US stocks have best week in nearly 2 years!! After the turbulence in the market last week, U.S. stocks had their best week in nearly two years. Markets were helped by strong quarterly earnings from Microsoft and other big U.S. companies and positive housing data. The Dow Jones industrial average closed the week at 16,805.41, up 425 points from last Friday’s close of 16,380.41. The Standard & Poor’s 500 index closed Friday at 1,964.58, up 77.82 points from last Friday’s close of 1,886.76. The Nasdaq composite rose 30.92 points today or 0.7 percent, to 4,483.72, but was still down 74.42 points from last Friday’s close 4,558.14. The S&P 500 rose 4.1 percent for the week, its biggest gain since January 2013. But volatility can go both ways. Just as the market jumped sharply this week, it plunged just as sharply last week. The index is still down 0.4 percent for October. Profits for companies in the Standard & Poor’s 500-stock index are up 5.6 percent from a year ago this earnings season, according to FactSet. That growth is better than the 4.6 percent increase the market was expecting.
U.S. 10 year Treasury Bonds yields slightly edged up this week. The 10 year treasury bond yield closed up Friday at 2.29%, from 2.22% last Friday.
Mortgage giant Freddy Mac’s weekly Mortgage rate survey showed slightly lower rates. The 30 Year Fixed Mortgage Rate was at 3.92% compared to 3.97% last week and 4.19% last year. Since April, the 30-year fixed rate has plummeted nearly 50 basis points. The 15-year fixed-rate average dropped to 3.1%. It was 3.18% a week ago and 3.24 percent a year ago. The 15-year fixed rate has declined almost 40 basis points the past six months. Hybrid adjustable rate mortgages were mixed. The five-year ARM average edged down to 2.91%. It was 2.92% a week ago and 3% a year ago. The one-year ARM average rose to 2.41%. It was 2.38% a week ago. The 30 year loan rate rose a little today and yesterday. The 30 year fixed is just over 4% and the 15 year fixed if around 3.25%. Both rates are at near their lowest levels of 2014 and are just slightly above early in the week which was the best in 72 weeks.
Freddie Mac October U.S. Economic and Housing Market Outlook. Freddie Mac released this week its U.S. Economic and Housing Market Outlook for October, showing the four key ingredients labor, income, fixed investment and trust required to lift the economy toward robust sustainable growth are still lacking the necessary thrust.
As interest rates have dipped lower, demand for home loans has surged. Mortgage applications jumped nearly 12% in the week ended Oct. 17 compared with a week prior, according to the Mortgage Bankers Association, a lenders trade group. The increase is driven by homeowners seeking to refinance existing mortgages. Refinancing applications shot up 23% in the week through Oct. 17–the largest weekly leap since January 2012after a 5.6 percent advance the week before —though they remain 44% lower than in June 2013 while the purchase applications measure dropped 4.6 percent. The refinancing gauge jumped 23.3 percent. For borrowers hoping to pull the trigger on a refinance, this spate of the lowest mortgage rates since June 2013 is a pretty good opportunity. Homeowners now have more equity as well due to rising prices. Many who could not refinance in the last few years are able now that they can meet the equity requirements.
FED MEETING Next Week: Investors will increasingly turn their focus to next week’s Federal Reserve policy meeting for confirmation that the U.S. central bank is ending its bond-buying program. That policy has kept interest rates extremely low to support an economic recovery. It has also helped drive gains in stock prices as investors sought higher returns. Recent mixed signals about the strength of the U.S. recovery have prompted speculation that the Fed might let the program continue for longer than previously anticipated. On Oct. 29 the Federal Reserve is expected to wrap up what was once an $85-billion monthly bond-buying initiative – the third installment of quantitative easing, or QE3. The effort was part of an unprecedented two-pronged global central bank blitz that flooded financial markets with trillions of newly minted dollars and brought interest rates to near zero in an effort to keep the financial system from freezing up.
Home Remodeling Index in U.S. at Record High. According to the NAHB, the National Association of Home Builders’ Remodeling Market Index (RMI) reclaimed the high-water mark of 57 in the third quarter of 2014. This is the sixth consecutive quarter for an RMI reading above 50. An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling
CAR (California Association of Realtors) Data Released September Report this week showed that California home sales remained steady in September. Closed escrow sales of existing, single-family homes in California totaled a seasonally adjusted annualized rate of 396,440 units in September. Sales in September inched up 0.4 percent from a revised 394,700 in August and were down 4.2 percent from 413,850 in September 2013. September marked the 11th straight month that sales were below the 400,000 level and the 14th straight month that sales have declined on a year-over-year basis. The median price of an existing, single-family detached California home fell 4 percent from August’s median price of $480,280 to $460,940 in September but was up 7.6 percent from the revised $428,290 recorded in September 2013. The statewide median home price has been higher on a year-over-year basis for more than two years.
CPI Data Released. The Labor Department said on Wednesday that its Consumer Price Index edged up 0.1 percent in September as a rise in food and shelter costs offset a broad decline in energy prices. The index dropped 0.2 percent in August, and economists had expected a flat reading for September. In the 12 months through September, the index rose 1.7 percent after a similar gain in August. The Fed targets 2 percent inflation and tracks the index. Inflation has waned in recent months after increasing in the second quarter. This is due in part to slower economic growth in Asia, and Europe, as well as a strengthening dollar, which reduces import price pressures.
It is strange how quickly the outlook in the economy can change! Last week a panic was setting in about the economy, and this week everything looked “rosy”. Let’s see what that translates to in home sales. I am optimistic!
Have a great weekend!
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