US Stock Market Overview – Stock Rally Ahead of Key Earnings; S&P Closes at RecordStocks break out and set all time highs
US Stocks prices surged to record highs, driven by positive sentiment. It appears that a trade deal between the US and China are now being priced into US equities. Fitbit shares surged 35% following news that Google’s parent Alphabet was in talks with the company to buy it outright. Brexit remains in the headlines and it appears that the EU will provide the UK with a 3-month extension to come back to the Brexit table. Most sectors were higher, led by Technology, Utilities bucked the trend. The VIX volatility index rebounded slightly after closing lower on Friday. This comes despite stock prices hitting all-time highs. The VIX measures the “at the money” strike prices of the S&P 500 index and generally reflects the demand for hedging against adverse market conditions. At 12.90 the VIX is closer to the lows for 2019 near 11, compared to the highs for the year near 36.20.
Mortgage Refinances Surged in the Q3
While US rates have rebounded during the fall, the decline in rates over the summer spurred a surge in lending in the mortgage market. According to a report from the Wall Street Journal, lenders extended $700 billion of home loans in the Q3 the most in 14 years. Mortgage originations for the full year are on pace to hit their highest level since 2006 according to the WSJ.
Refinancing activity jumped 75% from a year earlier in July and August, the WSJ states. A record 11.7 million people would have saved at least 0.75 percentage point on their mortgage rate by refinancing in early September, the journal revealed.
The UK will Get a 3-month Extension for Brexit
The UK will receive a 3-month extension to return to the Brexit table. This comes on the heel of UK Prime Minister Boris Johnson’s request. France wanted a shorter time frame wishing to grant a one-month extension only. The EU is expected to inform the UK about its decision on Tuesday. The EC had previously rejected the re-opening the agreement. China is experiencing a protracted downturn. Chinese profits in the Industrial sectors dropped by the largest amount in 4-years. This is mainly driven by US tariffs. Profits at China’s industrial sectored declined by slightly more than 5%. It was the biggest decline since August 2015.