Dow retreated 236, decliners over advancers about 3-2 & NAZ was off 121. The MLP index crawled up to the 244s & the REIT index drifted lower, down 1+ to the 359s. Junk bond funds puled back & Treasuries had a little selling, raising yields slightly (more below). Oil continued its rally, up 1+ to the high 92s & gold inched up 1 to 1954.
AMJ (Alerian MLP Index tracking fund)
New US home construction dropped in Aug to the lowest level since 2020, underscoring the ongoing challenges facing the housing market. Housing starts tumbled 11.3% last month to an annual rate of 1.28M units, according to new Commerce Dept. That is well below the forecast for a pace of 1.44M units. Applications to build, which measures future construction, saw an uptick in Aug, climbing 6.9% over the course of the month to an annualized rate of 1.54M units. Compared with the same time last year, building permits are down about 2.7%. "August’s home construction data appear to be showing some cracks in the armor of what has been one of the few strong indicators in the housing market recently," said Daniel Vielhaber, an economist at Nationwide. "Still, it’s important to note that there could be a noise component here as much of the sharp decline in starts came from the multifamily sector, which is notoriously volatile." The data comes one day after the National Association of Home Builders/Wells Fargo Housing Market Index (NAHB), which measures the pulse of the single-family housing market, fell 5 points to 45, the lowest reading since Apr. The decline followed a 6-point drop in Aug. Any reading below 50 is considered negative. Sentiment among builders had been steadily rising earlier this year as limited resale inventory pushed would-be buyers to seek out new construction instead. But when mortgage rates shot above 7% in Sep, it throttled demand among would-be homebuyers. "High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower," said Robert Dietz, chief economist at NAHB.
Housing starts unexpectedly plummet to lowest level since 2020
The United Auto Workers union (UAW) announced it would begin striking at additional plants if no serious progress was made by Fri in negotiations with automakers Ford (F), General Motors (GM) & Chrysler's parent company Stellantis (STLA). The UAW launched a targeted strike over pay last week against the 3 automakers, targeting one US assembly plant at each company. "We're not going to keep waiting around forever while they drag this out. We're not messing around," UAW Pres Shawn Fain said, setting the new deadline after complaining about lack of progress in recent talks. The union & companies are at odds over pay & benefits for workers. The 3 automakers have proposed 20% raises over the 4½-year term of their proposed deals, which is ½ of what the UAW is demanding thru 2027. At one point during talks, the UAW offered to lower its demand to 36%. The UAW is also demanding shorter 32-hour work weeks with pay for the full 40 hours, restoration of defined benefit pensions & stronger job security as automakers move to electric vehicles. Ford also faces a total strike at its smaller Canadian operations if no agreement is reached soon with the union, which represents about 5600 Canadian autoworkers, just days after workers at one of the company's US plants walked out. Canadian union Unifor, whose contract with Ford expired at midnight, said there was still no deal in place. Unifor National Pres Lana Payne said that Ford must do more to meet the union's demands. "If there is a strike, this will be a total strike," she said. "Every single one of Unifor's 5,600 members at Ford in Canada will be on picket lines." Negotiations between the UAW& the automakers are continuing. Roughly 13K workers are striking at the 3 US plants, including 3300 at Ford's assembly plant in Wayne, Michigan.
UAW sets new deadline as strikes cripple Big Three automakers
Treasury yields were little changed as investors looked to fresh economic data & the start of the Federal Reserve's 2-day Sep meeting. The yield on the 10-year Treasury rose just around 1 basis point at 4.333% & the 2-year Treasury yield was near flat at 5.067%. Yields & prices move in opposite directions & 1 basis point equals 0.01%. The Federal Reserve is expected to announce its next interest rate policy decision tomorrow. Markets are widely expecting rates to be kept unchanged. However, uncertainty remains about what the monetary policy path may look like beyond that. Comments from the Fed released alongside its interest rate decision & made in the subsequent press conference will therefore be key for investors who hope to gain insights about the outlook for rates. Further rates hikes are still a possibility, several Fed officials have indicated in recent weeks, pointing to economic data as a key factor. Recent data has suggested resilience in the economy & continuing but tolerable levels of inflation.
Treasury yields hold steady as investors await economic data, Fed meeting
Investors are waiting for the Fed's decision tomorrow while the auto strike drags on. Meanwhile they are largely sitting on the sidelines.Dow Jones Industrials
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