US consumer confidence is the top indicator Lisa Shalett, chief investment officer for wealth management at Morgan Stanley, is watching right now as fear of the coronavirus outbreak roils global markets.
If consumers aren’t willing to spend, “then the earnings of a huge swath of S&P 500 companies are going to disappoint and that’s going to disappoint markets,” she told Markets Insider.
As an gauge of consumer confidence, she’s also keeping an eye on the housing market, as it’s one of few areas benefiting from the current low-rate environment.
US consumer confidence is the top indicator that Lisa Shalett, chief investment officer for wealth management at Morgan Stanley, will be watching as the coronavirus outbreak spreads in the US.
“If consumer confidence collapses, it really doesn’t matter what the market does,” Shalett told Markets Insider in an interview. That’s because if consumers aren’t willing to spend, “then the earnings of a huge swath of S&P 500 companies are going to disappoint and that’s going to disappoint markets,” she said.
In late February, the consumer confidence index rose to 130.7 from 130.4 in January, according to data from The Conference Board. The slight jump was less than economists expected for the month, a concern as the US consumer is a cornerstone of the economy.
Markets have tanked amid panic that the coronavirus outbreak that originated in Wuhan, China, will halt global growth. As cases spread around the world, the US is also bracing for an economic slowdown – on Tuesday, the Federal Reserve announced an emergency half-point rate cut to combat the impact of the virus.
But the Fed’s rate cut might have been the wrong move, as an epidemic presents a risk to public health, not monetary policy. Even though by lowering interest rates the Fed has made borrowing cheaper to encourage spending, it might not pan out if consumers are afraid to go out to eat or go on trips, according to Shalett.
For signs that the Fed rate cut is encouraging consumer spending, Shalett will be keeping an eye on the housing market, because it is “the most obvious beneficiary of the cratering in rates,” she said.
As investors have piled into safe-haven assets, yields on long-term US Treasury bonds have plummeted to new lows. The average rate on the 30-year fixed rate mortgage, which loosely follows the benchmark 10-year, fell to 3.29% this week, the lowest on record.
That’s a good thing for people looking to buy a home. It also gives current homeowners a chance to refinance their mortgage for a lower rate – this week, mortgage and refinancing applications spiked, according to data from the Mortgage Bankers Association.
But, coronavirus could have an adverse impact on the housing market going forward, if people become so worried about catching the virus that they don’t want to go out and look at new properties.
“The next few weeks are key in whether these low mortgage rates bring in more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search,” Mike Fratantoni, senior vice president and chief economist at MBA, said in a statement.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
