Stocks Lose Steam as US Housing Data Disappoint: Markets Wrap

By Investor Empires On Aug 16, 2024

(Bloomberg) — Stocks lost ground at the end of a strong week after a disappointing reading on the housing market, as traders awaited data on U.S. consumer sentiment.

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Stocks fell in early trading in New York, with the S&P 500 set to end a six-day winning streak. New U.S. homebuilding fell in July to its lowest level since the aftermath of the pandemic as builders responded to weak demand that kept inventory levels high. Treasuries rose across the curve. The dollar fell, on track for a third week of declines, its longest such losing streak in more than five months.

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“Residential investment started very slowly in the third quarter — and is unlikely to contribute to GDP growth this quarter,” said Jeff Roach of LPL Financial. “Housing prices are likely to remain elevated despite the broader economic slowdown. However, we expect mortgage rates to decline throughout this year as the Fed begins to cut interest rates.”

Traders have cut their bets on a quick and aggressive rate cut from the Federal Reserve, while other data this week suggested the economy is more resilient than markets had expected. Wall Street is due to release a fresh reading of consumer sentiment later Friday.

“These numbers may be disappointing,” said Matt Maley of Miller Tabak & Co. “Let’s face it, it’s not like the consumer is suddenly booming again. In other words, the positive news from this week is that recession fears have eased somewhat. But there’s no question that the economy is still slowing.”

Chicago Federal Reserve Bank President Austin Goolsbee said the labor market and some leading indicators in the economy are sending warning signs, adding that there are concerns that unemployment rates will continue to rise.

S&P 500 futures fell 0.5%. The U.S. stock index is still on track for its best week this year. Nvidia Corp. led the declines among large companies. Applied Materials Inc., the largest U.S. maker of chipmaking equipment, fell after its sales forecast disappointed investors who were looking for a bigger return on AI spending.

The yield on the 10-year US Treasury note fell four basis points to 3.87%, and the dollar fell against most major currencies.

No borrowers will be looking to sell U.S. investment-grade bonds on Friday, according to an informal survey of debt underwriters, but issuers are lining up for what could be an unusually busy week.

Historically, the last two weeks of August have seen scattered releases. For example, the penultimate week of August 2023 saw just three deals totaling $3.45 billion. But this year could be different, with new sales expected to total around $20 billion, mostly on Mondays and Tuesdays.

The company’s most prominent achievements:

Texas Instruments Inc. is set to receive $1.6 billion in CHIPS Act grants and $3 billion in loans, the Biden administration announced Friday, marking the latest major award from a program designed to boost U.S. semiconductor manufacturing.
Rivian Automotive Inc. has halted production of an electric commercial truck it makes for Amazon.com Inc. due to a parts shortage in the latest supply chain problem for the electric vehicle maker.
Bayer AG shares jumped after the German company won a major victory in a long-running cancer lawsuit over Roundup weed killer.
BHP Group and Chilean union leaders reached a preliminary agreement on wages on Friday, paving the way for normal production to resume at the world’s largest copper mine.
A joint COVID-19 vaccine developed by Pfizer and BioNTech failed to meet one of its goals in the final stage of clinical trials, a disappointment for companies trying to make more use of the technology that has been successful in fighting the pandemic.

Some key movements in the markets:

Stocks

S&P 500 futures were down 0.5% as of 8:59 a.m. ET in New York.
Nasdaq 100 futures fell 0.5%.
Dow Jones Industrial Average futures fell 0.3%.
The Stoxx Europe 600 index was little changed.
MSCI World Index rose 0.3%

Currencies

The Bloomberg Dollar Index fell 0.3%.
The euro rose 0.2% to $1.0994.
The pound rose 0.3% to $1.2897.
The Japanese yen rose 1.1% to 147.69 yen per dollar.

Cryptocurrencies

Bitcoin rose 2.1% to $57,873.26
Ether price rose 1% to $2,576.7

Bonds

The yield on the 10-year US Treasury note fell four basis points to 3.87%.
The yield on German 10-year bonds fell four basis points to 2.23%.
The yield on the 10-year British bond fell by two basis points to 3.90%.

Goods

West Texas Intermediate crude fell 2.2% to $76.47 a barrel.
Spot gold rose 1.4 percent to $2,492.33 an ounce.

This story was produced with the help of Bloomberg Automation.

–With the assistance of John Viljoen.