Traders-Blog.com

Today’s market started out strong with investors preparing for a long weekend. News from the U.S. Commerce Department as well as optimistic reports from GE gave the market a boost after the difficult week. The Dow fell 13.15 points to close at 10,422.87, while the NASDAQ gained 0.84 points closing at 1,991.06. Additionally the S&P closed at 1,171.42 after losing 1.11 points.

The United States Commerce Department announced today that new homes sales are at the second highest level in history. New homes available on the market rose to a record 444,000, while the sales rate rose to 1.304 million, the largest percentage increase in four years. Additionally, the Department reported that new orders for durable goods has increased 0.3 percent.

The Commerce Department’s announcement led to improved reports from GE later this morning. GE increased their first quarter expectations by one cent per share and priced a $2.1 billion stock offering of its Genworth Financial insurance unit. In addition, GE announced their intention to purchase $500 million Class B stock. The entire transaction will be worth $2.6 billion for GE.

Thirty-year mortgages went above 6% this week in the light of recent interest rate hikes. This is the sixth consecutive hike for fixed interest mortgages. Most analysts are surprised that the rate has remained so low with the recent tightening actions adopted by the Federal Open Market Committee., so the news did not come as much of a surprise. Although the rate has risen, it still remains very affordable, thus explaining the increase in the purchases of new homes in February.

Kmart Corp. received good news today as Sears, Roebuck, & Co. stockholders approved the company’s buyout of their stock with a 69% majority. The deal is worth $12.3 billion. Earlier in the day, the Kmart shareholders had approved the deal as well. After the announcements were made, Kmart shares gained 3.6 percent while Sears shares dropped 11.7 percent.

After years of low airline prices, airlines have recently been upping the costs of travel. Recently, there has been a $10 increase for round-trip flights, a trend that is likely to repeat itself. United Airlines Chairman and CEO, Glenn Tilton, told his employees that “It appears that after some tentativeness in the marketplace, the latest fare increase may well stick.” Online travel companies have backed up his claim saying that they have seen no difference in bookings since the rate hike.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter