Hope you are all doing well. The three major U.S. stock indexes posted weekly gains of around 2% to nearly 3%, rebounding from declines of roughly 3% the previous week. For the S&P 500, the latest result snapped a string of three weekly losses in a row. Actor Tom Sizemore passed away this week. I have broken down this week’s update using quotes from perhaps his most famous role as Sergeant Horvath in Saving Private Ryan.
The pandemic controlled our lives for almost 2 years. However, it did allow most households to save more. Now that life is somewhat back to normal pent up pandemic demand is the root cause of the fantastic consumer spending numbers that continue to keep our economy afloat. We are also seeing this same post pandemic trend in Europe and China. A gauge that tracks economic activity across the U.S. services sector showed the highest monthly reading since last June. That number helped lift the major U.S. stock indexes to gains on Friday. Similar services sector expansion was reported in the eurozone and China as well. Eventually, households will burn through their savings and demand will wane. Until that happens expect all those doom and gloom analysts that have been predicting a serious economic recession for the last two years to continue to be wrong.
Housing demand is continuing to fight off higher mortgage rates. Homes are still selling as new data showed an increase of 8.1% month over month in pending home sales. However, mortgage rates are rising. If mortgage rates continue to climb it will likely hurt home demand in the not too distant future. The average U.S. mortgage rate hit a three-month high, rising to 6.65% for a 30-year mortgage, according to an update on Thursday from mortgage buyer Freddie Mac. We are going to need to have higher mortgage rates for the foreseeable future because the housing market needs to slow for inflation to come down anywhere near the Fed’s target range of 2%.
If you’d like to speak about your investments or your plan, my calendar link is below and you can schedule a phone or zoom appointment.
