October 20, 2009
October 20, 2009 by admin
The stock market is struggling to hold ground in early trading on Tuesday as investors react to key economic reports. The DOW has surged past the key 10,000 level as confidence has returned to the equity markets. Today’s economic reports are diminishing some better than expected earnings reports from Monday and overshadowing a strong third quarter by most corporations. The mortgage market has seen a slight pullback to long term fixed rates. The record surge in the DOW for the month of October pushed fixed rates higher by approximately .375%. Long term rates were hovering at or below the five percent level in early October, and moved sharply higher with the 700 point market rally. Recently, bond yields have started to drop, as witnessed in the ten year Treasury bond yield lowering from a high point of 3.46% this month down to 3.34% on Tuesday. This drop correlates to most national mortgage lenders offering rates of 5.25% or lower for thirty year loan terms and under 5% for fifteen year loan terms.
Apple reported another record quarter of earnings for the third quarter. The company’s profits continue to increase thanks in part to the I-Phone and Mac Computer. The technology giants great quarter is a catalyst that could help keep the NASDAQ from selling off and more importantly sheds some light into the mindset of the U.S. consumer.The market will continue to digest corporate earning reports this week from key companies such as DOW Chemical, Yahoo, Wells Fargo. These companies will play a pivotal role in setting the markets expectation for the fourth quarter and into 2010.
Today, the market sold off early as a result of a weaker than expected PPI report. The report, which measures wholesale inflation, is a strong gauge of the market for spending and growth. The lack of pricing inflation in the market will help consumers and business contain costs as the market works through the economic challenges, but also points to a weakness for lack of growth. This report comes at a time when most analysts are pointing towards earnings as a signal of cost containment versus revenue growth. The other key report released today was the New Housing Starts report. This is a key report covering the real estate market. Experts will continue to closely following housing news as a leading indicator for the health of the economy. Today’s housing report was flat for the month of September. Permits for single family homes came in higher than expected, multi family construction was off slightly. Most economists will place emphasis on the existing home sales report due out later this month as the true gauge of housing. Home sales should continue to benefit from historically low mortgage rates and the governments first time home buyer tax credit which runs through the end of the November.