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Stocks down as investors worry over mortgage rates

Stocks down as investors worry over mortgage rates

U.S. stocks edged lower Thursday, brushing aside some positive economic news.
Reports on Midwest business conditions, jobs and home sales all showed improvement. However, investors fretted over rising rates and the effect they will likely have on an already weak housing market. The average rate on 30-year fixed mortgages rose this week to 4.86 percent, the highest level in seven months.
The Dow Jones industrial average on Thursday morning was down 19.6 points, or 0.2 percent, to 11,565.80. The S&P 500 fell 1.38, or 0.1 percent, to 1,258.40, while the technology-focused Nasdaq composite index was down 3.10, or 0.1 percent, to 2,663.83.
The week has been marked by thin trading. Thursday is effectively being considered the last trading day of note because the burst of economic data gives one last glimpse into the state of the economy before 2011. Fewer traders are expected to show up on Friday.
Another factor that could be playing a role in the lower stock prices is that many traders close out their portfolios at the end of the year, which can have a negative effect especially in a thinly traded market.
The National Association of Realtors said the number of people who signed contracts to buy homes rose in November, the fourth increase since contract signings hit a low in June. Its index of sales agreements for previously occupied homes increased 3.5 percent. However, with mortgage rates creeping up, investors worried over its effect on home sales.
Earlier Thursday, the Chicago Purchasing Managers Index for December showed that business conditions improved in the Midwest. The index, which surveys business conditions in the states of Illinois, Indiana and Michigan, came in with a reading of 68.6, up from 62.5 in the previous month. Economists had been expecting the index to drop to 61.
The purchasing index followed more positive news on the jobs front. The Labor Department reported that the number of people applying for unemployment benefits fell to its lowest point in more than two years, a positive sign that the job market is slowly improving.
Initial filings for unemployment insurance in the week ending Dec. 25 fell to 388,000 from 420,000 in the previous week. Economists were expecting total claims of 415,000.
U.S. Treasurys are also down slightly, which has led to a slight bump up in yields. The benchmark 10-year bond is yielding 3.39 percent, up from 3.35 at Wednesday's close.


Updated : 2021-06-23 13:20 GMT+08:00