U.S. market turbulence continues with stocks dip and dollar weakens amid mixed housing data

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28th November 2023 – (New York) In an erratic start to the week, U.S. stocks closed lower on Monday, with the Dow Jones Industrial Average dropping by 56.68 points (0.16 per cent) to 35,333.47. Similarly, the S&P 500 decreased by 8.91 points (0.20 per cent) to 4,550.43, while the Nasdaq Composite Index lost 9.83 points (0.07 per cent), ending at 14,241.02.

Alongside the stock market’s decline, the U.S. dollar experienced a late-session slump, reacting to a mixed bag of domestic housing market data. The dollar index, a benchmark comparing the greenback against six major counterparts, was down by 0.16 per cent to 103.2078 in late trading.

On the housing front, the Commerce Department’s Census Bureau announced on Monday that new home sales in the United States had fallen 5.6 per cent to a seasonally adjusted annual rate of 679,000 units in October. The sales pace for September was also revised downwards to 719,000 units from the previously reported 759,000 units.

The median sales price of new houses sold in October decreased to $409,300, a downturn from the previous month’s $422,300 and a 17.6 per cent drop from the same month the previous year. This slump brings the price to its lowest level since August 2021.

Doug Duncan, chief economist at Fannie Mae, commented on the developments: “We expect new-home sales to soften further over the remainder of the year, but with mortgage rates recently pulling back somewhat, we don’t expect the decline to be large.”

U.S. Treasury yields also moved lower on Monday, as market participants speculated that the Federal Reserve would start slashing rates in the first half of the next year to provide additional support to the economy. This expectation contributed to the downward pressure on the US dollar.

The Federal Reserve Bank of Dallas reported on Monday that the Dallas Fed Manufacturing Index had slipped from -19.2 in October to -19.9 in November, compared to an analyst consensus of -17. The Production Index likewise declined from 5.2 in October to -7.2 in November, and the New Orders Index decreased from -8.8 to -20.5.

In late New York trading, the euro climbed to $1.0956 from $1.0946 in the previous session, while the British pound rose to $1.2631 from $1.2608. The U.S. dollar fell to 148.6250 Japanese yen, a drop from the previous session’s 149.4800 yen, and it bought 0.8802 Swiss francs, down from 0.8818 francs. However, it modestly increased against the Canadian dollar, buying 1.3623 up from 1.3622.

Meanwhile, gold futures on the COMEX division of the New York Mercantile Exchange saw a rise on Monday, coinciding with the fall of the U.S. dollar and Treasury yields. The most active gold contract for December delivery rose by $9.40, or 0.47 per cent, to close at $2,012.40 per ounce.

The decrease in U.S. new home sales, reported by the U.S. Commerce Department, also contributed to supporting gold. Market analysts suggest that expectations of a pause in the Federal Reserve’s monetary tightening have helped gold consolidate above the crucial $2,000 level.

Investors now await the release of the US third-quarter gross domestic product (GDP) figures on Wednesday and the personal consumption expenditures (PCE) price index on Thursday.

In other metals, silver for December delivery rose by 34 cents, or 1.40 per cent, to close at $24.681 per ounce. However, platinum for January delivery fell by $13.70, or 1.46 per cent, to close at $923.20 per ounce. These movements underline the volatile nature of the current US market, as investors keep a close eye on economic indicators and policy updates.