Mid-Day Recap: Equities Weaker After Housing Data

All three equity indexes have extended yesterday’s late day weakness into today. After a modest open, the S&P is trading near the lows of the day, down 1.18% to 1048 after a worse-than-anticipated housing report. As of 1:45 pm, shares in the NASDAQ are worse off with a 1.47% slide to 2,100, while the Dow has lost 64 points, or 0.66%, to 9,684.

An hour before the open it looked as though markets were going to recover from the mid-week session. Initial jobless claims declined on a weekly basis for the third straight time, allowing Wall Street to believe that September’s employment report might see significant improvement from August.

The 530,000 new jobless claims are far from indicating stabilization, but they compare favorably with the average of 569k claims per week in August. 

Optimism didn’t last long though, as half an hour into the session the National Association of Realtors reported the existing home sales had failed to advance for a fifth straight month.

Resales in the home market slid 2.7% in August, against forecasts that the index would edge up 2.1%. Economists were quick to point out that broader story of housing improvement hadn’t changed, but markets didn’t find much consolation in that sentiment.

The monthly decline was broad. Sales fell 2.2% in the Northeast, 6.6% in the Midwest,  3.1% in the South, and 2.7% in the West. 

The Treasury Department has succesfully auctioned $29 billion 7 yr notes. MND's MBS Commentary Blog covered the results.

With appetite for equities waning, yields on Treasuries have fallen. The benchmark 10-Year Note is down four basis points to 3.37%, the lowest yield since Sept. 11. Also, the dollar is continuing to firm up, while commodity prices are dipping alongside equities.