US Stock Market Overview – Stocks Close Mixed Ahead of Historic Impeachment Vote

US stocks were mixed on Wednesday, with the Nasdaq continuing to set fresh records and the Dow Industrials pulling back slightly. Sectors in the S&P 500 index were mixed, led by the defensive sectors. Both real-estate and utilities notched up gains, while industrials bucked the trend. The back up in yields push pressure on mortgage applications. Wednesday is a historic day in US politics. The House of Representatives is scheduled to vote on the impeachment of President Donald Trump. All sources point to 2-3 democrats voting not to impeach and all-republicans opposed. The 30 plus majority the Democrats have in the house will lead to the 3^rd impeachment of a President in US history.

The markets do not seem to care about impeachment because they see the senate fast-tracking the trial. To remove a President the senate would need more than 66 senators to vote in favor. Republicans hold a 53-47 majority so the markets feel this is going now where.

Mortgage Applications Fall

The rise in US yields was the drive for total mortgage application volume to fall 5% from the previous week, according to the Mortgage Bankers Association. Yet volume was 65% higher compared with the same week one year ago when interest rates were considerably higher. Refinance volume was weakest, falling 7% for the week. Applications were still 135% higher than a year ago. Refinance demand has been very strong ever since rates began falling last spring. Mortgage applications to purchase a home fell 2% for the week but were 10% higher than a year ago.

How Can the Trade Deal Help?

The phase one trade deal between the US and China is really a trade truce. Both sides backed down on several issues, with the US not moving forward with more tariffs and China promising to buy more ag products. As you would expect, skepticism is brewing in the markets as much of the details have not been confirmed by both sides. China is reluctant to commit to the number of agriculture products it’s willing to buy, as the number is far greater than the amount purchased in the last decade. Beijing has also been quiet about tariffs. Donald Trump needs a win for the ag states, but its unlikely that the Chinese will come to the rescue. They have found other partners and do not need as much US grains.