A Ripe Time for Homebuying

Mortgage rates have fallen to a new all-time low for the fourth time this year. The 30-year fixed-rate mortgage averaged 3.13 percent for the week ending today, down eight basis points from a week earlier, according to Freddie Mac. The 15-year fixed-rate mortgage dropped four basis points to 2.58 percent.

The previous record low was 3.15 percent, set back at the end of May. Just one year ago, the 30-year home loan averaged 3.84 percent.

Not surpsrisingly, mortgage applications to purchase a home rose 4 percent last week from the previous week, the ninth consecutive week of gains and the highest volume in more than 11 years. Applications are a remarkable 21 percent higher than they were a year ago.

The Top Stocks in the COVID-19 Era

We have now passed 100 days since the World Health Organization declared COVID-19 to be a global pandemic. In that time, the markets have been on a roller coaster ride, with a steep plunge that was followed by a breathtaking climb.

Here are the ten S&P 500 stocks that have fared best over that period:

1. Diamondback Energy, up 56.8 percent
2. Abiomed, up 54.6 percent
3. Halliburton, up 49.7 percent
4. Fortinet, up 49.3 percent
5. PayPal Holdings, up 49.3 percent
6. Cadence Design Systems, up 47.9 percent
7. West Pharmaceutical Services, up 47.2 percent
8. Chipotle Mexican Grill, up 45.9 percent
9. United Rentals, up 44.8 percent
10. Marathon Oil, up 44.8 percent

Retail Comes Back

Another encouraging sign for the recovering economy: Retail sales rose 17.7 percent in May from the previous month, setting a new record. The gain easily topped the previous record of 6.7 percent from October 2001 — a month after the 9/11 terrorist attacks.

Clothing and accessories stores reported the biggest percentage gain at 188 percent. The category comprising sporting goods, hobby, musical instruments and book stores rose 88.2 percent. After being almost completely shuttered during the lockdown, food services and drinking places saw a 29.1 percent rebound in May.

Note, though, that the economy is still making up for lost ground. Despite the strong bounceback, total sales were still down 6.1 percent from a year ago.

The Online World Is Taking Over

Here's a sign of how much of our lives we spend online these days: Nasdaq announced on Friday that DocuSign, the electronic signature software company, would be joining its Nasdaq 100 index. What would it be replacing? The venerable but currently beleaguered United Airlines.

DocuSign just debuted on the Nasdaq back in 2018. It will join cloud companies Adobe, Workday and Zoom Video Communications on the index, reflecting the rise of cloud services as companies opt for systems they don’t need to operate on their own data center infrastructure.

The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. The index includes companies from all industry sectors except for the financial industry.

Inside the Inflation Numbers

The Bureau of Labor Statistics says the consumer price index fell 0.1 percent in May, driven by deep discounting on energy, car insurance, clothing and public-transportation prices. The so-called core rate of inflation, which strips out volatile food and energy prices, also fell 0.1 percent

But those volatile categories have been rising. Prices for food consumed at home rose 1.0 percent after going up 2.6 percent in April. The cost of beef shot up a record 10.8 percent in May, reflecting shortages as a result of COVID-19 infections at meat processing plants.

Prices were held down by a 3.5 percent drop in the cost of gasoline, which followed a 20.6 percent drop in April. On other hand, while shelter prices are not rising as fast as they were at the beginning of the year, they are still increasing, up 2.6 percent in the past year.

The Fed's Forecast

After its meeting yesterday, the Federal Reserve said it will be years before it raises interest rates again. The Fed now doesn’t expect to lift its benchmark interest rate until 2023. Its Fed funds rate has been in  a range of 0-0.25 percent since mid-March, when the economy went into lockdown.

Along with the rate decision, the Fed also projected Wednesday that the American economy will shrink 6.5 percent in 2020. We've already seen GDP decrease by 4.8 percent in the first quarter of this year.

However, the Fed does not expect the recession to be long-lived. The central bank thinks that 2021 is expected to show a 5 percent gain, followed by 3.5 percent in 2022.

The Tech Rally

The Nasdaq Composite rose 0.29 percent yesterday to finish the day at a new record close of 9,953.75, after briefly breaking above 10,000 earlier in the day. Tech stocks led the way, which is why the Dow Jones was losing ground even as the Nasdaq was setting records.

The biggest tech stocks led the rally:

• Netflix rose 3.47 percent on the day 
• Facebook rose 3.1 percent  
• Apple rose 3.1 percent, setting a new high
• Amazon rose 3 percent, also notching a new all-time high 
• Google-parent Alphabet rose 0.28 percent