After volatile trading that ended positive yesterday, markets are looking for further gains this morning ahead of key housing data.
90 minutes before the bell, Dow futures are up 15.00 points to 10,844 and S&P 500 futures are 2.00 points higher at 1,170.75.
Meantime, WTI crude oil is up 6 cents to $82.23 per barrel, and Spot Gold is up almost a dollar to $1,110.70.
Reversing earlier losses, the dollar index came off a 4-day low overnight, though it remains relatively soft this morning.
Earlier in the day, Chicago Fed President Charles Evans told Bloomberg TV the unemployment rate could remain higher than 9% for the rest of the year. He also said the FOMC statement’s use of the words “extended period” for accommodative policy suggests no change for a six month period. In a different interview, he also called the “extended period” language a guideline rather than a rule.
Key Events Today:
9:00 ― In last month’s report for December the S&P Case-Shiller Home Price Index rose by a more-than-expected 0.3% to mark the seventh consecutive monthly price gain. But in January the index is set to fall 0.6%, reflecting weak demand despite low mortgage rates and tax incentives.
Recapping the December index, prices were down 3.1% compared to 12 months before, the slowest level of deflation since May 2007 (and versus a -5.3% decline one month before). Since the peak of home prices in mid-2006, prices in the index ― which track the value of residential real estate in 20 metropolitan regions ― were down 34.1%.
“At this point, the decline appears to reflect normal seasonal weakness, and perhaps some payback from the end of the first-time homebuyer tax credit,” noted economists from Nomura Global Economics. “However, given how detrimental a further decline in house prices would be for the economy and financial system, this trend bears close watching.”
10:00 ― After a 10-point decline in February, Consumer Confidence is expected to rise 4 points to 50.0 in March, economists say. With unemployment so high, real optimism seems dubious, but after big drops indexes tend to retrace a bit.
“Preliminary signs of an upturn in labor markets, along with further gains in stock prices, will be the main drivers of an expected strong bounce back from what looks like a rogue downshift in February,” said economists from IHS Global Insight. “Consumers are also reporting some improvement in personal finances. Reports of rising light vehicle sales in March are another indication that the consumer markets recovery is gaining momentum."
In the broader outlook, former US labor secretary Robert Reich provided this commentary in the Financial Times last week:
“Optimists also point to rising stock prices that supposedly make consumers feel wealthier. But the net worth of most Americans is tied up in their homes, which are worth less than in 2007. The ‘wealth effect’ is relevant to the richest 10% of Americans whose net worth is mostly in stocks and bonds. The top 10% accounted for about half of total national income in 2007, but they represent only 40% of total spending. A sustainable recovery cannot be based on the top 10%.”
Treasury Auctions:
- 11:30 ― 4-Week Bills
