UNDER TWELVE THOUSAND...
That's not just a price range for used cars, it's also where the Dow landed last week. Not surprising, as we've now had six down weeks in the stock market, matching the six weeks there's been a negative mood on Wall Street. That mood of course has come from signs of a slowdown in the economic recovery, even though there have also been signs of economic progress.
Speaking in Atlanta on Tuesday, Fed Chairman Ben Bernanke admitted that our economic growth has been slower than expected this year. He also said the inflation triggered by higher energy prices was a passing thing and that the economy should get its mojo back in the second half of the year. But even then, Bernanke feels economic conditions will still justify keeping the federal funds rate at exceptionally low levels for the now familiar "extended period."
More disappointing news came with new weekly jobless claims up by 1,000 and still above the 400,000 threshold. Better news was the fact that continuing claims dipped again, to 3.68 million. Best news of all, the trade deficit shrank $3.1 billion in April to $43.7 billion. And the March trade deficit was revised to be $1.4 billion less than originally reported. These smaller trade deficits will raise the reading for GDP growth.
For the week, the Dow ended down 1.6%, at 11,952; the S&P 500 was down 2.2%, at 1,271; and the Nasdaq was down 3.3%, at 2,644.
The stock slide helped Treasury bonds rally, although the bulls were by no means dominant. The FNMA 4.0% bond we watch ended the week down .78, closing at $100.24. Nevertheless, national average rates for fixed-rate conforming mortgages dropped for the eighth week in a row, to their lowest levels since November. Freddie Mac's survey also had 1-year adjustable-rate mortgages at their lowest level in the report's history.
From my weekly enewsletter for real estate pros, INSIDE LENDING, for the week of June 13, 2011
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