Markets rally over economic indicators showing strength
U.S. stocks rose for a fourth day and the dollar strengthened after data bolstered optimism that the American economy is on firm footing. Gasoline spiked to the highest in two years as Harvey relentlessly pounded the energy-rich Gulf coast.
The S&P 500 index pushed above its average price for the past 50 days, overcoming early weakness sparked by a Twitter post from President Donald Trump on North Korea. European stocks gained with Asian shares on optimism that the anxiety after a missile launch this week was receding.
Treasuries rose, while the greenback advanced versus most major peers.
“It doesn’t strike me that the market is extremely nervous here,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “I think as time goes on, these kind of tweets have less and less impact on the market.”
Investors focused on data showing U.S. second-quarter growth reached the fastest pace in two years on stronger household spending and a bigger gain in business investment. A private report on payrolls indicated robust hiring this month two days before government jobs data will be scoured for clues on the timing of the Federal Reserve’s next rate move.
The main moves in markets Wednesday:
■ The S&P 500 index rose 0.5 percent, the Nasdaq 100 index jumped 1.1 percent and the Dow Jones industrial average edged 0.1 percent higher.
■ The U.K.’s FTSE 100 index rose 0.4 percent, recovering from the biggest drop in almost three weeks on a closing basis.
■ Germany’s DAX index gained 0.5 percent.
■ The euro dropped 0.7 percent to $1.1886, after touching the strongest in almost three years on Tuesday.
■ The yield on 10-year Treasuries rose one basis point to 2.14 percent, while the twoyear note yield increased one basis point to 1.33 percent. that growth over the past six months has averaged 2.1 percent, the same modest pace seen for the recovery that began in mid-2009.
During last year’s presidential campaign, Donald Trump attacked the Obama administration’s economic record, pledging to double GDP growth to 4 percent or better.
His first budget, sent to Congress earlier this year, projects growth rates will climb to a sustained annual rate of 3 percent, a goal that many private economists believe program on a more sustainable footing.”
Reverse-mortgage loans are meant to help seniors age 62 and older “age in place” by giving them cash from the equity in their homes. Borrowers receive a line of credit or a loan in a lump sum or in monthly payments. They are allowed to defer payments on the debt until they die, move away or do not meet loan obligations, such as paying property taxes and insurance.
A key change to the program will be how much insurance senior borrowers will need to pay to HUD to obtain loans. They will be required to pay a standard 2 percent upfront insurance fee based on the maximum amount they can borrow on their home. Currently, insurance premiums range from 0.5 percent to 2.5 percent. The change will be offset by a drop in an annual insurance rate of 0.5 percent, reduced from 1.25 percent, officials said.
After Oct. 2, senior borrowers is too optimistic.
The nonpartisan Congressional Budget Office sees growth averaging 1.9 percent over the next decade, a forecast much closer to estimates made by private economists.
Many economists had been forecasting growth in the current July-September quarter would be around 3 percent. Some are now saying that the devastation from Hurricane Harvey could shave about a half-percentage point off growth this quarter. However, analysts believe the pace of growth will bounce back once the rebuilding begins and oil refineries get back to full production, bringing down prices.
For the entire year, Mark also will face new limits on how much they can borrow from their homes. Currently, limits are based on interest rates and the age of a borrower. Now a 62-yearold with an interest rate of 5 percent for the loan would be able to obtain about 41 percent of the equity in their property, down from 52 percent. An 82-year-old would be able to access 51 percent of the equity, down from nearly 60 percent.
HUD officials said the changes aren’t intended to offset losses from earlier loans, but instead to help improve the insurance fund. Every reverse-mortgage loan is projected to lose money, officials said. A 2016 HUD actuarial report shows that the reverse-mortgage program is expected to balloon to negative $12.5 billion in 2023.
Housing and consumer advocates wondered how the changes would affect a program that has insured more than 1 million borrowers since its inception.
Ira Rheingold, executive director of the National Association of Consumer Advocates, Zandi, chief economist at Moody’s Analytics, is forecasting growth of 2.1 percent. That would mark an improvement over last year when the economy grew a meager 1.5 percent, the poorest showing since 2009 when GDP shrank by 2.9 percent.
Zandi is forecasting that growth in 2018 will be an even stronger 2.8 percent. But he said 0.4 percentage point of that forecast reflects an assumption that the Trump administration will win a tax cut package that will take effect in early 2018. The economy will also be boosted by higher spending on the military and infrastructure projects, he said. worries that needy seniors will find it harder to get help. He said HUD is punishing low-income homeowners for problems that were aggravated by poor federal management. Among the issues, HUD encouraged lenders to help homeowners maximize the sizes of their loans by taking younger spouses off the mortgage documents, leading to foreclosures on widows, he said.
“It’s their own fault for any losses they are seeing,’’ he said. “The response is to make it harder for people who need the money to get access to the program.”