Fourth-quarter growth typical of Obama era
US 30-year mortgage rate rises to 4.19 pct.
— Longterm U.S. mortgage rates rose this week after three weeks of declines, marking their first increase of the year.
Mortgage buyer Freddie Mac said Thursday the rate on 30-year fixed-rate loans climbed to an average 4.19 percent from 4.09 percent last week. That was still sharply higher than a 30-year rate that averaged 3.65 percent for all of 2016, the lowest level recorded from records going back to 1971. A year ago, the benchmark rate stood at 3.79 percent.
The average for a 15-year mortgage increased to 3.40 percent from 3.34 percent last week.
US new-home sales tumble in December
— Americans pulled back sharply from buying new homes in December, but sales for all of 2016 were the highest since 2007.
The Commerce Department said Thursday that new-home sales last month fell 10.4 percent to a seasonally adjusted annual rate 536,000. But sales totaled 563,000 in 2016, up 12.2 percent over the past year.
Much of the sales growth during 2016 came from low mortgage rates and a steadily improving job market. But 2017 begins with some of that momentum possibly stalling as mortgage rates have risen since the November presidential election.
Scrapping Mexico plant hurts Ford net profit
— Ford Motor Co.’s net income fell nearly 40 percent last year as a big pension adjustment and the cost of scrapping a new plant in Mexico outweighed an otherwise strong performance.
The company on Thursday posted $4.6 billion in net income, down nearly $2.8 billion from a year earlier. But Ford said its pretax profit for the year hit $10.4 billion, the second-best ever, while revenue rose slightly to $151.8 billion.
Ford’s 56,000 U.S. hourly workers will reap the benefits. They’ll get average profit-sharing checks of $9,000 based on a pretax North American profit of just over $9 billion.
$1B terminal makeover at DFW airport is done
The temporary walkways are gone. So are the sounds of drilling and hammering.
In their place are wide aisles and open-air, cafestyle concessions with modern paint schemes and wood-grain tile.
In other words, Terminal A at Dallas-Fort Worth Airport, which is now 43 years old, looks brand new.
DFW Airport officials on Thursday officially declared the renovations at Terminal A substantially complete — although a small amount of finish-out work is still being done behind the scenes.
66 million travelers are expected at DFW Airport this year.
THE ASSOCIATED PRESS
The U.S. economy probably finished the Obama era with a performance typical of the almost eight-year expansion: growth near 2 percent, with consumer spending in the driver’s seat and little help from business investment or trade.
Gross domestic product grew at a 2.2 percent annualized rate in the October-December period, according to the median estimate of economists in a Bloomberg survey ahead of Commerce Department data due Friday. Household spending, which accounts for almost 70 percent of the economy, likely rose at a 2.5 percent pace, also close to the average since the recession ended in 2009, while corporate outlays may have provided a small gain and the trade deficit a minor drag.
The questions now turn to whether the growth drivers remain intact, and the drags can be diminished, as Donald Trump tests their limits in an expansion that’s about to become the nation’s third-longest on record.
The president’s goal of doubling GDP gains likely requires faster consumer spending — something he aims to stoke through lower taxes and more jobs — and reducing the gap between exports and imports, which he’s trying to address by revamping trade policy. A revival in business investment would also help, potentially spurred by Trump’s plans to rebuild infrastructure, reform the tax system and loosen regulations.
“The expansion in the last few years was driven almost exclusively by consumer spending, while business investment was stagnant,” said Stephen Stanley, chief economist at New York-based Amherst Pierpont Securities , and a former Federal Reserve researcher.
Should consumer outlays remain strong and businesses join in, that “would allow the economy to grow faster,” Stanley said. “There’s a likelihood of a significant tailwind from fiscal policy.”
The pace of household spending, while slowing, is still healthy, coming after the best back-toback quarters since 2014. Trump has promised to cut tax rates “massively” including for the middle class. While that would help put more money into Americans’ pockets, higher gasoline costs in recent months may erode some purchasing power.
Business investment may also be in for a pickup after a long, sluggish stretch, provided Trump’s plan to spend on improving infrastructure gets off the ground and efforts to ease regulations deliver enough incentives. The most significant boost, however, would come from successful corporate tax reforms, economists said. Economists see limited scope to significantly shrink the trade gap this year. For exports, expectations of further Fed interest-rate increases mean the strong dollar may remain a headwind, while overseas markets are still weak relative to U.S. growth. American exporters and manufacturers may also face hurdles at a time of rising, cheaper imports. Trump has pulled the U.S. out of the proposed Trans-Pacific Partnership, and plans to renegotiate the North American Free Trade Agreement with Canada and Mexico.
BLOOMBERG
The Dow Jones industrial average inched further into record territory Thursday, eking out a gain while the broader U.S. market indexes drifted lower.
The Dow’s gain came a day after closing above 20,000 for the first time. The Standard & Poor’s 500 index and Nasdaq composite posted small losses, snapping two days of consecutive record highs.
More stocks fell than rose on the New York Stock Exchange. Financial stocks led the gainers, while health care companies lagged the most.
With about 30 percent of the companies in the S&P 500 index serving up earnings this week, the quarterly report cards continued to be a focus for investors Thursday.
The S&P 500 index fell 1.69 points, or 0.1 percent, to 2,296.68. The Nasdaq slid 1.16 points, or 0.02 percent, to 5,655.18. The Dow rose 32.40 points, or 0.2 percent, to 20,100.91.
Small-company stocks did worse than the rest of the market. The Russell 2000 lost 6.84 points, or 0.5 percent, to 1,375.60.
It’s been a record-making week on Wall Street. The S&P 500 index and Nasdaq composite closed at all-time highs on Tuesday and Wednesday. The Dow, which tracks 30 major industrial companies, added its own milestone Wednesday after it breached the 20,000 mark for the first time.
The market is getting a boost from strong company earnings and investor optimism that the Trump administration’s policies on taxes, regulation and trade will be good for business.
On Thursday, the stock indexes wavered between small gains and losses for most of the day as investors sized up the latest company earnings news.
Several companies got a boost after they reported results that exceeded Wall Street’s expectations, including Sherwin-Williams. The paint and coatings company also said it expects to complete its $11.3 billion purchase of Valspar within 90 days after making a relatively small divestiture. The stock gained $21.58, or 7.6 percent, to $305.
Traders welcomed an optimistic 2017 forecast and good bookings from Royal Caribbean Cruises. The cruise operator’s stock jumped $7.97, or 9.1 percent, to $95.64.
New Commerce Department data indicating sales of new U.S. homes fell 10.4 percent in December didn’t weigh on PulteGroup. The homebuilder’s quarterly earnings and sales beat financial analysts’ estimates, lifting its shares 74 cents, or 3.6 percent, to $21.18.