue to remain on the sidelines as a result, and refinance applications have fallen in nine of the past 10 weeks. Compared to January 2022, refinance activity is down 66%," said Joel Kan, MBA's associate VP of economic & industry forecasting. Homebuyers are also pulling back. Applications for a mortgage to purchase a home were flat week to week & down 16% from a year ago. More supply is coming on the market, but homes are suddenly sitting longer for sale. Mortgage demand from homebuyers is now close to the lows last seen in spring 2020, at the start of the Covid pandemic. Homebuying quickly picked up after that & frenzied demand pushed prices higher at an astounding rate over the past 2 years. Now those high prices are sidelining potential buyers, especially people seeking to purchase their first home.
Mortgage demand slides further, even as interest rates pull back slightly
Toll Brothers (TOL) delivered fiscal Q2 profit & revenue that topped expectations. Earnings for the qtr came in at $221M ($1.85 on a per-share), up from $128M a year earlier. The estimate was for EPS of $1.46. The
homebuilder posted revenue of $2.28B in the period, also beating forecasts of $2.05B. "While demand is still solid, over the past month it has
moderated from the unprecedented pace of the past two years as buyers
adapt to higher mortgage rates and other macro-economic conditions,"
said CEO Douglas C. Yearley, Jr.. "However, the many fundamental drivers of housing demand remain firmly
in place," Yearley added. "These include favorable demographics, the
significant imbalance between the supply and demand for homes, and
migration trends. We believe these factors will support a healthy
housing market over the long term." Looking ahead, the company said its net signed contract value totaled
$3.1B, pushing its Q2 backlog to a record $11.7B & 11,768 homes. Based on the strength of its backlog, TOL said it is maintaining its full-year projection of 20% revenue
growth. The stock rose.3.53 (8%).
If you would like to learn more about TOL click on this link:
club.ino.com/trend/analysis/stock/TOLa_aid=CD3289&a_bid=6ae5b6f
Toll Brothers earnings top estimates, shares rise
TOL results are quite good, however it sells higher priced homes which are still strong. Middle & lower priced homes are soft. Meanwhile everybody is anxious to hear what the Fed had to say in the PM about the future of interest rates.
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