Stocks Rebounded from Last Week’s Drop…..

U.S. stocks ended the day higher, rebounding from last week’s drop that came amid a hotter-than-expected consumer price inflation report. The recent choppiness comes as the markets await this week’s monetary policy decision from the Fed, with another unusually high rate hike expected. Treasury yields were mixed, and the U.S. dollar was unchanged but remains near multi-year highs. Crude oil prices rose, and gold prices ticked slightly lower. The economic calendar released the first housing report of many that will come out this week, with home builder sentiment falling more than expected, and posting a ninth-straight month of declines. In relatively light equity news, AutoZone topped earnings estimates but shares were lower. Asia finished mostly lower in a light trading session, as Japanese markets were closed for a holiday. Europe ended the day mostly higher, but markets in the U.K. were closed. The global markets waited in anticipation for monetary policy decisions from the Fed, Bank of England, and the Bank of Japan later this week.

The Dow Jones Industrial Average rose 197 points (0.6%) to 31,020, the S&P 500 Index increased 27 points (0.7%) to 3,900, and the Nasdaq Composite advanced 87 points (0.8%) to 11,535. In moderate volume, 3.7 billion shares of NYSE-listed stocks were traded, and 4.1 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.60 to $85.36 per barrel. Elsewhere, the gold spot price ticked $0.40 lower to $1,683.10 per ounce, and the Dollar Index declined 0.1% to 109.62.

The National Association of Home Builders (NAHB) Housing Market Index (HMI) showed home builder sentiment in September fell more than expected and to a level suggesting poor conditions (a reading below 50). The index dropped to 46 from August’s unrevised 49 level, and below the Bloomberg consensus estimate of a decline to 47. This was the second-straight month that homebuilder sentiment was below 50 after falling for nine-straight months, amid the backdrop of rising interest rates and elevated home prices that have caused affordability to plunge, as well as persistent materials and labor costs.

The NAHB said, “Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new home purchase out of financial reach for many households.” The NAHB added that, “builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating as builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped pushed mortgage rates above 6% last week, the highest level since 2008.”

More housing data is slated for release on tomorrow’s economic calendar, courtesy of the August report on housing starts and building permits. Housing starts are forecasted to have increased 0.3% month-over-month (m/m) to an annual rate of 1,450,000 units, while permits are expected to decline 4.8% m/m to an annual rate of 1,604,000 units.

Treasury yields ended mixed, as the yield on the 2-year note climbed 8 basis points (bps) to 3.93%, and the yield on the 10-year note advanced 4 bps to 3.49%, while the 30-year bond rate ticked 1 bp lower to 3.51%.

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