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All three major stock indexes red; Nasdaq down most
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Utilities lead S&P sector gainers; comm svcs biggest loser
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STOXX 600 off ~0.4%
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Dollar up; gold, crude, bitcoin down
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U.S. 10-year Treasury yield edges up to ~3.61%
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HOUSE OF MIRRORS: MORTGAGE RATES FOLLOW YIELDS HIGHER, LOAN
DEMAND SLIDES (1115 EDT/1415 GMT)
The cost of financing home loans resumed its uphill climb
last week, sending mortgage demand down by 8.8%, according to
the Mortgage Bankers Association (MBA).
The average 30-year fixed contract rate , jumped
13 basis points to 6.43%, aping the recent bounce-back in
benchmark Treasury yields .
As a result, applications for loans to purchase homes slid by 10.0%, while refi demand dropped 5.8%.
"With more first-time homebuyers in the market, we continue
to see increased sensitivity to rate changes," writes Joel Kan,
deputy chief economist at MBA. "Affordability challenges persist
and there is limited for-sale inventory in many markets across
the country, so buyers remain selective on when they act."
"Low for-sale inventory continues to constrain sales, along with mortgage rates that remain above 6 percent," Kan says. They've been above 6% since September, in fact. And while they've cooled from the 7.16% apex touched in late October, combined with low inventories and tighter lending conditions - a result of restrictive Fed policy combined with recent pressures on the regional banking system - fewer potential buyers can afford monthly payments or qualify for financing. Overall mortgage demand, despite showing stirrings of a comeback in recent weeks, is down 44.1% from the same week a year ago. Recent housing data has been messy, and seemingly contradictory. Homebuilder sentiment has grown less pessimistic this month, the most recent Case-Shiller print shows home price growth - an enormous barrier to entry in recent years - at its coolest since November 2019. But then data on Tuesday showed building permits - among the most forward looking housing indicators - plunged by 8.8% last month. The National Association of Realtors is due to release March existing home sales data on Thursday, which are seen dipping 1.7% after having rebounded in February to a six-month high. So the question remains - has the housing market found its basement? Recent economic data make that question difficult to answer. But if you turn your attention to the stock market, which reflects where investors believe the sector will be six months to a year down the road, housing is due for a renovation. Rebased to a year ago, the S&P 1500 Home Building index and the Philadelphia SE Housing index are up 34.5% and 11.3%, respectively. That's a far cry better than the broader S&P 500's 6.9% drop over the same time period: Rising Treasury yields and a mixed bag of earnings dampened investor risk appetite in late morning trading. All three major U.S. stock indexes were modestly red, with interest rate sensitive megacaps weighing heaviest.
(Stephen Culp)
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WALL STREET SHARES OPEN ON THE DEFENSIVE (1021 EDT/1321 GMT) Shares on Wall Street are in the red early on Wednesday, pressured by the rise in Treasury yields on expectations the Federal Reserve will keep rates higher for longer. The Fed meeting is in two weeks and a 25 basis-point hike has been baked in. There is speculation as well that the Fed could also hike in June. Mixed earnings so far are also weighing on the market led by banks. Morgan Stanley reported a fall in quarterly profit, a day after rival Goldman Sachs Group Inc GS.N posted a 19% drop in profit on hit to dealmaking and losses from the sale of some assets in its consumer business.
The communications services sector leads all
decliners on the S&P.
Brian Reynolds, chief market strategist, at Reynolds
Strategy, suggests in a research note though to buy market
declines. He points out that "cities and states have bulging
cash positions that they are allocating to their pensions."
On the other side, he recommends selling stock market
rallies, given the debt ceiling situation and uncertain outlook
on bank deposits.
Here's an early market snapshot
(Gertrude Chavez-Dreyfuss)
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FOR WEDNESDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT -
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(Reporting by Gertrude Chavez-Dreyfuss)
