Markets struggle to recover after a 4-day losing streak

Dow rebounded 266, advancers over decliners 3-1 & NAZ went up 68.  The MLP index gained 2+ to the 276s & the REIT index rebounded 1+ to the 356s.  Junk bond funds crawled higher & Treasuries ran into selling which raised yields.  Oil was off pennies in the 82s (more below) & gold went up 5 to 2393.

AMJ (Alerian MLP Index tracking fund)

Sales of previously-owned homes dropped 4.3% in Mar compared with Feb, to a seasonally adjusted, annualized rate of 4.19M units, according to the National Association of Realtors (NAR).  Sales were 3.7% lower than in Mar 2023 & this came after a big jump in sales in Feb.  Rising mortgage rates are likely the cause of the slowdown.  This sales count is based on closings from contracts likely signed in Jan & Feb.  Mortgage rates stayed lower in Jan, in the mid 6%-range on the popular 30-year fixed loan, but then they then shot higher in Feb.  “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said Lawrence Yun, NAR's chief economist said.  “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market.”  Inventory did improve slightly, rising 4.7% month-to-month to 1.11M homes for sale at the end of Mar. That's a 3.2-month supply at the current sales pace.  Inventory is now up 14.4% higher than Mar of last year.  More supply did not cool home prices, however.  The median price of an existing home sold in March was $393K, up 4.8% from the year before.  It's also the highest price ever for the month of Mar.  The annual comparison was, however, slightly lower than the month before.  The spring housing market is getting more competitive, & moving faster.  The typical home sat on the market for just 33 days compared with 38 days in Feb.  Investors pulled back a bit, making up 15% of sales, compared with 21% in Feb & 17% in Mar of last year.  First-time buyers did make a comeback though, accounting for 32% of sales, up from 26% in Feb & 28% the year before.  All-cash purchases accounted for 28% of sales, down from 33% in Feb but up from 27% one year ago.  Pre-pandemic, that share was generally around 20%.  Mortgage rates have moved even higher this month, with the average rate on the 30-year fixed hovering around 7.5%, according to Mortgage News Daily.

March homes sales dropped despite a surge in supply

Crude oil futures fell for a 4th day, as Israel has refrained from immediately striking back against Iran after the unprecedented air assault last weekend, easing fears that the Middle East is on the brink of a major war.  The West Texas Intermediate contract for May fell 36¢ to $82.34 a barrel & Jun Brent futures lost 52¢ to $86.77 a barrel.  Oil has sold off 4% this week as traders unwind the geopolitical risk premium built into prices over the last 2 weeks.  US crude oil & the global benchmark have fallen below the prices reached after Israeli's airstrike against Iran’s diplomatic compound in Damascus, Syria at the start of the month, the event that triggered the current round of hostilities. Tamas Varga, analyst with oil broker PVM, said it appears intl pressure on Israel will compel the country to respond in a “measured and moderate” way to Iran’s weekend attack.   Ukraine's drone attacks on Russian oil infrastructure have also receded, Varga added.  “Those with bullish propensity are sinking into apathy as the risk premium that is rooted from Russia and the Near East keeps eroding,” he said.  In addition to the fading geopolitical risk premium, prices are also falling on a 10M barrel build in US petroleum inventories last week, said Giovanni Staunovo, strategist with UBS.

U.S. oil falls below $83 as war fears ease after Israel refrains from immediate Iran counterattack

The commercial real estate market is starting to buckle under the weight of higher interest rates & remote work.  There were 625 commercial real estate foreclosures in Mar, up 6% from Feb & 117% from the same time last year, according to a new report published by real estate data provider ATTOM.  The figure is calculated based on commercial properties with at least 1 foreclosure filing, including default notices, scheduled auctions & bank repossessions, entered into the ATTOM Data Warehouse during the month.  California had the highest number of commercial foreclosures in Mar, with 187 properties.  While that marked an 8% decrease from the previous month, it is a stunning 405% jump from the previous year.   "California began experiencing a notable rise in commercial foreclosures in November 2023, surpassing 100 cases and continuing to escalate thereafter," the report said.  New York, Florida, Texas & New Jersey also saw notable increases in commercial foreclosures last month.  Foreclosures have steadily risen since May 2020, when they hit a record low of just 141 properties.  At that time, the US economy was still in the throes of the COVID-19 pandemic, & many lenders offered commercial loan forbearance to borrowers to help them stay afloat.  However, those agreements have largely expired & now, the commercial real estate market is struggling with a number of challenges, including higher interest rates & waning demand for office space as more companies allow employees to work from home.

Commercial real estate foreclosures jumped 117% in March as trouble looms

Stocks have struggled amid concerns inflation is no longer cooling & the Federal Reserve could ease back on interest rate cuts.  That has put corp earnings center stage as investors watch closely how well reports match up with high expectations.  Dow is still down 1800 in Apr.

Dow Jones Industrials