Stocks fell at the open this morning but quickly recovered. The Dow and SPX are currently flat. Defensive, interest rate sensitive sectors (utilities, real estate) are down in early trading. The energy sector, on the other hand, is up over 1.8% on higher oil prices. Trade volume is pretty light coming off of a holiday weekend. European markets are still closed for Easter. The stock market looks kind of tired after a huge recovery rally in the first quarter. In other words, don’t expect a lot of excitement today. Earnings will provide plenty of excitement later this week. WTI crude oil shot up to $65.50/barrel, the highest since the end of October last year. That’s a direct result of the Trump Administration saying Iran’s trade sanction exemption will expire on May 2. A White House statement said the decision “is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue.” Bonds are trading a bit lower as yields tick higher. The 10-year Treasury yield is back up to 2.58%. The “yield curve” (that is, the difference between the 10-year and 2-year rates) is still pretty narrow and fragile. In fact, the spread is just .19% and has been in the range of .10% and .20% for the last 5 months. Should it break convincingly above .20%, that will likely be viewed as a bullish signal for traders.

Existing home sales fell in March to an annualized rate of 5.21 million units. Home sale volumes decelerated sharply in 2018 due to falling affordability and rising mortgage rates through most of the year. Annualized units troughed at about 4.9 million last December, but since then we’ve seen a rebound. Two factors are responsible for the turnaround: rising wages, and a reversal in mortgage rates. In fact,’s average 30-year fixed rate has fallen back to 4.12%. And at long last the rate of wage growth is catching up to the rate of home price growth. So while most housing data have been in a downtrend for the past year, there is hope for a rebound (or at least stability at a healthy level).

About 82 of the S&P 500 companies have reported first quarter results. Thus far, aggregate revenue growth is tracking to 2.5% from year-ago levels, and earnings-per-share growth is flat. While growth rates have slowed sharply since 2018, analysts’ estimates have fallen more. As a result, about 78% of reporting companies have beaten Wall Street analysts’ earnings forecasts. So far, so good.

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