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Dow Rebounds in Big Way as Bank of England Announces Bond Purchases
• US stocks rose Wednesday as the Dow Jones Industrial Average and S&P 500 snapped six-day losing streaks. The Bank of England announced it will begin buying bonds, in a bid to help stabilize its currency, the pound sterling. That’s a notable shift from other central banks who have been offloading assets amid the inflationary environment.
• The market reacted positively to the BOE announcement, as it helped weaken the US dollar. A stronger dollar causes disruptions for international trade. It also harms profits from abroad because US-based corporations face an unfavorable exchange rate.
• The National Association of Realtors® said the pending home sales index fell 2.0% in August. This is a result of the Federal Reserve’s rate hike campaign, which has led to a rise in mortgage rates, and has sapped demand from would-be homebuyers.
What to Be on the Lookout for Today
• Initial and existing jobless claims are due. Initial claims jumped slightly last week, but economists argue the labor market is still strong, noting the number of people collecting unemployment benefits remains close to the pre-pandemic average.
• The Bureau of Economic Analysis will issue the revised second-quarter GDP. In late August, the BEA said GDP declined at an annual rate of 0.6%, after the first-quarter GDP decreased 1.6% over the previous 12-month period. Consecutive quarters of negative growth have traditionally been used to define a recession, so investors will be watching this updated print closely.
• Several big names will report earnings with sneaker and apparel giant Nike (NKE) leading the way. NBA superstar Lebron James just joined Nike last week to unveil the pair’s 20th signature shoe. Since first becoming a client in 2003, James has signed two contract extensions with Nike, including a “lifetime” deal in 2016.
• Chipmaker Micron Technology (MU) and used car retailer Carmax (KMX) will both report earnings. As the supply chain came under pressure throughout the pandemic, both semiconductors and used cars became hard to come by. Investors will be studying these companies to get a snapshot view of each sector.
Home Buying 101: Knowing How Much House You Can Afford
When the idea of buying a home becomes a real possibility, figuring out what you can actually afford (or what loan amount you can qualify for to borrow) can be a little tricky.You may have a general idea in terms of what you want your mortgage loan amount and monthly payment to be, but that number may get a little hazy during late night sessions of online house shopping.
It’s easy to start gravitating toward those professionally lit photographs of expansive, renovated kitchens and manicured gardens. You might start to think: What’s another $100,000, right?
Or maybe you really do need an extra bedroom, additional garage space, or a pool with a swim-up bar. Why not?
You can see with these examples how a person’s initial home-buying budget can quickly balloon out of control. Fortunately, we created a home affordability calculator that might help give you a sense of a suitable home-buying budget.
Just input five quick numbers, and we’ll tell you how much house you could really afford.
A Few Headlines That Should Be on Your Radar
The US housing market has been white hot for the past two years. Now the Federal Reserve is raising rates in an attempt to cool prices. Do you lock in a mortgage now before rates climb even higher? Or do you keep renting for a few months to see how things play out? Read more >> The Biden administration’s student loan forgiveness plan applies to qualifying individuals who earn less than $125,000 per year. Both tax-filing status and the way in which that income is earned could impact eligibility. This has to do with the potential to reduce gross income, by making contributions to a SEP-IRA. What is a SEP-IRA and how does it differ from other retirement accounts? Read more >> Since hitting a peak in January, NFT trading volumes are down 97%. Users have declined as well, leading to what some are calling “crypto winter.” The Fed’s rate hike campaign is one factor impacting NFTs and the broader tech sector, but there are additional factors at play as well. Read more >> We've broken down the average retirement savings by age in the US, from ages 30 and up. See where you fit in the country's averages. When saving for retirement, it can be helpful to see how one compares to others in their age range. Read more >>Not-So-Breaking News
- VFC Corp. (VFC) cut its full-year outlook for both sales and profit following disappointing results for the company’s fiscal second quarter. The parent company of both Vans and The North Face recently laid off 600 workers and has faced challenges while looking to grow in China.
- Payroll services company Paychex (PAYX) beat analyst expectations for profit in its fiscal first quarter, while also increasing its full-year guidance. Executives say the firm is experiencing “notable strength” in its mid-market HR solutions and retirement business.
- Johnson & Johnson (JNJ) announced the name of its new consumer health company Kenvue, which is being spun off. It’s scheduled to become a standalone company sometime next year, with a portfolio that includes Band-Aid, Listerine, Tylenol, Neutrogena, and Aveeno.
- A report from Bloomberg says Apple (AAPL) told its iPhone suppliers not to increase iPhone 14 production, something that had been planned previously. This is apparently due to the fact that demand is not as high as anticipated.
- RV maker Thor Industries (THO) reported profit that easily exceeded estimates while also beating on sales in its fiscal fourth quarter. The company says its margins also improved. But it warned of lingering “uncertainty” in the 12 months ahead concerning economic growth and consumer demand.
Financial Planner Tip of the Day
"When figuring out how to become financially independent, it can behoove individuals to invest early and often. Even if it’s only $25 or $50 per month, small amounts can add up. By investing earlier than later, money has more time to grow and for interest to compound."
Brian Walsh, CFP® at SoFi