Stocks drop this week – This week the latest companies to report second quarter corporate earnings had disappointing results. Snap Inc., the owner of Snapchat saw a loss of nearly 20% after its quarter loss grew. That affected many stocks in the tech sector. JC Penny also had a disappointing quarter. It’s stock dropped to an all time low. This put pressure on retail stocks. Some analysts attributed the drop on geopolitical conditions due to rhetoric with North Korea. Year-to-date the Dow is up 10.6%, the S&P is up 9% and the NASDAQ is up 16.3%, so some profit taking is expected. The Dow Jones Industrial Average ended the week at 21,858.33, down from 22,092.82 last week. The S&P 500 closed the week at 2,441.33, down from its close last week of 2,476.83. The NASDAQ closed the week at 6,256.56, downfrom last week’s close of 6,351.56.
Bond yields drop this week – The 10-year Treasury bond closed the week at 2.19%, down from 2.27% last week. The 30-year treasury yield ended the week at 2.79%, down from 2.84% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates down slightly this week – The August 10, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.90%, down slightly from 3.93% last week. The 15-year fixed was 3.18%, down from 3.18% last week. The 5-year ARM was 3.14%, almost unchanged from 3.15% last week. Rates dropped late in the week. Next week’s survey rates should be even lower.
Home affordability slips in California as prices rise – The California Association of Realtors reported that 29% of California households could afford to buy a $559,260 median-priced home in the second quarter. That is down from 32% in the first quarter of 2017 and 31% one year ago in Q2 2016. The annual income required to purchase the median-priced home was $110,780. They found that 38% of California households were able to purchase a median-priced condominium or town-house, which was $443,400. The annual income required was $88,870.