Stocks rally on Friday to end the week just slightly down – The stock markets have been volatile for the last six weeks mostly due to worries about the effects from slowing growth in China, European weakness, and and uncertainty about the outlook for interest rates. Early in the week markets dropped as more data came in showing China’s economy has continued to slow. One report Wednesday showed that their manufacturing had slowed to the lowest level in 6 years, during the peak of the financial crisis. However; stocks made up much of their loses on Friday after the Commerce Department reported that 2nd quarter GDP had been revised upward, consumer spending was revised upward, and Fed Chairperson Janet Yellen gave a more optimistic view of the economy. Her assessment included that The Fed does still intent to raise rates this year. Uncertainty over rates, and The Fed’s decision last week to leave rates at near zero levels, made experts fear that The Fed felt the economy was weaker than experts believe. Janet Yellen’s speech at the University of Massachusetts yesterday seemed to put investors’ minds at ease when she reiterated that growth was strong and that a rate increase was coming. US airlines also reported that profits were up 53% in the second quarter mostly due to lower fuel prices and steady travel demand. It is the best year for the airlines since 2007. The Dow Jones Industrial Average closed the week at 16,314.67, almost unchanged from last week’s close of 16,384.79. The S&P 500 closed the week at 1,931.34, down slightly from last Friday’s close of 1,958.03. The NASDAQ closed the week at 4,686.50, down from last week’s close of 4,827.23.
Mortgage rates just under 4% – The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.375% for loans over $417,000. The 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are about 2.50%.
Treasury Bond yields slightly lower this week – The 10 year Treasury bond yield closed week at 2.17%, up slightly from 2.13% last Friday. The 30 year treasury bond yield closed Friday at 2.96%, almost unchanged from last week’s close of 2.93%. Mortgage rates follow bond yields so these are closely watched.
Consumer confidence reading the edges up in September- The University of Michigan final reading on consumer sentiment for September moved higher. It ended the month at a reading of 87.2 from an initial reading of 85.7 at the beginning of the month. The average reading since its inception has been 85.3. The average reading during the 5 recessions since its inception has been 69.3. During non-recessionary years the average reading has been 87.5, which is right about where we are. Consumer sentiment is important because consumer confidence is so closely tied to consumer spending which accounts for nearly a third of the economy.
Second quarter GDP revised upward – The Commerce Department said Friday that the second quarter gross domestic product showed a growth rate of 3.9%. This was higher than their initial estimate of 3.7%. The Commerce Department also said Friday that consumer spending rose 3.6% during the quarter up from an initial estimate of 3.1%.
Pending home sales decline in August, but numbers are still above last year’s levels – The California Association of Realtors reported that pending home sales fall 8.7% in August from July. While monthly pending home sales were down, year over year pending home sales in August were still up 12.8% from August 2014. It was the 10th straight month of year over year increases in the number of pending sales, and the 7th straight month of double-digit year-to-year gains.
I hope you have a great weekend!
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