The Dow Jones surged on Thursday as Wall Street ignored dire economic fundamentals that could wreak havoc on the stock market – eventually. | Source: REUTERS / Brendan McDermid
The Dow Jones soared toward a major resistance level on Thursday, even after weak pending home sales data threatened to dent the buoyant mood.
While investors cheered China’s measured rhetoric on the trade war, US economic fundamentals continue to suffer from uncertainty, keeping the Dow locked in a stifling long-term sideways range.
Dow Jones Rises, But Fails to Break Out of Sideways Range
As of 12:18 pm ET, the Dow Jones Industrial Average had surged by 337.5 points or 1.30%. The DJIA last traded at 26,373.6.
The 2.5% reduction in pending home sales seemed to stop the Dow Jones in its tracks, but it’s the subtext of this reading that should weigh on investors.
Sentiment indicators like home sales could be more meaningful than optimistic tweets or press releases over the long term as traders try and gauge recession risks.
Ultra-Low Rates Do Little to Restore Confidence
In a note released to CNBC, Lawrence Yun, NAR’s chief economist, made the following comments on the state of the US housing market, as low rates are not doing their job.
“Super-low mortgage rates have not yet consistently pulled buyers back into the market. Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
Market Ignores Trump’s Fed-Bashing
Trump chose this morning to attack the Federal Reserve,