Commenting on the record low mortgage rates and today’s trading, Gorilla Trades strategist Ken Berman said:
The major indices are all trading higher at midday as despite the continued increasing the number of COVID cases, investor sentiment improved over the weekend. Cyclical issues started out the holiday-shortened week on a positive note, helped by the fact that the number of virus-related fatalities continues to trend lower in the U.S. even as the number of new cases is rising at a record pace. Several states rolled back their reopening over the weekend as Florida and Texas reported an alarming number of infections, while the global total of cases passed 10 million.
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Housing Market Recovery Could Be Fueled By Record Low Mortgage Rates
In economic news, pending home sales blew away the consensus estimate, surging higher by 44.3%, the most on record, suggesting that the record low mortgage rates could fuel a quick recovery in the housing market. Last week’s pullback led to a spike in volatility on Wall Street but today’s broad morning rally could mean that the strong post-crash rally is set to continue soon, even as the global economic uncertainty remains very high.
Dow: 25,383, + 431 or 1.7%
S&P 500: 3,040, + 31 or 1.0%
Nasdaq: 9,817, + 60 or 0.6%
Russell 2000: 1,415, + 36 or 2.6%
Market breadth has been relatively strong this morning, with advancing issues outnumbering decliners by a 3-to-1 ratio on the NYSE. 13 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 34 stocks hit new 52-week highs. The major indices have been trading above their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday buying pressure. The key cyclical sectors and industrials, in particular, have been showing strength in early trading, while consumer-related, healthcare, and tech stocks have been lagging the broader market amid the shift towards the most lockdown-sensitive issues. Stay tuned!