MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.
NICK EICHER, HOST: Well, the stock market broke its fall last week, somewhat.
The Dow Jones Industrials and the Standard & Poor’s 500 index of stocks edged slightly higher.
That followed losses of more than 4 percent each the week before.
The S&P 500 is a benchmark index. It’s not risen two days in a row since September the 20th. On that day, it finished at an all-time record high, but since then, it’s down 5.6 percent.
The tech-heavy Nasdaq and the smaller-company index of stocks, the Russell 2000, continued losing value last week. Although for now all the Wall Street indexes remain up, year-to-date.
On Tuesday, it appeared the long-running bull market was back on track. But then came Wednesday, and news from the Federal Reserve on interest rates.
Stocks took another big hit after the Fed released minutes of its September meeting, at which some of the members discussed hiking rates to the restrictive level.
That means rates specifically high enough to put the brakes on economic growth.
Late this week or early next, the government is expected to release third quarter gross domestic product. Expectations are for 3 percent growth, and the Fed is fretting that the high-flying economy may provoke inflation.
Higher interest rates already are making government bonds more attractive to investors. They’re moving money from stocks to pursue those higher bond yields.
That’s one factor behind the stock-market retreat.
Higher interest rates are also raising the cost of borrowing money. And that’s hurting the housing market.
The National Association of Realtors said home sales have slipped now six months in a row. September sales fell 3.4 percent. That’s the biggest drop in 2-and-a-half years.
A key 30-year mortgage rate is hovering near 5 percent and home loans haven’t been that expensive in seven years.
The rising cost of financing debt also hit the big borrower in Washington, the federal government. Fiscal Year 2018 ended September 30th and we learned last week that all that debt Uncle Sam has racked up over the years is even more expensive to finance now.
Interest payments for fiscal 2018 surged 14 percent and added $65 billion more to the deficit. It finished the year at $779 billion.
Tax revenues rose, ever so slightly, to $3.3 trillion.
But that was not enough to keep pace with spending, which topped $4 trillion for the first time ever.
And that’s today’s Monday Moneybeat.