July 31st, 2013 8:30 AM by Mel Samick
Last week's rebound of the housing market and positive earnings gave a good start to the third quarter. In the global economy, most foreign stock markets closed higher for the week. With signs of economic progress in Europe and some better than expected domestic economic indicators, U.S. Treasury yields rose across all maturities. At the end of week, the Ten year treasury yield was up nearly 8 bps and ended at 2.56. Towing the same line, conforming mortgages rates jumped up. At the end of week Conforming Fixed 30 year rate leveled out at around 4.37 percent, while the Conforming Fixed 15 year rate finished around 3.4 percent. Standard 5/1 ARM rates were hovering around 2.86 percent. However due to mixed earning and economic indicators, US stocks ended flat for the week.
In major indices, the S&P closed at 1,691 while the Dow ended the trading week at 15,558. The S&P 500 staged a notable comeback effort on Friday, but missed its fifth straight winning week. In earnings, it was a huge week as 157 S&P 500 companies and eight Dow components reported their quarterly results. According to Thomson Reuters, 56 percent of the companies that had reported second-quarter results by the end of the week had surpassed revenue estimates, a somewhat better showing than in recent quarters. Last Thursday, Facebook's (FB) stock jumped by 30 percent after their blowout earnings report. While more than 2 billion shares traded at the NASDAQ and Facebook alone accounted for 18 percent of the share volume at the NASDAQ that day.
For economic indicator news last week, the housing related indicators dominated the market. For the month of June, existing home prices saw some firming and a little more supply is coming into the market but sales of existing homes slowed to a 5.08 million annual rate. In monthly terms, supply is at 5.2 months at the current sales rate with average staying days of a house on the market coming down to 37 days. However, for the month of June, New Home Sales are at a new recovery high, at a higher-than-expected 497,000 annual rate in June. The availability of new homes on the market is extremely tight, at only 3.9 months at the current sales rate.
House prices continue to rebound as for the month of May the FHFA house price was up 0.7 percent after gaining 0.5 percent in April. In another economic indicator, Durable Goods Orders sharply beat expectations, almost entirely due to aircraft orders. New Factory Orders for durables in June surged 4.2 percent. The transportation component spiked 12.8 percent after a 14.8 percent jump in May. Excluding transportation, durables orders were unchanged in June. The Thomson Reuters/University of Michigan Index of consumer sentiment advanced to 85.1 in July from 84.1 in June, the highest level in six years. Economists attribute the optimism to an increase in personal wealth thanks to rising property and stock prices, as well as job gains.
Information Provided by NYCB Capital Markets