Market futures are higher before the open

Pre-market futures are up again this morning, and if they stay that way, it will extend the winning streak on the major indices to three straight weeks. The Fed’s quarter-point interest rate hike last week cleared several question marks from the near-term economic outlook, the US labor force retains strength with weekly jobless claims ever seen for more than 50 years, the Covid pandemic continues to recede into past history, and Western allies at the G-7 conference are keeping up the pressure on Russia to end the war in Ukraine.

These are all good things to keep stock indexes strong, and I’ll add another that may not get the same attention: we’re already seeing signs of slowing inflation. The housing industry, which had been red hot before what everyone knew was a new environment of higher interest rates, is already starting to see mortgage applications slow down significantly.

This is because mortgage rates, as well as interest rates, are on the rise. This will put pressure on home prices, as higher home prices are already keeping a significant portion of potential buyers on the sidelines. While there is no shortage of housing demand at present, some expect us to be at cycle highs – and to attract new buyers to the housing market, prices will have to flatten or even fall.

The reason this matters to the overall economy is because of the large percentage of home purchases as a piece of the pie. Remember that a few years ago when the Fed tried to introduce inflation to the market when it was stubbornly staying below 2%, many indicators at the time were then quoting prices for real estate; it was only when the housing market came under supply – before the oil price spike aggravated by the Russian invasion of Ukraine, which, along with the post- pandemic, have been at the center of inflation concerns – that inflation figures have started to rise.

After the opening bell this morning, we’ll see some new March readings on the national economy: the University of Michigan Consumer Sentiment Survey and 5-year inflation expectations. February’s pending home sales will also be released around the same time, so keep an eye on this near-term space – although we may continue to see metrics pointing to inflation at levels well above optimum. , keep an eye out for clues that runaway inflation is already on the wane.

For now, the Dow Jones is at +85 points, the Nasdaq at +30 and the S&P 500 at +12 points. A third consecutive week of increases would bring us closer to the first green month in the markets for 2022. Currently, the Dow Jones is still at -5% year-to-date, the S&P 500 at -5.8% and the Nasdaq at -10.3%. Especially compared to recent lows, of course, but we still have some way to go.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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