Dow gained 130, advancers over decliners 2-1 & NAZ was up 66. The MLP index was off a tad to the 251s & the REIT index added 1+ to 356. Junk bond funds crawled higher & Treasuries had limited selling which raised yields slightly. Oil dropped 3+ to the 74s after the OPEC+ delayed its meeting from Nov 26 & gold fell 6 to 1995.
AMJ (Alerian MLP Index tracking fund)
The number of Americans filing new claims for unemployment benefits fell more than expected last week, but that likely does not change the view that the labor market is slowing amid higher interest rates. Initial claims for state unemployment benefits dropped 24K to a seasonally adjusted 209K for the week ended Nov 18, the Labor Dept said. A poll had forecast 226K claims for the latest week. The data was released a day early because of the Thanksgiving holiday on Thurs. The labor market is gradually cooling as higher borrowing costs dampen demand. Minutes of the Federal Reserve's Oct 31-Nov 1 meeting showed that while policymakers viewed labor market conditions as having "remained tight," they noted that "they had eased since earlier in the year, partly as a result of recent increases in labor supply." Loosening conditions combined with subsiding inflation have led financial markets to conclude that the central bank is done hiking interest rates in the current cycle. Financial markets are anticipating a rate cut in the middle of 2024, according to CME Group's FedWatch Tool. Claims rose marginally between the Oct & Nov survey weeks. The economy created 150K jobs in Oct. Though the labor market is steadily slowing, there are signs the moderation is broadening out. According to the Bank of America Institute, an analysis of internal data showed a rise in "pay disruptions" over 2023, consistent with rising joblessness. It noted that this phenomenon, previously confined to higher-income groups appeared to be extending to middle- & lower-income cohorts. The institute also said there was a significant slowdown in job-to-job moves, consistent with slower hiring & workers' reluctance to move against an uncertain backdrop. It said the data suggested that pay increases for job hoppers had softened, though rises for higher-income workers showed signs of picking up.
US weekly jobless claims fall; labor market still slowing
Nordstrom (JWN) sales slid by nearly 7% year over year, echoing other retailers' comments about weaker demand & budget-pressured consumers. Yet
the department store operator reiterated its full-year sales outlook,
saying it expects revenue to decline 4-6% versus a year
ago, including retail sales & credit card revenues. It
narrowed its adjusted EPS forecast to $1.90-2.10, excluding the impact of winding down its
stores & online business in Canada & any potential share buybacks. In the 3-month period that ended Oct 28, EPS was 41¢ compared to a loss of 13¢ in the year-ago qtr. The company had an
impairment charge related to supply chain technology & related assets
in the year-ago qtr. JWN is looking for growth after 3 straight years of sales that have been at or below pre-pandemic
levels. The higher-end department store missed out on the dramatic sales
gains that other retailers experienced during the Covid pandemic when
consumers had extra cash & fewer ways to spend it during the pandemic. As part of that push, the retailer has opened more of its off-price stores, Nordstrom Rack, & revamped merchandise in those stores to emphasize best-selling brands, CFO Cathy Smith said. But she also referred to a complex economic backdrop. “We
continue to see a cautious consumer and it remains to be seen how
changes in inflation, higher interest rates, and the resumption of
student loan repayments will affect discretionary consumer spending
during the holiday season,” she said. The stock fell 54¢.
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Nordstrom sales come up short, echoing broader retail industry pressures
Mortgage demand is finally crawling out of the basement as interest rates continue to move lower. Total application volume increased 3% last week from the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726K or less) decreased to 7.41% from 7.61% & points decreased to 0.62 from 0.67 (including the origination fee) for loans with a 20% down payment. “U.S. bond yields continued to move lower as incoming data signaled a softer economy and more signs of cooling inflation. Most mortgage rates in our survey decreased, with the 30-year fixed mortgage rate decreasing to the lowest rate in two months,” said Joel Kan, MBA's deputy chief economist. “Mortgage applications increased to their highest level in six weeks, but remain at very low levels.” Applications to refinance a home loan increased 2% for the week & were just 4% lower than the same week one year ago. Rates today are about 75 basis points higher than they were a year ago, but more than twice what they were 2 years ago when there was a massive refinance boom. Most homeowners with mortgages today have rates far lower than they would get now. Applications for a mortgage to purchase a home increased 4% week to week but were still 20% lower than one year ago. “The average loan size on a purchase application was $403,600, the lowest since January 2023. This is consistent with other sources of home sales data showing a gradually increasing first-time homebuyer share,” Kan added. While mortgage demand is moving slightly higher off historic lows, the housing market is still extremely weak. Oct sales of existing homes dropped to the lowest level in 13 years, according to a new report from the National Association of Realtors. “The market has clearly shifted gears into holiday mode with light volume and liquidity greasing the skids for random volatility without any fundamental justification,” wrote Matthew Graham, COO of Mortgage News Daily.
Mortgage demand jumps to six-week high as interest rates continue to drop
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