As investors speculated about whether banks will be the leader of the market’s rebound, stocks and exchange traded funds (ETFs) rose this morning, extending the biggest monthly gain since 2003.
The S&P 500 was up 0.7%, the Dow Jones Industrial Average was up 0.8% and the MSCI World Index of 23 developed nations rose 0.8%.
On a sour note, home prices in 20 U.S. cities fell 19% in January, compared to a year earlier. The famous S&P Case-Shiller Index decreased for yet another month, extending its downfall every month since January 2007. Most believe that this decline in prices can be attributed to a lack of demand and a rise in foreclosures, states Shobana Chandra of Bloomberg.
This bad news in the housing industry seems to be hovering all around the nation. Of the 20 cities that are measured in the Case-Shiller Index, all 20 show a year-over-year decline sending the index to its lowest level since 2003. To take the numbers into consideration, one in every 440 homes in the United States is in some stage of foreclosure and this number is expected to increase.
- iShares FTSE NAREIT Real Estate 50 (FTY): down 36.1% year to date
To add fuel to the fire, U.S. consumer confidence is still at a record low. The sentiment index inched up from the previous month, but not by much. Most consumers are reluctant to spend money because of an uncertain economic environment, which includes a negative outlook on labor markets and earnings, states Pedro Nicolaci da Costa of Reuters. Most people are still worried that they will receive a pink slip, or they’re stashing away as much cash as they can and getting ready for a rainy day.
- SPDR S&P Retail (XRT): down about 1.3% in intraday trading but up 12.7% year to date.
There is yet more news coming out of Detroit. General Motors (GM) and Ford (F) both stated that they will incorporate a plan to help customers who lose their jobs make their car payments. This is a great way to boost consumer spending in a time where these automakers are shutting down factories, laying off hundreds of workers, eating up taxpayer money and on the verge of bankruptcy.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.