First Month of the Year a Tough One for Stocks – Market Update

Quicken Loans Market Update - Zing Blog Last Week:

Headline News

  • New Home Sales – Sales of new homes fell in December to a 414,000 annual rate. The decrease was below Econoday’s consensus low-end estimate. The total number of new homes on the market also fell by 5,000.
  • S&P Case-Shiller HPI –Momentum in home prices began to ease in November but only slightly based on S&P Case-Shiller whose month-to-month composite-20 index came in at an adjusted plus 0.9% versus a revised plus 1.1% in October.
  • Consumer Confidence – Consumer confidence, up 3.2 points to a higher-than-expected 80.7, is picking up this month on top of a very solid gain in December. The positive report helps to offset what has been a mostly negative run for economic indications this month.
  • FOMC Meeting Announcement – The Fed continues with a taper of quantitative easing. The FOMC said that asset purchases will be reduced by another $10 billion monthly in February, leaving asset purchases at $65 billion per month. The purchase of mortgage-backed securities is now scheduled at $30 billion a month and long-term Treasuries at $35 billion.
  • Jobless Claims – A surprise 19,000 rise in initial jobless claims, combined with a rising trend for continuing claims, is not pointing to much improvement for the labor market.
  • GDP – The economy ended the year on a moderately positive note, rising an annualized 3.2% in the advance estimate for the fourth quarter. This followed a 4.1% boost in the third quarter.
  • Pending Home Sales – There was a much weaker-than-expected 8.7% decline in pending home sales for December. This points to a sharp decline ahead for what was already a very soft existing home sales market.

Mortgage Rates

According to the Primary Mortgage Market Survey released by Freddie Mac, average mortgage rates dropped for the third straight week following the release of weaker housing data.

30-year fixed-rate mortgages (FRM) averaged 4.32% with an average 0.7 point for the week ending January 30, 2014, down from last week when it averaged 4.39%. A year ago at this time, the 30-year FRM averaged 3.53%.

15-year FRM this week averaged 3.40% with an average 0.6 point, down from last week when it averaged 3.44%. A year ago at this time, the 15-year FRM averaged 2.81%.

5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 3.12% this week with an average 0.5 point, down from last week when it averaged 3.15%. A year ago, the 5-year ARM averaged 2.70%.

1-year Treasury-indexed ARM averaged 2.55% this week with an average 0.4 point, up from last week when it averaged 2.54%. At this time last year, the 1-year ARM averaged 2.59%.

Equity Markets

Stocks dropped sharply during January. The Dow Jones Industrial Average fell more than 5%, ending its worst January since 2009. The S&P 500 dropped more than 3%, while the NASDAQ suffered a 2% loss.

The Week Ahead

Thursday, February 6

Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smoothes out weekly volatility.

Friday, February 7

Employment Situation (8:30 a.m. ET) – The employment situation is a set of labor market indicators based on two separate surveys in this one report. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households.

Consumer Credit (3 p.m. ET) – Changes in consumer credit indicate the state of consumer finances and portend future spending patterns.

Visit the Quicken Loans Zing Blog for updated information on important economic releases that affect your wallet.

 

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