July 24th, 2013 9:33 AM by Mel Samick
The equity market has experienced quite a winning streak as the Dow and S&P logged their fourth consecutive week higher. The Dow and the S&P set fresh highs last Thursday after Federal Reserve Chairman Ben Bernanke reiterated his commitment to existing monetary policy. Bernanke said the U.S. Central Bank still expects to start scaling back its massive bond purchase program later this year, but he left open the option of changing that plan if the economic outlook shifted. For the week, the Dow rose 0.5 percent finishing at 15,543. The S&P added 0.7 percent finishing at 1,692. As stocks sit at record highs, roughly 20 percent of the S&P 500 companies have reported as of Friday. 65 percent beat earnings estimates and 51 percent beat on revenues. In other positive news, the number of Americans filing new claims for jobless benefits dropped more than expected last week to its lowest level in four months, a possible sign that hiring could pick up in July. Initial claims for state unemployment benefits fell by 24,000 to a seasonally adjusted 334,000, the Labor Department said last Thursday. The housing crash brought the stock market down with it in 2008 and early 2009. But the rebound in real estate in recent years has been a key driver of the stock market rally. Wall Street is keenly interested to see if housing can remain a stock market tailwind despite the recent increase in rates.
The average 30-year fixed rate mortgage fell to 4.37 percent for the week ending July 18 mainly due to "Uncle Ben" helping to ease market conditions about the U.S. Central Bank's tapering policy. The 30-year fixed rate was 4.51 percent the previous week and 3.53 a year ago. The 15-year fixed rate mortgage averaged 3.41 percent, down from 3.53 percent the previous week and 2.83 percent a year ago.
U.S. Housing starts and permits for future home construction unexpectedly fell in June, further evidence of a sharp slowdown in economic activity in the second quarter. The Commerce Department said last Wednesday Housing Starts dropped 9.9 percent to a seasonally adjusted annual rate of 836,000 units. That was the lowest level since August. The report was the latest indication that economic growth probably broke sharply from the first quarter's 1.8 percent annual pace. Sentiment among single-family homebuilders hit a 7-1/2 year high in July, a report showed last Monday, amid optimism over current and future home sales. But many builders have been complaining about a shortage of labor and materials, which may have contributed to last month's surprise decline in activity. Builders have been raising prices in order to make up for higher costs, and record low interest rates have helped them to be able to do that. Experts suggest that Builders may be somewhat insulated from rising rates due to price points. New homes typically aren't "entry level" and buyers that qualify can generally weather a .375 percent to .75 percent change in rates without getting declined due to debt-to-income. As the world awaits the arrival of the "Royal Baby," the markets are due for a busy week.
Information provided by NYCB Capital Markets