Many changes in this week’s economical update. Check out what’s new and always stay on top of information.
Market Update | Local Tips, Trends, Rants & Events | Chelsea Robinson | Encino and Sherman Oaks Real Estate Agent and Houses for Sale
Stock markets drop sharply in the last week of February and first two days of March – Stock markets dropped in four out of five sessions in volatile trading this week. The week began with Federal Reserve Chairman, Jerome Powell’s testimony to congress. In his first congressional update he stated that he would raise short term interest rates at a faster pace than his predecessor. He testified that the economy was strong, and inflation was tame, but stated that historical low interest rates were not needed to stimulate an already robust economy. Investors sold stocks in fears that higher interest rates will increase borrowing costs and cut into corporate profits.
Later in the week, President Trump announced that he planned to place tariffs on steel and aluminum imports in an effort to help U.S. metal companies. That sparked another sell off as many U.S. companies purchase imported steel and aluminum. Their costs will be increased which will increase the cost of their products which include: cars, trucks, soda cans, building materials, etc. Another fear is that although the U.S. has a huge trade deficit, we still are among the biggest exporters of goods in the world. It is feared that other countries may retaliate and place tariffs on U.S. goods. That would hurt many industries.
The Dow Jones Industrial Average closed the week at 24,538.06, down sharply from last week’s close of 25,309.99.  It is down 0.7% year to date. The S&P 500 closed the week at 2,691.25, down from 2,747.30 last week.  It’s up 0.7% year to date. The NASDAQ closed at 7,257.87, down from 7,337.39 last week. It is up 4.7% year to date.

Treasury Bond Yields
 –  The 10 year treasury bond closed the week yielding 2.86%, down slightly from 2.88% last week. The 30-year treasury bond yield ended the week at 3.14%, down slightly from 3.16% last week. We watch bond rates because mortgage rates follow bond rates.Mortgage Rates slightly higher this week – The March 1, 2018 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 4.43%, up slightly from last week’s 4.40%. The 15 year fixed was 3.90%, up  from 3.85% last week. The 5-year ARM was 3.62%, down from 3.65% last week.

U.S. Pending Home Sales Index drops 4.7% – The National Association of Realtors announced that it’s pending home sale, index, which is based on the number of contracts signed in January for existing home purchases, dropped 4.7% from December. It was the lowest number of pending sales since October 2014. Year over year existing home sales were 3.8% lower than last January. Extremely low housing inventory was blamed on the drop in sales. The number of active listings were down 9.5% in January from the number of listings in January 2017. The number of existing homes listed for sale in the U.S. was the lowest ever recorded in January.
Southern California median price increased 11.4% in January – CoreLogic/DataQuick announced that the median price paid for a home in the 6 county region increased 11.4% in January from one year ago. The median price was $507,000 in January. It was the highest year over year increase in the median price in 44 months.
The February Jobs report will be released next Friday. Wage gains will be the most pertinent part of the report. Interest rates rose after January’s report showed that average hourly wages rose at the fastest rate since 2010 in January. That caused investors to fear higher inflation was on the way. The February report will show if January’s wage increase was an outlier, or the start of a trend after years of stagnant wages.

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