| U.S. hiring stabilized in August after dropping in July – The Department of Labor and Statistics reported that 143,000 new jobs were added in August. That was an increase from a revised 89,000 jobs added in July, yet below economists’ expectations of 165,000 new jobs. The unemployment rate ticked down 4.2% in August from 4.3% in July which marked its highest level since October 2021. Average hourly wages increased 3.8% year-over-year in August, up from a 3.6% annual increase in July. Stock markets dropped on fears that as the economy is heading toward a slowdown, which it needs to do to control inflation, spending will drop, and profits will decrease. Economists widely speculated that with job growth higher than in July, wages increasing at a higher rate, and the unemployment rate stabilizing, there was enough strength in the report for the Fed to do a .25% rate drop rather than a .50% rate drop at their meeting next week.
Stock markets – Stock markets dropped sharply this week. While all indexes were down, the tech-heavy Nasdaq had its worst week since 2022, dropping over 6%. Although tech stocks fared the worst, the sell-off was broad-based with nearly all sectors falling as investors feel that the slowing job market will lead to some sort of slowdown in the economy. The Dow Jones Industrial Average closed the week at 40,345.42, down 2.9% from 41,563.08 last week. It is up 10.3% year-to-date. The S&P 500 closed the week at 5,408.42, down 4.2% from 5,648.40 last week. The S&P is up 18.4% year-to-date. The Nasdaq closed the week at 16,690.83 down 6.4% from 17,713.63 last week. It is up 18% year-to-date. U.S. Treasury bond yields dropped sharply this week – The 10-year treasury bond closed the week yielding 3.72%, down from 3.91% last week. The 30-year treasury bond yield ended the week at 4.03%, down from 4.20% last week. We watch bond yields because mortgage rates follow bond yields. Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of September 5, 2024, were as follows: The 30-year fixed mortgage rate was 6.35%, unchanged from 6.35% last week. The 15-year fixed was 5.47%, down from 5.51% last week. The graph below shows the trajectory of mortgage rates over the past year.
Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S. Have a great weekend! |
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