Last week, America continued its quest for homeownership, a process that somehow combines the cost of a luxury vacation with the emotional experience of visiting the DMV. A barrage of housing reports suggested prospective buyers are finding neither bargains nor shortcuts.
- The S&P 500 fell 0.47% and the Nasdaq lost 0.71%, while the Dow rose 0.41%. Small caps outperformed large caps and value beat growth across market-cap ranges. Sector results looked like someone had spun a carnival wheel labeled with random human anxieties: energy and health care led, while communication services fell 6.21%.
- Bonds had a decent week—which is about as reassuring as someone telling you not to panic. After months of markets repeatedly revising rate expectations higher, investors finally got a week in which rates became slightly less of the story. The Bloomberg U.S. Aggregate Bond Index gained 0.54% while U.S. Treasury yields declined across the curve.
- Taken together, commodities appear to be spelling out a warning, but their handwriting is terrible. Crude oil rose to $103.27 from $99.02, while gold fell to $4,008 an ounce, copper slipped to $14,415 per metric ton, and gasoline declined to $4.63 a gallon.
- The U.S. dollar was mixed; it strengthened slightly against the euro, weakened against the yen, and was little changed against the pound.
- October home-builder confidence fell to 29, a reading generally associated with discovering that the crawl space contains both mold and a support beam the seller describes as “more of a decoration.” The NAHB/Wells Fargo Housing Market Index missed the consensus estimate of 32, slipping to its lowest level since June 2012. Current sales conditions, six month expectations, and prospective-buyer traffic all declined. Forty-three percent of builders cut prices, while 65% offered incentives. Mortgage rates, meanwhile, sat at 7.43%--high enough that every open house should probably include a grief counselor and folding chairs.
- Housing starts fell 5.2% in September, so if your parents are thinking about turning your old bedroom into a craft room, you may want to ask them to hold off. Starts fell to a seasonally adjusted annual rate of 1.221 million, below the 1.300 million consensus estimate and down from a revised 1.288 million in August. Building permits slipped 0.2% to 1.400 million, while single-family starts fell 4.6% and single-family permits declined 4.0%.
- Pending home sales dropped 7.3%, which isn’t a slowdown so much as the housing market being yanked backward by a vaudeville hook. The index fell to 66.0 in September versus expectations for a 0.2% increase. Contract signings were down 11.3% from a year earlier, with declines in every U.S. region.
- Median weekly earnings increased 1.5% from one year ago, while consumer prices rose 3.5%, allowing workers to earn more money while being able to afford less stuff. Median earnings reached $1,232 for the nation’s 122.2 million full-time wage and salary workers, which is a bit like getting an extra 12 arcade tokens after the arcade doubles the price of every game and replaces the prize counter with a guy selling a small strawberry-scented pencil eraser for 40,000 tickets.
- The Leading Economic Index was unchanged in September, because even warning signs are waiting to see what happens. The index held at 99.6 after declining 0.1% in August. Five components contributed but weaker consumer expectations, stock prices, capital-goods orders, and building permits erased those gains.
- Business activity in October remained strong, but unfortunately, so did its commitment to charging you more. The flash S&P Global U.S. Composite purchasing managers’ index eased to 57.6 in October from 58.4. The services index declined to 57.9, while the manufacturing PMI inched up to 56.0, beating the 55.5 consensus estimate. New orders grew at their fastest pace in more than four and a half years, hiring was the second strongest in four years, and selling price inflation reached its highest level since August 2022.
- Consumer sentiment finished October at 48.0, a historically bleak reading that suggests everyone completed the survey immediately after buying groceries. The final reading was revised up from 46.3 but remained just below September’s 48.1. Current conditions fell to 46.7, while expectations improved to 48.8. One-year inflation expectations rose to 4.7%, and long-run expectations climbed to 3.5%.
- Initial jobless claims declined by 6,000 to 194,000 for the week ended October 17, below the 200,000 consensus estimate. The four-week average fell to 197,750. Continuing claims, however, climbed by 25,000 to 1.728 million, above expectations. Employers remain reluctant to fire workers, but those who do lose jobs appear to be taking longer to find a new one.
- 3Q26 corporate earnings continued arriving from a parallel dimension where the economy is doing beautifully, provided you’re legally a company. With 121 S&P 500 companies reporting, 83% beat analysts’ estimates, 3% matched them, and 15% missed. Analysts expect quarterly earnings growth of 31%. Energy led with 135.7% growth, followed by technology at 66.9% and communication services at 37.7%. Corporate America is once again enjoying an extraordinary earnings season while consumers stare at the supermarket cheese aisle as if it contains rare gemstones guarded by an armed curator.