Record Home Prices

By Nicholas Jasinski |  Tuesday, June 22 Mean Reversion.  Today's trading largely extended yesterday's trends. Stocks gained in a modest, but broad, rally, the Treasury yield curve got steeper, and investors were again leaning into the same assets they shed last week. The best-performing sectors today were technology and consumer discretionary (that's mostly stores, restaurants, Amazon.com, and Tesla), with gains from software stocks and bricks-and-mortar retailers alike. The reopening versus stay-at-home dynamic no longer drives markets' day-to-day action. The Nasdaq Composite rose 0.8% today, to hit a record high. The S&P 500 added 0.5%, to finish just a hair below its all-time close, and the Dow Jones Industrial Average ticked up 0.2%. In his testimony before a House panel today, Federal Reserve Chairman Jerome Powell largely echoed his remarks from last week's post-meeting press conference. More or less, those points were: ·        Vaccines are making the virus go away and that's allowing the economy to recover, but there's a long way to go before employment reaches the Fed's goals. ·        Inflation has picked up lately, but that's a result of transitory factors that will go away, and the rate of inflation will decline back to the Fed's 2% target. ·        The Fed is ready to use the monetary policy tools at its disposal, but for the time being the conditions support holding steady on interest rates and monthly bond purchases. Stocks wavered late last week as market participants suddenly seemed concerned about tightening monetary policy on the (distant) horizon. Fedspeak since then has soothed those worries, and investors have realized that interest rates remain ultralow, the economy and earnings are booming, and the outlook actually isn't all that different than it was a week ago.  So stocks and bonds have spent this week so far undoing their moves from last week. Read more on Powell's latest comments from Barron's Brian Hershberg.

 

DJIA: +0.20% to 33,945.58 S&P 500: +0.51% to 4,246.44 Nasdaq: +0.79% to 14,253.27 The Hot Stock: L Brands +5.0% The Biggest Loser: Iron Mountain -3.5% Best Sector: Consumer Discretionary +0.9% Worst Sector: Utilities -0.6%