U.S. stocks got back onto the positive side of the ledger after snapping a string of gains yesterday, as global bond rates, which have fallen and intensified market uneasiness, stabilized, while some upbeat earnings out of the retail sector, particularly Target and Lowe’s, also added support. The moves came despite the afternoon release of the minutes from the Fed’s July meeting that confirmed Committee members felt the rate cut following the meeting was a “recalibration”, as opposed to the start of an easing cycle. Treasury yields turned upward and the U.S. dollar nudged higher following the minutes, and as existing home sales rose and topped forecasts. Meanwhile, crude oil prices were mixed and gold lost modest ground.
The Dow Jones Industrial Average (DJIA) rose 240 points (0.9%) to 26,203, the S&P 500 Index increased 24 points (0.8%) to 2,924 and the Nasdaq Composite advanced 72 points (0.9%) to 8,020. In moderately-light volume, 669 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.45 to $55.68 per barrel and wholesale gasoline was $0.01 higher at $1.69 per gallon. Elsewhere, the Bloomberg gold spot price declined $4.59 to $1,502.61 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 98.29.
Existing-home sales rose 2.5% month-over-month (m/m) in July to an annual rate of 5.42 million units, compared to the Bloomberg expectation of a rise to 5.40 million units from June’s upwardly-revised 5.29 million rate. Sales of single-family homes were up m/m and versus year-ago levels, but purchases of condominiums and co-ops were roughly flat m/m and down y/y. The median existing-home price rose 4.3% from a year ago to $280,800, marking the 89th straight month of y/y gains. Unsold inventory came in at a 4.2-months pace at the current sales rate, down from 4.4 months a year ago. Sales rose m/m in the Midwest, South and West, but were down in the Northeast. Sales were up slightly in the Midwest and South compared to last year, and were down in the Northeast and West. National Association of Realtors Chief Economist Lawrence Yun said, “Falling mortgage rates are improving housing affordability and nudging buyers into the market,” but added that “supply of affordable housing is severely low.”
In other housing news, the MBA Mortgage Application Index dipped 0.9% last week, following the prior week’s 21.7% surge. The slight decline came as a 0.4% gain in the Refinance Index was more than offset by a 3.5% drop for the Purchase Index. The average 30-year mortgage rate decreased 3 basis points (bps) to 3.90%.
Treasuries were lower, as the yield on the 2-year note increased 7 bps to 1.57%, the yield on the 10-year note gained 3 bps to 1.58%, while the 30-year bond rate nudged 2 bps higher to 2.07%.
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