Top Story
Tech Sector Helps Lift Stocks, Home Sales and Mortgage Applications Both Decline
• US stocks rose Wednesday as a new round of earnings reports may have boosted sentiment. This is an ongoing theme this week, as investors are studying the impact of inflation on individual companies. Still, there’s disagreement as to whether this is a “bear market bounce” or the potential start of a new bull run.
• A strong performance from the tech sector helped lift the major indexes, particularly the Nasdaq Composite. Several chipmakers saw their prices rise ahead of a key vote on legislation that would benefit domestic firms. Some analysts say the market is showing an increased appetite for risk.
• In other areas of the market, signs of pessimism persist. This includes the bond market, where the yield on the benchmark 10-Year US Treasury rose yesterday. Oil prices also fell, possibly due to recessionary concerns. Worries tied to tight supply had boosted prices earlier in the week.
• Existing home sales fell 5.4% in June from the previous month, according to the National Association of Realtors®. The housing market hasn’t experienced a decline of that sort since June 2020, when sales activity plummeted amid the pandemic’s early stages. Meanwhile, home prices rose 13.4% year-over-year, hitting a new record median price at $416,000.
• The MBA says mortgage applications dropped 6% from the previous week. The overall number of applications represents a 22-year low. As mortgage rates have risen, demand for mortgages has fallen.
What to Be on the Lookout for Today
• Initial and existing jobless claims are set for release. Last week’s jobless claims reached their highest level in nearly eight months. The number of Americans filing for unemployment benefits rose 9,000 to hit 244,000 overall.
• Also watch for the Philadelphia Fed’s regional manufacturing survey and the Conference Board’s leading economic index. The Philly Fed’s survey examines output and productivity for the region, while the Conference Board is a non-government entity and their index is a composite measure of economic productivity.
• AT&T (T) will publish its latest earnings data. The telecommunications firm just announced an expansion of its ActiveArmor cybersecurity feature for fiber customers.
What Rising Interest Rates Means For Student Loan Borrowers
The recent low-interest environment has made student loan refinancing a money-saving move. When loan holders refinanced, they were often able to secure a lower interest rate than the rate on their federal loans. (For example, the federal student loan rate for undergraduate Direct Subsidized loans was 6.8% from July 2006 through June 2008, while refinancing rates were sub-3% as recently as last year.)
A series of expected increases from an inflation-fighting Federal Reserve means that the interest rates on student loan refinancing are rising — and possibly rising fast. Since getting the lowest possible interest rate is the goal for refinancing, it may not pay to delay any longer.
If you have federal student loans, you know that the current interest rate is 0% and is scheduled to stay that way through Aug. 31. No doubt, that’s a rate that can’t be beat.
However, if you are waiting for the payment pause to end before refinancing your federal student loans, you may find yourself looking at much higher interest rates by fall. Depending on what your current interest rate is and how much you have borrowed, you could see bigger savings by not waiting.
Not sure about refinancing now when your federal loan payments are on pause? If you refinance your federal loans with SoFi, you will get 0% interest through Aug. 15, and no payments until Oct. 1. What’s more, SoFi’s student loan refinancing rates are competitive — and there are no origination fees or pre-payment penalties. View your rate and see if student loan refinancing makes sense for your financial plan.
A Few Headlines That Should Be on Your Radar
Several prominent ecommerce companies are burning through cash as economic conditions shift. It could further disrupt the way consumers shop for things online, including used cars. Throughout the early stages of the pandemic, ecommerce soared, with more people stuck at home and stimulus checks coming in. Now firms are burning through reserves. Here are some resulting factors both consumers and investors should know. Read more >> A new report suggests home prices may not come down anytime soon, despite higher mortgage rates pricing more Americans out of the market. That’s because homebuilders are also facing a pricing squeeze. Rising construction costs and shrinking profit margins have some rethinking whether single-family home building is worth it. The US Census Bureau reported single-family-home starts were down 8.1% in June from the prior month. Would-be homebuyers might not be thrilled, but there’s a silver lining in the rental market. Read more >> As SoFi’s Head of Investment Strategy points out, in addition to the 2-year and 10-year Treasuries, there are several less commonly talked about spreads that serve as important guideposts and market indicators. One such example is the “near-term forward spread,” which serves as an indicator of when the market thinks the Fed may have to cut interest rates — likely due to economic stress or recession. Read more >> Americans currently owe a total of over $1.7 trillion in student debt, with the average student borrower having $28,400 in loans to pay off. There are pros and cons of refinancing student loans. Here’s what to consider to decide if this option is right for you. Read more >>Not-So-Breaking News
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BlackRock (BLK) has acquired Vanguard Renewables for $700 million. The investment company is expected to invest upwards of an additional $1 billion in the renewable energy company, which converts food waste and manure into renewable natural gas.
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The trial date has been set for October of this year in the lawsuit between Twitter (TWTR) and Tesla (TSLA) CEO Elon Musk. The social media company is suing Musk after the billionaire walked away from his $44 billion deal to acquire it.
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Abbott Labs (ABT) beat Wall Street projections on the top and bottom lines. The medical device company says it benefited from strong sales of its COVID-19 tests.
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Biogen (BIIB) exceeded estimates on profits, but missed on revenue. The biotechnology company also bumped up its guidance for the year.
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Baker Hughes (BKR) shares tumbled after reporting lower-than-expected results on the top and bottom lines. The oil industrial company blamed the beleaguered supply chain for component shortages, as well as inflation. Baker Hughes also cited the negative impact of its suspension of operations in Russia.
Financial Planner Tip of the Day
"Anyone who wants to flex good financial habits may find it worthwhile to come up with a debt repayment plan. In an ideal world, this might mean paying off credit card balances in full and making all other necessary debt payments on time, such as mortgage installments and student loan payments."
Brian Walsh, CFP® at SoFi