Dow fell 93, advancers modestly ahead of decliners & NAZ added 38. The MLP index fluctuated in the 172s & the REIT index continued in demand, crawling up to the 427s. Junk bond funds rose & Treasuries saw limited buying. Oil inched higher in the 61s & gold was off 7 to 1785.
AMJ (Alerian MLP index tracking fund)
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The number of Americans filing for first-time jobless claims last week
fell to the lowest level since the outbreak of COVID-19, according to
the Labor Dept. Data showed 547K Americans filed for first-time
unemployment benefits last week, below the 617K expected. Last week's total of
576K first-time filings was revised up by 10K to 586K. About 8M fewer Americans are working now than before the pandemic. Continuing
claims for the latest week, meanwhile, fell to 3.674M,
but were above the 3.667M expected. Despite the
decline in both initial & continuing claims, the number of Americans
receiving some form of jobless benefits rose by more than 491K to
17.4M. Jobless
claims hit a record 6.2M last Apr as nonessential
businesses were ordered to close their doors in an effort to help slow
the spread of COVID-19.
Jobless claims drop to new pandemic low, surprising analysts again
Federal Reserve Chair Jerome Powell said that inflation could temporarily rise as the US economy recovers from the coronavirus pandemic, but added that policymakers are committed to preventing a "substantial" overshoot. In a 5-page letter to Sen Rick Scott, Powell said the central bank expects the increase in prices to be transitory, driven by a spending rebound as the economy reopens & a potential bottleneck that could limit supplies. "We do not seek inflation that substantially exceeds 2 percent, nor do we seek inflation above 2 percent for a prolonged period," Powell added. The letter was in response to concerns about inflation & the Fed's bond-buying program. The Fed slashed interest rates to near-zero last month & committed to buying at least $120B a month in Treasury debt as it sought to stave off the economic pain triggered by the pandemic & subsequent stay-at-home orders. In order for policymakers to raise interest rates from 0%-0.25%, Powell has repeatedly said the economy would need to hit full employment & inflation would have to hit a sustainable level above 2%, the Fed's target range. "If progress towards our employment and inflation objectives slows, we will maintain a highly accommodative stance for longer," Powell wrote. "Conversely, if progress turns out to be more rapid, adjustments to the stance of policy would likely occur sooner." Most Fed policymakers don't expect to reach those targets for another couple of years; previous projections from the Fed's Mar policy-setting meeting show that policymakers expect rates to remain near zero thru 2023. About 7 of the 18 Fed officials at the meeting said they expect to start lifting rates in 2022 or 2023 -- an increase from Dec, when just 5 forecast a rate hike.
Powell pledges Fed won't allow 'substantial' overshoot of inflation
Closed sales of existing homes fell 3.7% in Mar to a seasonally adjusted annualized rate of 6.01M units, according to the National Association of Realtors. That is the slowest sales pace since Aug & the 2nd straight month of declines. Still, sales were 12.3% higher than Mar 2020, when transactions were falling due to the COVID pandemic. Realtors say the monthly numbers are dropping due to limited supply. The demand is there. Homes are selling in an average of just 18 days, which is considered an extremely fast rate. “If the demand was retreating, then we would see fewer multiple offers, but we know that multiple offers are widely prevalent in today’s market,” said Lawrence Yun, chief economist for the Realtors. The supply of homes for sale fell 28.2% from a year ago. There were just 1.07M homes for sale at the end of month, representing a 2.1-month supply at the current sales pace. Low supply continues to push prices ever higher. The median price of an existing home sold in Mar was $329K, a 17.2% increase last Mar. That is the highest price on record & the fastest pace of appreciation. Some of that gain is due to the fact that there are more homes selling on the higher end of the market, therefore skewing the median higher. Overall, however, prices are significantly higher. “Perhaps the record stock market is providing the financial wherewithal to purchase these million-dollar homes,” said Yun. These closed sales represent contracts signed in Jan & Feb. Mortgage rates started this year near a record low but then began climbing steeply in Feb & throughout most of Mar. As rates rose, potential buyers lost purchasing power, and some were likely sidelined.
Existing home sales suffer second straight monthly decline as tight supply pushes prices higher
After selling at the opening, there was buying in the 2nd hour of trading. Economic data & earnings look good. But the virus keeps fighting back, a reason for investors to be nervous.
Dow Jones Industrials
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