The Dow Jones Industrial Average fell over 200 points to start the week’s trading session as the National Association of Home Builders/Wells Fargo Housing Market Index hit a three-year low. A combination of rising interest rates and low home affordability dented the housing market for much of 2018, but the sector may get a reprieve next year.
“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” said NAHB Chairman Randy Noel, a homebuilder from LaPlace, Louisiana. “However, recent declines in mortgage interest rates should help move the market forward in early 2019.”
The Federal Reserve is set to decide on interest rates on Wednesday as the capital markets are poised for what could be a fourth and final rate hike for 2018. The central bank has been sounding increasingly dovish as of late, which could mean that less rate hikes than anticipated for 2019–something that could help give U.S. equities a much-needed boost following the last two months of volatility–a perfect backdrop for a year-end rally.
“With just ten trading sessions left for stocks in 2018 the chance of a Santa Claus rally appears less than slim,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management. “Sentiment remains sour toward stocks even as fundamentals and relatively cheap valuations leave stocks poised to move higher in the New Year.”
The Dow Jones Industrial Average shed close to 500 points on Friday amid global growth concerns as China and Europe reported weaker-than-expected economic data. U.S. capital markets have been roiled by volatility as any sliver of financial news, positive or negative, have set the major indexes in motion, such as trade wars.
U.S. President Donald Trump and Chinese president Xi Jinping agreed to cease fire on their tariff-for-tariff battle. The truce reached at the G-20 Summit didn’t quell investor fears as markets in the U.S. and China have been fretting on the notion that a trade deal can only materialize after lengthy discussions between the two economic superpowers–contentious topics like forced technology transfer and intellectual property could derail negotiations.
Trump and Jinping met at the G-20 Summit in Buenos Aires, putting global markets on pause as the two economic superpowers met to hopefully ameliorate their trade differences. As part of the agreement, both nations agreed to withhold imposing further tariffs on each other for 90 days while they work out a firm, ironclad deal.
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