S&P 500 Closes at 5-week High, Rapid Decline in Housing Market

Barry Adams
20 Jul, 2022
New York City

U.S. stocks advanced and investors digest the latest batch of earnings and housing market indicators flashed red signals ahead. 

The S&P 500 index increased 0.6% to 3,959.90 and the Nasdaq Composite index advanced 1.6% to 11,897.65. 

The popular averages rose to five-week highs as the earnings season picks up momentum. 

Futures of crude oil decreased $1.61 to $102.65 a barrel and natural gas increased 63 cents to $7.89 a unit. 

The yield on 10-year Treasury notes increased to 3.034%.  

Mortgage Demand Drops to 22-year Low 

Mortgage demand plunged to the lowest levels in 22 years, according to data released by the Mortgage Bankers Association.

The Market Composite index, tracking the mortgage loan application volume, dropped 6.3% on a seasonally adjusted basis for the week ending July 15. 

On an unadjusted basis, the index declined 17% on a weekly basis. 

The refinance indexes declined 4% from a week ago and plunged 80$ from a year ago. 

Rising home prices and a surge in mortgage rates have drained considerable purchasing power from home buyers. 

The average contract interest rate for 30-year fixed-rate mortgages with 20% down payment and loan balances less than $647,200 increased to 5.82% from 5.74%, with points increasing to 0.65 from 0.59 including the origination fee. 

 

Existing Home Sales Drops Below 2019 Level 

Existing home sales declined 5.4% in June from May, the National Association of Realtors said in its monthly report today. 

June existing home sales declined to a seasonally adjusted rate of 5.12 million units, a fall of 14.2% from a year ago, the industry group said in its report. 

Home sales were the slowest since January 2019 outside of the sales decline during the onset of the coronavirus pandemic during the same month in 2020 and below the total 2019 sales before the pandemic. 

Stocks advanced on Wall Street on the earnings optimism and investors looked ahead to results from at least 100 more companies this week. 

 

Movers: Bakers Hughes, Bath & Bodyworks, Netflix, Tesla

Netflix increased 7.3% to $216.40 after the steaming services provider reported fewer than expected subscriber losses. 

In the second quarter, Netflix lost 970,000 subscribers, less than the previous estimate of 2 million. Moreover, earnings were ahead of expectations. 

Baker Hughes dropped 8.2% to $25.89 after the oil field services company reported sharply lower than expected earnings. 

Tesla gained 0.6% to $747.0 after the vehicle maker reported June quarter sales increased 42% to $16.9 billion from $11.96 billion a year ago.

Net income rose  rose 98% to $2.26 billion from $1.14 billion a year ago and diluted earnings per share jumped to $1.95 from $1.02 a year ago. 

Automotive gross margin declined, but still healthy, to 27.9% from 28.4% a year ago. 

Free cash flow in the quarter was nearly unchanged at $621 million from a year ago. 

In the second quarter, Tesla produced over 258,000 vehicles and delivered over 254,000 vehicles, despite ongoing supply chain challenges and factory shutdowns beyond the company's control.

June 2022 was the highest vehicle production month in Tesla