Mr. Market Is a Morning Person

By Nicholas Jasinski | Thursday, July 22

Dog Days. Stock indexes closed modestly higher today, with growth-oriented parts of the market generally outperforming value. The Dow Jones Industrial Average ticked up less than 0.1%, the S&P 500 added 0.2%, and the Nasdaq Composite rose 0.4%. All three are within shouting distance of their record highs.

After an eventful start to the week, with a sharp selloff immediately followed by a quick rebound, investors seem to have taken off early for the weekend. Trading volume on U.S. exchanges was the second-lowest it has been all year today.

Second-quarter earnings season continued, however, with results today from AT&T, Twitter, Snap, Dow, American Airlines Group, Domino's Pizza, Newmont, D.R. Horton, Biogen, Las Vegas Sands, and Crocs.

This week's economic data is concentrated on the U.S. housing market. On Monday, the Census Bureau reported that home builders began construction on new homes at a seasonally adjusted annual rate of 1.64 million in June. That was up 6.3% from May and 29.1% from June 2020.

It's a fast pace of housing starts for the post-financial crisis period—the monthly readings had hovered just around 1.2 million for most of the past five years—and was above economists' expectations.

"The uptick came despite ongoing materials shortages that show little sign of easing," wrote Barron's Shaina Mishkin earlier this week.

But there's still not enough supply in the housing market to meet demand. Today, the National Association of Realtors reported that the median price of a previously owned home in June was $363,300—a record high, and up 24% from a year earlier.

But there are also some signs that things may start to calm down. The high prices that homeowners can get these days are encouraging more people to list their properties for sale. That’s beginning to boost supply.

As for demand, there's plenty to go around. Mortgage rates are ultralow, Americans have pent-up savings and stock-market gains, and people are on the move as the pandemic eases.

For now at least, it remains a seller’s market in much of the country. That's positive news for homebuilders too, although investors seem to be worried that things are as good as they'll get.

The iShares U.S. Home Construction exchange-traded fund (ITB), which tracks home builders and related companies, is down 11% since May.

DJIA: +0.07% to 34,823.35
S&P 500: +0.20% to 4,367.48
Nasdaq: +0.36% to 14,684.60

The Hot Stock: Domino's Pizza +14.6%
The Biggest Loser: Texas Instruments -5.3%

Best Sector: Technology +0.7%
Worst Sector: Energy -1.1%