Stocks end week lower on tax reform uncertainty and falling oil prices – Stocks fell for the second straight week. There was unusual volatility this week. The Dow dropped 168 points in the first three days of the week as it looked like tax reform was losing some support in Congress. On Thursday, the House passed their version and the Dow gained almost 200 points. On Friday, a few Republican Senators said they may not support the Senate version and The Dow dropped 100 points to end the week down for the second straight week. Meanwhile, both the Senate and the House removed changes to how they would be taxing stock options for tech firms, after industry leaders argued that higher taxes on options would limit their ability to attract talent. This helped the tech heavy NASDAQ, which closed up for the week. The Dow Jones Industrial Average ended the week at 23,358.24, down from 23,422.22 last week. It’s up 18.2% year-to-date. The S&P 500 closed the week at 2,578.85, down slightly from its close last week of 2,582.30. The S&P is up 15.2% YTD. The NASDAQ closed the week at 6,782.79, up from its last week’s close of 6,750.94. It’s up 26% year-to-date.
Bond yields drop this week – The 10-year Treasury bond closed the week at 2.35%, down from 2.40% last week. The 30-year treasury yield ended the week at 2.78%, down from 2.88% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates up slightly this week – The November 16, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.95%, up from 3.90% last week. The 15-year fixed was 3.31%, up from 3.24% last week. The 5-year ARM was 3.21%, almost unchanged from 3.22% last week.
California jobless rate falls to 4.9% – California posted strong job gains in October, adding 31,700 net new non-farm jobs. That brought the state’s unemployment rate down from 5.1% in September to 4.9% in October. Wage growth slowed as hourly wages were 3.2% higher in October from one year earlier, down from September’s wage growth of 3.8%, according to the U.S. Bureau of Labor Statistics. California is outpacing the U.S. as the national rate of wage growth was 2.4% in October.
New housing starts rebounds in October – The Commerce Department reported that new housing starts jumped 13.7% in October. That was the highest level since October 2016. September’s new home starts pace was down considerably because of a very steep drop in new construction in hurricane damaged areas. Because September’s figures were depressed, a 13.7% month-over-month increase is not as exciting as it sounds. Yet it was the highest number of permits pulled for new home construction since October 2016.
The housing sales and price report should be released next week by The California Association of Realtors.
Have a great weekend,
Syd