Archive for October, 2009

Day Recap: Stocks are slipping, the dollar is down, and gold is at new highs - The Dow and S&P 500 closed at 12-month peaks on Monday but trading was skittish today as investors’ long-term concerns didn’t match with the recent rally. Most sectors in all three markets were down after six days of broad gains.

The US dollar continues to weaken against a broad array of currencies; the US dollar index was down 0.2%. Gold reached new peaks this morning, up more than $7 to $1,064.70 per ounce. WTI oil futures were up 31 cents to $73.57 a barrel.

House Passes Legislation Extending FTHB Tax Credit for Active Military - The House of Representatives has passed a bill that extends the first-time homebuyers tax credit for one year for military families and certain other federal employees subject to frequent overseas deployment.

 
HR 3590 will allow eligible military personnel and foreign service and intelligence officers to apply for the $8,000 tax credit for one year beyond its current November 30 deadline. Those meeting the underlying requirements for the credit must also be serving overseas or have spent at least 90 days deployed outside of the country during the current calendar year. It is expected that about 350,000 military personnel and an unknown number of federal employees may be affected by the new law.

There is currently a battle being waged over extending the popular credit for all eligible persons and possibly even removing the requirement that the home be a qualified first-time purchase. Many credit the current tax break for a recent surge in the housing market after months of rising inventories and falling prices. Such an extension is strongly supported by the National Association of Realtors, the National Association of Homebuilders, and other major players in the housing industry, however, many argue against it on the basis of cost.

Rates Lower in Week Ending October 8, 2009 - Mortgage rates just keep going down according to data released this week by both Fannie Mae and Freddie Mac.

Freddie Mac's Primary Mortgage Market Survey for the week ended October 8 showed an average rate for the 30-year fixed-rate mortgage (FRM) of 4.87 percent with 0.7 point. During the previous week the average was 4.94 percent also with 0.7 point. This is the lowest the 30-year rate has been since the week ended May 21 when it averaged 4.82 percent.

The 15-year FRM set yet another record this week with a rate that averaged 4.33 percent with 0.7 point. Last week the average was 4.36 percent with 0.6 point. This is the fourth consecutive week that the 15-year has reached new lows for the 15 years Freddie Mac has tracked the mortgage.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also set a new record low at 4.35 percent with 0.5 point, down from 4.42 percent with 0.6 point. Freddie Mac first started reporting on weekly averages for the hybrid in January, 2005.

One-year Treasury-indexed ARMs averaged 4.53 percent, an increase from last week when it averaged 4.49 percent. Fees and points were unchanged at 0.5 point.

Stocks Higher After Jobless Claims Data - The day’s data was mixed but sentiment continues to run high on Wall Street after third-quarter earnings posted after the bell yesterday beat expectations. This morning, jobless claims moderated more than forecasts and wholesale trade data showed businesses were continuing to cut back on inventories at record rates.

Weekly claims for unemployment benefits fell 33k to 521,000 in the week ending October 3, the lowest level since early January. The report easily beat forecasts for 540k new claims, and drove the 4-week average down to 540k, the lowest since mid-January.

Demand for New Loans Up 16.4% as Rates Hold Below 5.00% - Mortgage rates held below 5.00 percent for the third consecutive week helping refinance and purchase loan demand increase, according to a weekly report released by the Mortgage Bankers Association (MBA) this morning. The MBA said, in the week ending October 2, 2009, the average mortgage rate for 30-year fixed-rate loan fell 5 basis points to 4.89 percent from 4.94 percent. That in combination with the soon to expire $8,000 tax credit for first time home buyers helped mortgage application volume increase by 16.4 percent in the week.

Forecast: California home sales to slow in 2010 - By ALEX VEIGA, AP Real Estate Writer

Home sales in California are expected to dip next year, bucking the national trend, as unemployment and the loss of a tax incentive for homebuyers weigh on the country's largest housing market, a forecast Wednesday showed.
The California Association of Realtors' 2010 housing market forecast calls for home sales to slow by 2.3 percent from a projected 540,000 homes this year to 527,000 next year.
California home sales bottomed in late 2007 at 346,900 units, but have turned around since then, fueled by cheap foreclosed homes and a federal tax credit.

Equity Gains Erase Last Week's Losses - A global advance in equities helped US stocks continue to rally on Tuesday. The last two days have seen stocks rise enough to erase losses from the previous two weeks. Indeed, the S&P 500 is just 15 points shy of the 2009 peak reached on Sept. 22.

The S&P 500 was up 1.48%, or 15 points, to 1,056. The Nasdaq was up 1.74% to 2,104, and the Dow was trading 1.39% higher at 9,733.

Commodities are also the rise. WTI crude has been driven up $1.40 to $71.81 per barrel, while gold has added $22.80 to a new record high at $1,040.60 per ounce. Meanwhile, the US dollar remains weak against a broad array of currencies, in part due to a report from the UK’s Independent stating that different Gulf states were in secret talks with Russia, China, Japan and France to replace the greenback in trading crude oil.

No major data from the US hit markets this morning, but third-tier data from the retail world said sales were rising last week. The weekly report from the International Council of Shopping Centers & Goldman Sachs said sales were up 1% compared to the last year and 0.3% compared to the prior week.

The Week Ahead: Turning Point for Markets? - Markets slipped 1.8% last week but overall September saw shares rise 3.6%, indicating that investors do not believe the market has overheated despite the rapid gains made since March.

After a packed schedule last week, the five days ahead look relatively light. Indeed, on Tuesday and Wednesday the focus will be on headlines from meeting held at the House Financial Services Committee.

With markets continuing to digest the worse-than-expected employment data from Friday, some are saying this week could be a turning point for markets.

Markets Recovering After Two-Week Struggle - Markets appear to have found a direction. The only data release this morning was the ISM services index but despite a much better reading than anticipated, the reaction on Wall Street was mixed. Stocks actually turned lower after the release, but 20 minutes later equities began climbing.
The S&P 500 is erasing losses from the past two weeks with a 0.86% gain to 1,034. The Nasdaq is similarly up 0.88% to 2,066, and the Dow is doing its best to catch up with a 0.63% gain to 9,547.

Busy First Day of Fourth Quarter - The fourth quarter began today with a torrent of fresh data, plus speeches from Fed chairman Ben Bernanke and Atlanta Fed president Sandra Pianalto. Here is the recap of today's data:
The day began on a soft note with poor results from the weekly jobless claims report. Offsetting a negative reaction from that report, optimistic numbers were published in the personal income & outlays report. Income levels went up 0.2% in August, doubling the consensus forecast, while the prior month’s level was given a bump in revisions too.
At 10:00 came the most important data point of the day. The ISM manufacturing survey fell three tenths to 52.6, well below Wall Street forecasts. Not that it had much mitigating impact on markets, but other data released at 10:00 was more positive.
The Pending Home Sales Index rose 6.4% in August to its highest level in more than two years. In the last 12 months signed contracts have advanced by 12.4%.
In a related report, construction sector improved by 0.8% in August, in contrast to expectations that it would fall 0.1%. But spending in July fell by a whopping 1.1% in the new estimates, compared to the original projection of -0.2%.
As busy as today was, the most important data point of the week won’t be released until tomorrow morning. The employment situation report is supposed to show that 170,000 jobs were lost last month, compared to 216,000 in August.

Mortgage Rates Average 4.94% in Week Ending October 1 - During the week ended October 1 the 30-year fixed rate mortgage (FRM) averaged 4.94 percent with 0.7 point compared to the week before when the average was 5.04 with 0.6 point. The 30-year fixed was last at this level during the week ended May 28, 2009 when it averaged 4.91 percent.