Mortgage Headlines
Mortgage Rates Continue to Tick Up
A dip in the price of oil and the downgrading of Rita to a Category 4 hurricane stalled buying in U.S Treasury securities on Thursday, after an active start. The somewhat diminished strength of Rita relieved some concerns about the effect that it would have on oil production in the Gulf Coast. Additionally, some analysts believe the economic impact of this hurricane could soften from the "worst case scenario" that has been offered.
The Fed said in its statement Tuesday that Hurricane Katrina would be a setback in the near-term, but pundits speculate that a second such assault could be enough to interrupt the Fed's credit-tightening program. There is concern that high energy prices will drag on the economy with the onset of winter, which is bound to bring high fuel oil and natural gas prices, which will put a dent in the consumer's disposable income. The damage done by Rita over the upcoming weekend is sure to influence the markets next week. For now, however, mortgage rates continue to tick up slightly.
Economic News Carries Little Weight
First-time unemployment claims for the week ended Sept. 16 rose by a less-than-expected 8,000 to 432,000 - short of the 454,000 that was forecast. Victims of Katrina have filed 214,000 claims over the last three weeks. The four-week average that smoothes volatility rose 29,000 to 376,250. In a separate report, the Conference Board said the Index of Leading Indicators fell 0.2 percent in August. The index, which looks at the economy three to six months ahead, came in better than the 0.3 percent decline that was expected, but short of the 0.1-percent increase posted in July.
Stocks Rebound After Three Losing Sessions
The three major indexes found their way into positive territory on Thursday, with retailers and homebuilders - two sectors that struggled earlier in the week -- leading the charge. Trading was choppy in the morning, with oil prices climbing and dire predictions about the impact of Hurricane Rita circulating. But Rita was downgraded and oil prices retreated. After nearing $69 a barrel in early trading, prices slid to close down 30 cents at $66.50 a barrel. This buoyed stocks and also invited bargain hunters, who were able to pick up well-priced shares after three down days.
The Dow Jones Industrials were split 50-50 between winners and losers, but gains were substantial and losses were slim. McDonald's led the way with a 5.3 percent increase after making product announcements. Caterpillar continued to gain on the presumed need for heavy equipment in the reconstruction of New Orleans and other hard-hit areas. The stock added another 1.6 percent. Wal-Mart rebounded with a 1.7 percent increase, and Procter & Gamble played with the big boys, posting 1.4-percent increase.
The Nasdaq composite also closed in positive territory, but gains were subdued. Eight tech bellwethers posted gains, led by Dell, Oracle, and Cisco Systems. They gained 1.9 percent, 1.7 percent and 1.5 percent, respectively. JDS Uniphase suffered the biggest loss, shedding 2.2 percent, and Sun Microsystems fell 1.3 percent. The loss by Ericsson was modest.
At closing:
The Dow 30 Industrial Index rose 44.02 points (+0.42 percent) to 10,442.05; the Nasdaq Composite index added 4.14 points (+0.20 percent) to 2,110.78, and the benchmark Standard & Poor's 500 Index gained 4.42 points (+0.37 percent) to 1,214.62.
The 30-year Treasury bond fell 2/32 with the yield holding at 4.46 percent.
The 10-year Treasury note was unchanged in price with the yield holding at 4.17 percent.
The 5-year Treasury note fell 1/32 in price with the yield holding at 3.99 percent.
At 4 p.m. EDT, AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:
The 30-year Conventional Fixed-Rate Mortgage was at 5.61 percent from 5.597 percent at Wednesday's close.
The 15-year Conventional Fixed-Rate Mortgage was at 5.191 percent from 5.154 percent at Wednesday's close.
Coming Up:
There are no reports scheduled for release on Friday, which will leave the financial markets to dwell on Hurricane Rita and all the various repercussions. The price of oil and the economic damage that could be imposed over the weekend when the storm is expected to hit landfall will be in sharp focus. Overnight and into tomorrow, however, mortgage rates are likely to hold near present levels, as changes in yields today were negligible.
Carolyn Siegel
carolyn@interest.com
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