It’s an encouraging sign that the market has stabilised today, with the volatility index dropping below 20 and stocks bouncing back on Wall Street. The Dow Jones climbed 0.6% or 90 points by early afternoon in New York while the S&P 500 was up 0.86% at 1586, recovering some of the ground that has been lost in the stock market’s recent slides.
It shows that, given enough positive signs in the underlying economy, investors are willing to look beyond the Fed’s actions.
Housing and consumer confidence are both still high and we’ve seen indications in the past two days that manufacturing may be a further source of optimism after a recent spell of softness. The boost in new orders for durable goods, which increased by a better-than-expected 3.6% in May, should help this sector maintain momentum further into the summer, with demand broadly strong across most key industries.
We saw last week that existing home sales were performing well and, combined with today’s new home sales report, it paints a picture of a thriving housing market. New home sales climbed to a seasonally-adjusted, annualised rate of 476,000 in May, with the number for April being upwardly revised from 454,000 to 466,000.
It was not that long ago that housing was a drag on the economy, but for the last year it has gone from strength to strength, transforming from a state of nascent recovery to now being one of the drivers of growth. A report on pending sales for existing homes is released on Thursday.