Investors Return to the Trading Floor
- Nov 01, 2012
Wall Street was back in business again on Wednesday, despite crippled infrastructure in the equities markets’ hometown. In the end, prices neither rose nor fell very much. The Dow Jones Industrial Average lost 10.75 points, or 0.08 percent, while the Nasdaq was down 0.36 percent, dragged in that direction by selloffs of Facebook stock. The S&P 500 gained a negligible 0.02 percent.
Now that the literal storm has passed, investors might have been looking at the financial storm that’s still brewing in Europe. On Wednesday, Eurostat, the EU’s statistical agency, reported that the euro zone’s unemployment rate rose to 11.6 percent in September, a bit more than August’s reading of 11.5 percent and considerably more than September 2011’s 10.3 percent. Both Greece and Spain have unemployment rates in excess of 25 percent. By contrast, Austria’s unemployment rate was 4.4 percent, and Germany and the Netherlands both saw unemployment of 5.4 percent.
On the other hand, there was good news for American investors closer to home. U.S. auto sales have been high enough for all the Big 3 automakers to report profits during the third quarter. In the case of Chrysler, profits were up about 80 percent compared with the same quarter last year. On Thursday, automakers are expected to report total sales of about 1.1 million vehicles in October, about 12 percent more than the same month last year.
Foreclosures continue to drop
CoreLogic reported on Wednesday that 57,000 foreclosures were completed in the U.S. in September 2012, down from 59,000 in August and 83,000 in September 2011. About 1.4 million homes, or 3.3 percent of all residential properties with a mortgage, were in the national foreclosure inventory as of September 2012, compared to 1.5 million, or 3.5 percent, in September 2011.
“The continuing downward trend in foreclosures along with a gradual clearing of the shadow inventory are signs of stabilization and improvement in the housing market,” CoreLogic president and CEO Anand Nallathambi noted in a press statement. “Increasingly improving market conditions and industry and government policy are allowing distressed homeowners to pursue refinancing, loan modifications or short sales rather than foreclosures.”
The foreclosure picture is improving, but still isn’t what one might call “normal.” Before the housing bubble popped, completed foreclosures averaged about 21,000 per month between 2000 and 2006, according to CoreLogic. Since the financial crisis began in September 2008, there have been about 3.9 million completed residential foreclosures across the country.
Lending standards eased (for some loan types)
According to the Federal Reserve’s October 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices, which the central bank released on Wednesday, “a small fraction of domestic banks,” on net, reported easing standards for business lending and some categories of consumer lending over the past three months. But there was little change in residential lending standards during the same period.
Within consumer lending, “modest fractions of respondents” continued to report an easing of standards on credit card and auto loans, the report noted. Standards on other types of consumer loans were mostly unchanged. Demand was up for many kinds of loans, such as commercial real estate loans, residential mortgages and auto loans. Demand for most other types of loans was more-or-less unchanged.
The Fed also asked a set of questions about lending to European banks in the October survey. Unsurprisingly, respondents to the domestic and foreign survey again reported that their lending standards to European banks and their affiliates had tightened over the past three months.