| Stock markets sold off this week as investors took profits and moved to bonds, ended six weeks of gains and moving the Dow and S&P off their record highs last week. Bond yields have spiked as recent data suggests that the economy is picking up steam which could reignite inflation. This jump in bond yields began after the September jobs report which revealed that 254,000 new jobs were created, over 100,000 more new jobs than expected. Wages also jumped from their July and August levels. New jobless claims this week were lower than they were in July and August when it looked like hiring was stalling for the second straight week. Consumer confidence also jumped this week. Unfortunately, a heating economy could cause inflation to increase. That pushes up bond yields and mortgage rates. Both are a little over 1/2% higher than they were just a month ago when the Fed dropped short term rates. The Nasdaq closed the week slightly higher and just below its all-time high set July 10, as tech company profits are coming in strong.
Stock markets – The Dow Jones Industrial Average closed the week at 42,114.40, down 2.7% from 42,275.91 last week. It is up 11.2% year-to-date. The S&P 500 closed the week at 5,808.12, down 0.6% from 5,864.67 last week. The S&P is up 21.8% year-to-date. The Nasdaq closed the week at 18,518.61, up 0.2% from 18,489.55 last week. It is up 23.4% year-to-date. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.25%, up from 4.08% last week. The 30-year treasury bond yield ended the week at 4.51%, up from 4.38% 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 October 17, 2024, were as follows: The 30-year fixed mortgage rate was 6.54%, up from 6.44% last week. The 15-year fixed was 5.71%, up from 5.63% last week. The graph below shows the trajectory of mortgage rates over the past year.
Home sales data is released on the third week of the month for the previous month by the National Association of Realtors. These are September’s home sales figures. U.S. existing-home sales September 2024 – The National Association of Realtors reported that existing-home sales totaled 3.84 million units on a seasonally adjusted annualized rate in September, down 3.5% from an annualized rate of 3.98 million units last September. The median price for a home sold in the U.S. in September was $404,500, up 3% from $392,700 one year ago. There was a 4.3-month supply of homes for sale in September, up from a 3.4-month supply one year ago. First-time buyers accounted for 26% of all sales. Investors and second-home purchases accounted for 18% of all sales. All-cash purchases accounted for 30% of all sales. Foreclosures and short sales accounted for 2% of all sales. Have a great weekend! |
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