Stocks finished the day lower after trading both sides of the street. At one point the Dow was up over 250 points but fell into the close after the release of the Federal Reserve meeting notes which indicated that a stronger economy and higher interest rates were in the cards. Banks and tech stocks moved higher while Wal-Mart continued to fall like a boat on the Amazon River that cascades over a set of falls. At the close the Dow was off 166 at 24,797. Trading volume increase a bit.
The state of the overall US housing market remains fairly positive. Sales of existing homes fell 3.2% in January to an annual rate of 5.38 million. Sales in 2017 were the highest since 2006. Headwinds in housing include 1) an inventory level that is down 9.5% from last year hitting the lowest mark for any January going back to 1999, 2) rising mortgage rates and 3) rising prices for homes as the market seems to be shifting to more expensive homes. The median home price was up 5.8%. All in all the data indicates that demand for homes is good because 43% of homes sold in January were on the market for less than a month. The shortage of homes seems to be concentrated in the low end of the market since higher building costs tend to push builders toward constructing pricier homes.
The Federal Reserve released notes from the last meeting and they revealed a general feeling amongst the gurus on the board that “upside risks” to economic growth have increased thanks to deregulation, consumer spending, consumer confidence and tax cuts. The Federal Reserve has revised economic projections higher and said that further gradual interest rate hikes would be appropriate. In response to this news the 10 year treasury yield hit a 4 year high cresting 2.9%.