Tuesday, December 29, 2020
Market futures look to extend their all-time trading highs when the opening bell rings this morning — the Dow, S&P and Nasdaq all closed at record highs Monday, following a relief rally from the signage of a relief package by President Trump late Sunday night. Over just the last six months, the Nasdaq has risen nearly 31%, the S&P 500 +22% and the Dow +18%. The Russell 2000, which hit a snag yesterday as investors began rotating into bigger stocks, is up 40% since late June.
The most recent burst of positive sentiment prices in the economic relief from $600 stimulus checks and the revival of Pandemic Unemployment Assistance (PUA), rent payment forgiveness and a host of other things to enhance support in this prolonged pandemic era. The House just yesterday voted to increase the stimulus payouts from $600 to $2000 — joining President Trump’s idea that the $600 won’t be enough to stop the suffering in many pockets of the country. If somehow this new bill passes the Senate, that would likely add more fuel to this Santa Claus Rally bonfire.
With robust economic stimulus, plus Fed measures to keep rates super-low and backstop bonds for the foreseeable future, 2021 may bring us a consideration we’ve not had to concern ourselves with for some time: inflation. This would be a further boon to stock markets, at least in the near term, before adjustments would be made to keep prices from spinning out of control.
After what we’ve been through in 2020, such a scenario sounds a long ways off. Then again, if 10-year bonds suddenly leap toward 3%, we may find ourselves in a new narrative before we know it.
The Case-Shiller Home Price Index released its results for the month of October, and the numbers came out even better than expected: +8.4%, following an already strong +7.0% in September. This represents the highest growth since March 2014, as 30-year mortgages continue to hit record lows (averaging 2.66% as of now). The 20-City index ramped up 7.9%, higher than the previous month’s 6.6%, and nearly 100 basis points higher than the 6.95% analysts had expected.
Phoenix led the way in home price increases for the 17th straight month at +12.7%, followed rather predictably by Seattle at 11.7% and San Diego at 11.6%. The Managing Director at S&P Dow Jones Indices noted that accelerating growth has been evident since June, following the lockdown period of the pandemic that likely stoked pent-up demand for housing.
Looking at the charts, Case-Shiller home prices have reported steady and noteworthy growth throughout 2020. The average home price has again hit a record high in the U.S. in October, to nearly $236K. This is up from under $219K we saw in January.
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Markets to Open at New Highs; Case-Shiller Sets New Record
Tuesday, December 29, 2020
Market futures look to extend their all-time trading highs when the opening bell rings this morning — the Dow, S&P and Nasdaq all closed at record highs Monday, following a relief rally from the signage of a relief package by President Trump late Sunday night. Over just the last six months, the Nasdaq has risen nearly 31%, the S&P 500 +22% and the Dow +18%. The Russell 2000, which hit a snag yesterday as investors began rotating into bigger stocks, is up 40% since late June.
The most recent burst of positive sentiment prices in the economic relief from $600 stimulus checks and the revival of Pandemic Unemployment Assistance (PUA), rent payment forgiveness and a host of other things to enhance support in this prolonged pandemic era. The House just yesterday voted to increase the stimulus payouts from $600 to $2000 — joining President Trump’s idea that the $600 won’t be enough to stop the suffering in many pockets of the country. If somehow this new bill passes the Senate, that would likely add more fuel to this Santa Claus Rally bonfire.
With robust economic stimulus, plus Fed measures to keep rates super-low and backstop bonds for the foreseeable future, 2021 may bring us a consideration we’ve not had to concern ourselves with for some time: inflation. This would be a further boon to stock markets, at least in the near term, before adjustments would be made to keep prices from spinning out of control.
After what we’ve been through in 2020, such a scenario sounds a long ways off. Then again, if 10-year bonds suddenly leap toward 3%, we may find ourselves in a new narrative before we know it.
The Case-Shiller Home Price Index released its results for the month of October, and the numbers came out even better than expected: +8.4%, following an already strong +7.0% in September. This represents the highest growth since March 2014, as 30-year mortgages continue to hit record lows (averaging 2.66% as of now). The 20-City index ramped up 7.9%, higher than the previous month’s 6.6%, and nearly 100 basis points higher than the 6.95% analysts had expected.
Phoenix led the way in home price increases for the 17th straight month at +12.7%, followed rather predictably by Seattle at 11.7% and San Diego at 11.6%. The Managing Director at S&P Dow Jones Indices noted that accelerating growth has been evident since June, following the lockdown period of the pandemic that likely stoked pent-up demand for housing.
Looking at the charts, Case-Shiller home prices have reported steady and noteworthy growth throughout 2020. The average home price has again hit a record high in the U.S. in October, to nearly $236K. This is up from under $219K we saw in January.
Questions or comments about this article and/or its author? Click here>>
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Start Your Access to the New Zacks Top 10 Stocks >>