Wall Street trades in narrow channel

Strong housing data has failed to provide any great impetus to the major US stock indices today, with investors still constrained by concerns over budget wrangles in Washington.

The S&P 500 edged higher by early afternoon in New York but failed to break through the psychologically-important 1700 mark, rising just 0.02% to 1697.8. The Dow drifted 0.1% lower. The ebb and flow of share prices has been slight today, with the Dow ranging fewer than 100 points all day.

There is a frustrating lack of progress in Washington over two major issues that need reconciling in a desperately short space of time. Lawmakers appear to still be in a stalemate in discussions for a budget for the new fiscal year, while separately the Treasury Department forecasts the debt limit could be very close to being hit by the middle of next month.

There have been concerns recently that rising mortgage rates might be hurting the US housing market, but new home sales were buoyant in August, according to a report released today. Sales of newly-constructed homes increased to a seasonally-adjusted annualised rate of 421,000 last month, which was broadly in line with estimates.

July was a soft month for new home sales, and the already disappointing 394,000 which was initially reported was revised down to 390,000 in today’s report, so it is reassuring sign, as far as the good of the US economy goes, that August saw such a resilient bounce.

In spite of the threat of mortgage rates, and some softness in the jobs market, the US housing market still appears to be marching upwards, justifying the high confidence of builders that we have seen indicated by the housing market index.

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