Tuesday, June 27, 2023

Markets rebound after recent losses

Dow went up 135, advancers over decliners about 3-1 & NAZ added 109.  The MLP index crawled higher in the 224s & the REIT index recovered 3+ to the 367s.  Junk bond funds rose along with stocks & Treasuries were sold, raising yields (more below).  Oil slid back to the 68s & gold declined 9 to 1924.

AMJ (Alerian MLP Index tracking fund)


 

 




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Home prices peaked last Jun, falling sharply thru the beginning of this year.  Now, they're recovering steadily.  Home prices in Apr were still down 0.2% compared with Apr 2022, according to the S&P CoreLogic Case-Shiller national home price index.  They were, however, 0.5% higher month to month, after seasonal adjustments.  Prices are now just 2.4% below their Jun 2022 peak.  A major jump in mortgage rates last summer caused a decline in prices.  But, rates are still high & homebuyers appear to be adjusting to the new normal.  Demand is strengthening.  “The ongoing recovery in home prices is broadly based,” Craig Lazzara, managing director at S&P DJI, said.  “If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument,” he added.  “Whether we see further support for that view in coming months will depend on the how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness.”  Before seasonal adjustments, prices rose in all 20 cities in Apr, as they had also done in Mar.  Seasonally adjusted data showed prices rising in 19 cities in Apr versus 14 in Mar.  The average interest rate on the 30-year fixed mortgage is still hovering in the high 6% range, more than double what it was in the first 2 years of the Covid pandemic, when homebuying surged dramatically.  Buyers, however, are still out in force.  But they are coming up against extremely low inventory of homes for sale.  Part of that is because the vast majority of homeowners have mortgage rates in the 3% range, which makes them much less likely to want to sell their home & buy another at a higher rate.

Home prices rose for third straight month in April, S&P Case-Shiller index says

Delta (DAL) raised its 2 forecast & estimated full-year adjusted EPS of $6 a share, at the high end of estimates it gave last Apr as strong travel demand & trade-ups to more expensive fare classes continue to drive growth.  DAL forecast adjusted EPS of $2.25-2.50 for Q2, up from a previous range of $2.00-2.25 a share.  CEO Ed Bastian said the Q2 earnings, which it is scheduled to report next month, could be its highest ever for the Apr-Jun period.  “The demand as you know, as anyone that’s traveling knows, is off the chain,” Bastian said.  At a presentation, the airline also raised its estimate for free cash generation this year to $3B from $2B.  DAL reinstated its quarterly div earlier this month.  DAL & its rivals have reported strong travel demand, particularly for intl trips, while other sectors have struggled as consumers grapple with inflation & other challenges.  The airline industry has also faced growth constraints because of air traffic controller shortages, delays in new aircraft & shortfalls of new pilots, helping keep fares firm.  But in addition to resilient demand, airlines are also enjoying jet fuel prices that are down about 30% from a year ago.  The stock rose 1.80.
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Delta lifts profit forecast thanks to strong demand and premium tickets

Treasury yields were little changed as investors monitored data reports that could provide fresh hints about the state of the economy & the Federal Reserve rate path.  The 10-year Treasury yield traded flat at 3.723% & the 2-year Treasury was last up a basis point at 4.685%.  Yields & prices move in opposite directions & one basis point equals 0.01%.  Traders scrutinized fresh economic data including May durable goods orders data that showed a surprising increase for the month.  The latest new home sales figures & Jun's consumer confidence report are also due out ahead of the personal consumption expenditure price index on Fri.  Before then, investors will monitor 2 appearances from Fed Chair Jerome Powell.  Many hope the remarks will offer clues about upcoming monetary policy moves after his comments last week suggested that further interest rate hikes are likely.

Treasury yields are little changed as investors assess state of the U.S. economy

Stocks have been slipping & sliding for more than a week.  Now there are hopes for improving economic data.  DAL (above) gave an optimistic outlook.

Dow Jones Industrials

 






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