As we approach the start of a new trading day, stock futures are indicating a positive open for the major U.S. indexes. In overnight trading, markets in Asia ended their day on the plus side. Meanwhile, the major European indexes are showing sizeable gains. Elsewhere, oil prices have inched lower, with West Texas Intermediate down 0.2%, to around $80.50 a barrel.
While second-quarter earnings season is quickly winding down, investors will get a number of key updates on the housing market this week. This morning, the National Association of Realtors will report on existing home sales for the month of July. Tomorrow, we’ll get the totals for building permits, a more forward-looking indicator. Consensus is calling for a slight uptick, to an annualized rate of about 1.442 million. A little later that same day, the Census Bureau will come out with its figures for new home sales last month. Expectations are calling for an uptick to 706,000 units, versus 697,000 in June. However, these numbers are likely to come under pressure, as 30-year mortgage rates are now just under 7.5%, the highest in nearly 23 years.
Lastly, and certainly not least, investors will be particularly interested in what Federal Reserve Chairman Jerome Powell has to say Friday morning at the Economic Symposium being held in Jackson Hole, Wyoming, where he joins central bank officials and economists from around the globe.
As it currently stands, market watchers are expecting the Fed to keep its overnight lending rate unchanged at its next meeting in September. However, as the central bank has repeatedly indicated, it is not done with raising its target rate just yet, and it may keep borrowing costs at an elevated level for longer than originally planned, perhaps through all of 2024. Elsewhere on the interest-rate front, the benchmark 10-year Treasury yield moved up to 4.34% yesterday, the highest in nearly 16 years. Generally speaking, as rates increase, fixed-income investments become more attractive relative to equities. This makes stocks of growth and tech companies, which have rallied this year, increasingly vulnerable to a correction. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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