Market Update: October 24, 2018

Shares fell Wednesday, sending the Dow and S & P into the red for the year.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The S & P 500 index (^ GSPC ) fell 3.09%, or 84.59 points, to close at 2,656.10 The index started the year at 2,673.61. The Dow (DJI) lost 2.41%, or 608.01 points, to close at 24,583.42. The 30-share index started the year at 24,719.22."data-reactid =" 16 "> The S & P 500 Index (^ GSPC) lost 3.09%, or 84.59 points, to close at 2,656.10. The index has started the year at 2,673.61. The Dow (DJI) lost 2.41%, or 608.01 points, to close at 24,583.42. The 30-share index started the year at 24,719.22.

The Nasdaq (^ IXIC) plunged 4.43%, or 329.14 points. However, the technology index is still up 2.9% for the year.

The defeat in stock trading prolongs this difficult month for the market. The S & P is now down 9.68% from its peak of 2940.91 on September 21st.

"In recent weeks, it seems that the general discourse on stock markets has become half empty, while the combination of Fed aggressiveness, trade tensions, medium-term concern (Dems Do House ), tariffs, political unrest, rising interest rates, weakness Technical problems and excess risk have shifted the "mid-point" of the consensus towards market fears at the end of the cycle / bearish " said Tom Lee of Fundstrat Global Advisors in a note sent Wednesday to his clients. "This is a long list that is enough to turn the" wall of worry "(rising markets) into a mountain of doubts."

However, Lee also sees in the fixed income and derivatives markets a number of signals that indicate the worst may be over.

"We strongly reiterate our view that this sale is ending, not starting," he said. "[H]we buy this dip. "

Lee is not alone with this feeling.

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" We think the market is currently oversold by fears trade, the euro, rising rates and uncertainty surrounding the mid-term elections, "said John Eade of Argus Research at Yahoo Finance.^ VIX) more than doubled last month. This happened several times during the bull market – each time this was a signal of purchase. ""data-reactid =" 23 ">" We think the market is currently overestimated by trade fears, the euro, rising rates and uncertainty about the mid-term elections, "said John Eade 'Argus Research at Yahoo Finance.^ VIX) more than doubled last month. This happened several times during the bull market – each time this was a signal of purchase. "

"There are a lot of negative factors that can be solved and a lot of positive things that can happen," said Brad McMillan of the Commonwealth Financial Network.

Eade and McMillon see the S & P close at 3,000 by the end of the year. Lee sees the index reach 3,025.

ECONOMY: New home sales fall at the lowest rate in almost two years

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "New home sales declined at a faster pace than expected in September, reaching their lowest level since December 2016. According to a statement released Wednesday by the Commerce Department, sales of new single-detached homes fell 5.5% year-on-year, at a seasonally-adjusted rate of 553,000. Consensus estimates among economists surveyed by Bloomberg, the decline was only 0.6% in one month. The median selling price decreased by 3.5% from one year to the next to establish at $ 320,000. Home supplies at current selling rates increased from 6.5 months to 7.1 months, the highest level since March 2011. "data-reactid =" 36 ">New home sales declined at a faster pace than expected in September, reaching their lowest level since December 2016. According to a statement released Wednesday by the Commerce Department, sales of new single-detached homes fell 5.5% year-on-year, at a seasonally-adjusted rate of 553,000. Consensus estimates among economists surveyed by Bloomberg, the decline was only 0.6% in one month. The median selling price decreased by 3.5% from one year to the next to establish at $ 320,000. Home supplies at current selling rates increased from 6.5 months to 7.1 months, the highest level since March 2011.

"Hurricane Florence was partly responsible for the steady leveling of home sales, but the slowdown in sales was mainly due to the deterioration in affordability. Mortgage rates have recently hit a record high for seven years and are expected to continue rising until 2019, "said Yun Cohen, an analyst at the National Association of Credit Unions. "While housing demand remains strong, the response is starting to decline. A recent study by Freddie Mac shows that a growing share of renters consider that renting is more affordable than home ownership while fewer consumers are considering buying a home. "

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In the United States, the Service Purchasing Managers Index recorded a seasonally adjusted rate of 54.7%. October, up from 53.5 last month, which is a three-month high. According to data compiled by Bloomberg, the IHS Markit figures for the US manufacturing PMI reached 55.9, exceeding the expectations of economists: 55.3. "Data-reactid =" 38 ">In the United States, the Service Purchasing Managers Index recorded a seasonally adjusted rate of 54.7%. October, up from 53.5 last month, which is a three-month high. According to data compiled by Bloomberg, IHS Markit's figures for the US manufacturing PMI were 55.9, exceeding economists' expectations by 55.3.

"Flash PMI surveys indicate that the pace of economic growth picked up again in October after being mostly weathered by the September storms," ​​IHS chief economist Chris Williamson said in a statement. "The overall PMI is broadly in line with annualized economic growth of 2.5%, signaling a new quarter of strong growth."

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