Market News Update - Stock Market Takes a Wild Ride

Outside of Monday’s volatile trading day, the stock market was unusually stable for the remainder of the week through Thursday’s closing bell.  On Monday, the stock market took a wild ride and the Dow Jones Industrial Average dropped as much as 177 points before recovering back to close higher than where it started the day.  Monday’s volatility was more having to do with perception than any real economic data. 

Investors that were surveyed on Wall Street seemed to blame Monday’s mid-day sell off on the perception that many stocks, especially those related to social media, are grossly overvalued.

Housing, the Fed, and the Department of Labor dominated the week’s most significant news.  The housing data for the week shows continued signs of slow improvement in the real estate market.  Monday the Pending Home Sales Index showed the first signs of spring momentum.  After 9 consecutive months of declines, the pending home sales index jumped 3.4 percent in March.  February’s report was also revised upward by 3 tenths to 0.5 percent. 

On Tuesday the Case-Shiller Home Value Index report was released.  For the month of February home price appreciation was strong and slightly more than expected.  According to the report, home values in the 20 major cities measured by the index rose 0.8 percent.  Values on the west coast, especially San Francisco, led the rise.  Home values in the index are 12.9 percent higher than the same time last year.

Applications for purchase mortgages took an unexpected drop for the week of April 25^th.  There has been some upward movement in mortgage rates; however, the increase is not necessarily believed to be the reason for the decline.  The Mortgage Bankers Association of American reported that purchase applications declined 4.0 percent.  Applications for refinances dropped 7.0 percent.

The one area of concern in this week’s economic data was Wednesday’s GDP report.  The first quarter of 2014 showed that economic growth has come to a virtual standstill. GDP for the first quarter only increased a far lower than expected 0.1 percent.  Harsh weather across the country seems to be what experts believe is the main culprit.  Economic growth in the last quarter of 2013 was 2.6 percent, so it is easy to understand why this year’s first quarter report took many by surprise.

On Wednesday the Fed announced that they are continuing to leave the plan for monetary policy in place.  The Fed will continue to reduce the amount of stimulus they are pushing into the economy through their bond buying program.  Investors on Wall Street expected this announcement from the Fed and there was virtually no reaction when the announcement hit the news wires.

There is much optimism for future employment data as ADP reported payroll growth of 220,000 for the month of April.  March’s figures were also revised up to 209,000.  Employment data has been steadily improving and that is having a positive impact on the latest consumer confidence report.

Next week is very light on market moving data:

·        Wednesday May 7^th - MBA Applications and Fed Chair Janet Yellen Speaks

·        Thursday May 8^th - First Time Jobless Claims

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

BRE Lic # 01520422
NMLS # 214851   

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