Markets Add to Gains for the Year…..
U.S. equities finished higher to add to gains seen this year, with the Nasdaq on a four-day winning streak. However, caution was prevalent, as the markets awaited tomorrow’s December consumer price inflation report, and as Q4 earnings season will kick off on Friday with results from some prominent names from the Financials sector. Treasury yields were lower and the U.S. dollar was little changed, while crude oil prices and gold were higher. The economic calendar was relatively light today, but mortgage applications snapped a two-week losing streak. The airline industry was in focus after the FAA temporarily suspended all flights across the U.S. after a computer system failure, and Wells Fargo & Company announced that it will reduce the size of its mortgage lending business. Asia finished mixed, and Europe saw widespread gains, as the global markets awaited this week’s inflation and earnings data out of the U.S.
The Dow Jones Industrial Average rose 269 points (0.8%) to 33,973, the S&P 500 Index gained 50 points (1.3%) to 3,970, and the Nasdaq Composite increased 189 points (1.8%) to 10,932. In moderate volume, 4.2 billion shares of NYSE-listed stocks were traded, and 5.2 billion shares changed hands on the Nasdaq. WTI crude oil added $2.29 to $77.41 per barrel. Elsewhere, the gold spot price was up $4.20 to $1,880.70 per ounce, and the Dollar Index was flat at 103.23.
The airline industry was in focus after the Federal Aviation Administration (FAA) temporarily paused all flights across the U.S. after the FAA experienced a computer outage impacting key pilot notification systems. The White House said there was no evidence the outage was due to a cyberattack, but it has ordered the Department of Transportation to do a full investigation.
The markets have started 2023 out in positive fashion, but a key consumer price inflation report and the start of Q4 earnings season is yet to come this week, with Financial sector heavyweights set to deliver their results. Market volatility is likely to remain as it grapples with the ultimate impact of aggressive Fed actions to try to combat rising prices. Last week’s December job report added to the uncertainty regarding the Fed’s monetary policy decisions.
Mortgage applications rebound slightly…..
The MBA Mortgage Application Index rose 1.2% last week, following the prior week’s 10.3% drop. The index increased for the first time in three weeks as a 5.1% rise in the Refinance Index more than offset a 0.5% dip for the Purchase Index. The growth in refinance activity came as the average 30-year mortgage rate moved 16 bps lower to 6.42% but remains up 290 bps versus a year ago.
Housing activity has been hampered by volatility in the interest rate markets that has come amid aggressive monetary policy tightening by the Fed and other central banks around the world.
Treasury rates were lower, as the yield on the 2-year note lost 4 bps to 4.22%, while the yields on the 10-year note and the 30-year bond declined 8 bps to 3.54% and 3.66%, respectively.
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