The Monday Moneybeat

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

AUDIO: [Wall Street closing bell]

NICK EICHER, HOST: The closing bell on the New York Stock Exchange. It’s signaling the end of a brutal week on Wall Street. The Dow Jones industrials, the Standard & Poor’s 500, the NASDAQ—those three major indexes gave up all their gains for 2018 and turned negative on the year. More importantly, the NASDAQ and the S&P 500 are now in a market correction.

That means the index is 10 percent or more below its recent high point. The Dow is just half a percentage point from that mark. It sits 9 1/2 percent below its October 3rd high.

But Sam Stovall, chief investment strategist at CFRA Research, says the market seems so cold because we’ve expected the market to remain so hot.

AUDIO: I think it feels more volatile than it really is because we just haven’t been used to this. At the same time, the 4th quarter of midterm election years traditionally sees more volatility than the non-midterm election year 4th quarter, so that, too, is playing into it.

EICHER: The worldwide price of oil hit its lowest level in a year. That dragged down the value of energy stocks.

But more broadly, it was an indication that the global economy will slow, and as it does, demand for energy will weaken.

One big factor weighing down the global economy is the ongoing trade dispute between the top two economies in the world, the United States and China.

Coming Friday this week, the group of 20 top industrial nations meet in South America. At that G20 summit, President Trump and China’s President Xi Jinping will get together to see whether they can iron out differences over trade.

REICHARD: Here’s some rare good news from the housing market: After six months in a row of declining home sales, the National Association of Realtors reported an increase last month. Sales of existing homes in October rose 1.4 percent over September.

And it just became slightly less expensive to take out a mortgage on that home purchase. Mortgage giant Freddie Mac said the interest rate on a 30-year fixed-rate mortgage recorded the biggest drop in nearly four years.

That said, home sales year over year are about 5 percent lower and the mortgage interest rates almost a full percentage point higher. On a $200,000 home loan, a single percentage point difference in interest can raise your monthly payment by close to $100.

EICHER: Durable goods orders fell in October 4.4 percent. That’s the biggest setback since last summer.

The Commerce Department defines a durable good as a manufactured item expected to last at least three years.

These are big-ticket purchases like cars and major appliances. They are also commercial and military aircraft, and sales are highly volatile. In October, they were way down, and if you factor them out, durables actually went up a tenth of a percent.

Still, as a sign of strength in the manufacturing sector, it’s more evidence of that economic slowdown.

But at the White House last week, economic adviser Larry Kudlow insisted there’s no cause for alarm.

KUDLOW: The basic economy has re-awakened. And it’s gonna stay there. I mean, I’m reading some of the weirdest stuff, how recession is around the corner. Nonsense. My personal view, our administration’s view: Recession is so far in the distance, I can’t see it.

EICHER: Kudlow stressed that the new, lower corporate tax rates are permanent and therefore continue to provide incentives to business to invest and grow.

And that’s today’s Monday Moneybeat.

(AP Photo/Richard Drew, File) In this Friday, Nov. 9, 2018, file photo specialist Antony Rinaldi left, and trader Robert Arciero work on the floor of the New York Stock Exchange.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.

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