Hump day data roundup: Housing starts, mortgages industrial output
Nasdaq slides >2%, S&P 500 falls >1%, Dow rises modestly
Real Est leads S&P 500 sector gainers; Tech weakest group
Euro STOXX 600 index off ~0.3%
Dollar, gold dip; bitcoin gains; crude rallies ~2%
U.S. 10-Year Treasury yield edges up to ~4.18%
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HUMP DAY DATA ROUNDUP: HOUSING STARTS, MORTGAGES, INDUSTRIAL OUTPUT
If recent data has painted a picture of a U.S. economy capable of pulling off a safe landing, indicators released early Wednesday added a few dabs of color to that canvas.
Groundbreaking on new U.S. homes USHST=ECI increased by 3.0% last month to 1.353 million units at a seasonally adjusted annualized rate (SAAR).
This number stands on the shoulders of May's 2.9% upward revision.
Consensus called for a 1.8% increase from the unrevised number.
Elsewhere in the Commerce Department's report, building permits USBPE=ECI - considered among the more forward-looking housing market indicators - also defied the expectation by rising 3.4% in June to 1.446 million units SAAR.
Scratching below the surface, multiple-unit projects were responsible for the gains in starts and permits, offsetting a dip in single family units.
"Builders are pulling back on single family projects as they anticipate the broader economic slowdown," says Jeffrey Roach, chief economist at LPL Financial. "Elevated mortgage rates continue to weigh on prospective buyers but demand for condos seems to be quite resilient."
"We could expect a modest rebound in single family projects if the Fed cuts and mortgage rates fall," Roach adds.
Speaking of the devil, mortgage rates dipped last week, prompting a surge in refi demand, according to the Mortgage Bankers Association (MBA).
The average 30-year fixed contract rate USMG=ECI shed 13 basis points to 6.87%, its lowest level since March.
But that failed to impress would-be home buyers. Demand for loans to purchase homes USMGPI=ECI dropped 2.7%.
But applications to refinance existing mortgages USMGR=ECI jumped 15.2%, resulting in a net overall mortgage demand increase of 3.9%.
"Recent signs of cooling inflation and the increased likelihood of Fed rate cuts later this year pulled (mortgage rates) lower," says Joel Kan, MBA's deputy chief economist, who notes that refi activity last week touched its highest level since August 2022.
With this report, the 30-year contract rate has returned to where it was a year ago.
Over the same time period, refi activity is up 37.3%, while purchase applications - also viewed as a forward housing indicator - have dropped 14.0%.
Switching gears, a report from the Federal Reserve showed industrial output USIP=ECI increased by 0.6% in June, double the pace analysts expected.
Year-over-year, production is up 1.6% - a significant acceleration from May's 0.3% annual rate.
Drilling down, utilities' output increased by 2.8% while auto production grew 1.6%, handily offsetting declines in business equipment and construction supplies.
Capacity utilization USCAPU=ECI, a measure of economic slack, unexpectedly tightened, rising 50 basis points to 78.8%, the highest rate since last September.
"This is a little contrary to the ISM manufacturing data, which has shown contraction," writes Scott Helfstein, head of investment strategy at Global X ETFs. "Perhaps the economy is still better than people think."
"U.S. economic data continues to signal all clear," Helfstein adds. "There is real investment driving real productivity gains across the economy."
(Stephen Culp)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
S&P, NASDAQ DOWN AS CHIP, TECH STOCKS LEAD DECLINES - CLICK HERE
POWER STRUGGLE WITHIN THE NASDAQ COMPOSITE ABOUT TO COME TO A HEAD? - CLICK HERE
CURVE STEEPENERS COULD BE THE TRUMP TREASURY TRADE - CLICK HERE
CONSIDER OWNING OPTIONS BEFORE EARNINGS - BARCLAYS - CLICK HERE
TRUMP TARIFFS COULD WIPE OUT EUROPE'S 2025 EPS GROWTH, GS FINDS - CLICK HERE
BANK OF ENGLAND'S CRUEL SUMMER - CLICK HERE
DRUGS AND CHIPS DRIVE THE STOXX - CLICK HERE
LET THE CHIPS FALL WHERE THEY MAY - CLICK HERE
GOLD GLITTERS, INFLATION JITTERS - CLICK HERE
Housing starts and building permits https://reut.rs/3xZiESO
Industrial production https://reut.rs/4f8fi0w
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