Economy Watch: The Wall Street Roller Coaster is Back

Wall Street seems determined to panic like it's 2008, no matter what the bearded one says, so the roller-coaster ride was back downward on Wednesday, pretty much erasing Tuesday's gains, which had mostly erased Monday's losses.

Wall Street seems determined to panic like it’s 2008, no matter what the bearded one says, so the roller-coaster ride was back downward on Wednesday, pretty much erasing Tuesday’s gains, which had mostly erased Monday’s losses. The Dow Jones Industrial Average lost 519.83 points, or 4.62 percent, while the S&P 500 dropped 4.42 percent and the Nasdaq was down 4.09 percent. Since mid-July, U.S. equities have lost about 15 percent of their value, with more than 10 percent of that in August so far.

Thus some trillions worth of phantom wealth has vanished. Still, investors command vast sums of money, and it has to go somewhere. Such as out of the market and into 10-year Treasuries, $24 billion of which the United States was able to sell on Wednesday, according to the U.S. Department of the Treasury. Moreover, those benchmark notes went for a record-low auction yield of 2.14 percent, so popular are they (and never mind that pesky AA+ for now).

On the other hand, 30-year Treasuries are trading considerably above their lows, since in theory such long-term obligations are more sensitive to the long-term outlook of the United States, which has a lot of doubters these days. The most recent auction of 30-year bonds on Tuesday had them trading at 3.51 percent.

Median home price declines year-over-year

The National Association of Realtors (NAR) reported on Wednesday that the national median (existing) single-family home price was $171,900 in the second quarter, down 2.8 percent from $176,800 in the second quarter of 2010. The median single-family home price rose year-over-year in 40 out of 150 MSAs during the second quarter; one was unchanged and the majority, 109 areas, showed price declines.

Distressed homes, which typically trade at a discount of about 20 percent, accounted for 33 percent of second quarter 2011 sales, down from 39 percent in the first quarter, according to the NAR. They were 32 percent of the total in 2Q10. The share of all-cash home purchases was 30 percent in the second quarter, up from 25 percent a year ago. Investors (or speculators), who make up the bulk of cash purchasers, accounted for 19 percent of second quarter transactions, up from 14 percent a year ago. Someone apparently thinks prices are bumping along the bottom.

In the condo sector, the national median price was $169,200 in the second quarter, which is 3.5 percent below the second quarter of 2010. Fourteen metros enjoyed increases in the median condo price, while 40 areas suffered declines.

JOLT not much of jolt in June

On Wednesday the U.S. Department of Labor reported in its aptly acronymed Job Openings and Labor Turnover survey that total job openings in the country saw a small uptick of 0.1 percent in June 2011 compared with May. In other words, about 75,000 more jobs were open in June than May.

Not a vast increase, but better than a decline. The only industry that saw a significant drop in job openings was construction, down 0.6 percent month-over-month, or 34,000 positions. The JOLT numbers aren’t seasonally adjusted, so that’s an unfortunate trend during the warm months of the year when the construction industry should be hitting all the cylinders.

The essential fact for job hunters hasn’t changed, however. Namely, there are still about four people looking for work for every job that happens to be open.

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