Mortgage Watch: Strong Corporate News and Dovish Fed Comments Boost Stocks
The S&P 500 Index is currently up by 0.18%, while the Dow Jones Industrials Index is up by 0.20%. Positive corporate news is supporting stocks today, with Advanced Micro Devices (AMD) up by more than 1% after acquiring server maker ZT Systems in a deal valued at $4.9 billion. ZIM Integrated Shipping is also up by more than 13% after reporting stronger-than-expected Q2 adjusted Ebitda and raising its full-year adjusted Ebitda forecast.
The latest US economic data has strengthened the Federal Reserve’s confidence in its ability to control inflation, leading to increased speculation about a potential rate cut. San Francisco Fed President Mary Daly stated that recent data has given the Fed “more confidence” that inflation is under control and it is time to consider adjusting benchmark borrowing costs. Furthermore, Minneapolis Fed President Neel Kashkari expressed that the debate about potentially cutting interest rates in September is an appropriate one to have.
Home builders and suppliers are also seeing an increase in stocks today, following a weekend report from Barron’s stating that US home sales should improve in coming quarters as long-term mortgage rates are expected to head down toward 5% as the Fed gains on inflation. Builders FirstSource (BLDR) is up by more than 2%, while DR Horton (DHI), Lennar (LEN), and Toll Brothers (TOL) are all up by more than 1%.
McDonald’s (MCD) is up by more than 2% to lead gainers in the Dow Jones Industrials after Evercore ISI raised its price target on the stock to $320 from $300.
The markets are awaiting the minutes of the July 30-31 FOMC meeting on Wednesday for clues as to how close the Fed is to cutting interest rates. Additionally, Fed Chair Jerome Powell’s opening comments on Friday at the Fed’s annual symposium in Jackson Hole, Wyoming, are expected to provide fresh insights on the future course of Fed policy.
Overseas Markets and Interest Rates
Overseas stock markets are mixed. The Euro Stoxx 50 has climbed to a 2-week high, up by 0.60%. China’s Shanghai Composite also rose to a 2-week high and closed up by 0.49%. Japan’s Nikkei Stock 225, however, closed down by 1.77%.
September 10-year T-notes are down by 3 ticks. The 10-year T-note yield is up by 1.0 bp at 3.892%. European government bond yields are moving higher, with the 10-year German bund yield up by 1.0 bp at 2.257% and the 10-year UK gilt yield up by 0.9 bp at 3.935%.
Stock Market Movements
US stock movers include Advanced Micro Devices (AMD), up by more than 1%, and ZIM Integrated Shipping (ZIM), up by more than 13%. Builders FirstSource (BLDR) is also up by more than 2%.
The current market trends indicate a positive outlook for the stock market, driven by strong corporate news and dovish Fed comments.
