Stocks have worst week since January – It was a tough week for stocks. Not quite a perfect storm, but it was the worst week since January for stocks. Factors that dragged stocks down were: Weakness in the Chinese economy caused U.S. companies that are heavily dependent on China to miss profit targets. Energy stocks plummeted as the cost of oil dropped further on fears of China’s economy, the worlds second largest, slowing causing demand to suffer. Supply is rising at the same time due to potential Iranian Oil hitting the market, shale production in U.S. and Saudi Arabia flooding the market with cheap oil. Commodities also got hammered as steel, copper, and other building metals dropped to a 6 year low in price, mostly due to lower demand in Asia. Central America also showed weekends in their economy. The dollar continued to gain strength hitting 1.09 Euro to the dollar, an all time high. This is a threat to profits as a strong dollar causes U.S. goods to be more expensive overseas which hurts U.S. exports. On the positive side:home re-sales showed a strong increase, jobless claims for the week hit a 41 year low, U.S. Retail sales were strong, especially Amazon who’s stock soared after they reported profits. The Dow Jones Industrial Average closed the week at 17,568.53, down from last week’s close of 18,086.45. The S&P 500 closed the week at 2,079.65, down from last week’s close of 2,126.64. The Nasdaq closed Friday at 5,088.63, down from last week’s record close of 5,210.14.
Treasury Bond yields drop for second straight week – Investors fled stocks and invested in treasury bonds looking for safety. Rates around the world dropped as foreign economies continued to slow. The U.S. Economy, currently the strongest in the world, has among highest treasury rates, attracting foreign investors as well as domestic. The 10 year Treasury bond yield closed the week at 2.27%, down from last week’s 2.34%. The 30 year treasury bond yield closed Friday at 2.96%, down from 3.08% last week.
Mortgage rates unchanged this week – The 30 year fixed rates ended the week around 4.10% for loans up to $417,000, and around 4.25% for loans over $417,000. Jumbo loans are about the same as new FNMA and Freddie Mac fees kept conforming rate loans from falling with treasury bonds the last couple of weeks. Jumbo loans over $625,500 are not subject to increased fees. The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.50%. 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.75%.
California pending existing home sales continue to increase – The California Association of Realtors reported that June pending home sales were up 12.5% on an annual basis from June 2014. This marked the 7th straight month of increased sales numbers and the 5th straight month of double-digit gains. Month over month California as a whole saw fewer sales in June than in May, but Southern California pending home sales were up 4% in June from May.
U.S. New home sales surprising disappointing – The Commerce Department reported that new home sales unexpectedly fell in June. New U.S. Single family home sales fell in June to a 7 month low. New home sales account for just 8% of housing sales and tend to be volatile on a month to month basis. Nevertheless, June single family new home sales dropped 6.8% in June on a seasonally adjusted basis. This was disappointing, as single family new homes had been trending up sharply, but single family new home sales are still up 18.1% from June of 2014. Data showed that new building permits jumped in June to an eight year peak. This is sign that new home sales will continue to increase as limited supply was factor in inhibiting sales in June.
U.S. Resale home sales jump – The National Association of Realtors reported that home sales of existing homes jumped in June to an 8 year high.
Weekly jobless claims lowest since 1973 – The Labor Department reported that the number of U.S. workers filing initial applications for jobless benefits fell by 26,000 to a seasonally adjusted 255,000 in the week ended July 18, a 41-year low.The week coincides with the period the Labor Department conducts surveys to assess the strength of the labor market for the month of July. The most recent jobless-claims report shows how the job market has healed from the fragility of six years ago, when nearly 600,000 Americans a week were seeking such assistance. The low number of layoff has some economists optimistic that hiring will strengthen further this summer.
Have a great weekend!
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