Stocks were whacked today with the Dow (or is that the “ow”) dropping 237 points on heavy trading volume to close at 20,668. The action today started with a positive gain to new highs for the NASDAQ which then made a reversal and a moved lower.
The general consensus regarding the pullback today was that several factors came into play. One being that it was “due” given that we have not had a greater than 1% pullback in over 2 months. The other being that yesterday was a bad day for President Trump and might serve as a warning that the expected tax initiatives and reforms he is tweeting about might not come as soon or as easily as expected. Next is concern over was the weaker than expected stance of the Federal Reserve regarding future rate hikes which is being interpreted in a roundabout way that economic strength, while good, is suspect. Since the FOMC action the US dollar has been declining and the 10 year Treasury Yield has fallen from 2.6% to 2.42%. The pullback today seemed more based on sentiment than baseline economic numbers.
Home builder Lennar reported better than expected earnings today. Revenue climbed 17% and profits were off 11%. The company said that home deliveries went from 4,806 to 5,433 and CEO Stuart “Stewie” Miller said that homebuilding operations in the first quarter went from “slow and steady” to “faster than expected”. He cited overall consumer wage and job growth contributing to the faster sales pace while limited land, labor and inventories are pushing prices higher which should power solid earnings going forward.
Oil prices fell with WTI crude below $48 per barrel while gold was up $10.60 an ounce to $1,244.