Markets Get Much-Needed Lift From Drive of Home Sales

Demonstrators hold signs Saturday in Huntington Beach, Calif., as they protest lockdown and masks rules put in place to fight the novel coronavirus. (AP Photo/Marcio Jose Sanchez)

MANHATTAN (CN) — Wall Street was able to reclaim most of Friday’s losses as a record number of home sales in May boosted markets.

The Dow Jones Industrial Average closed Monday up 579 points, a 2.3% increase, while the S&P 500 and Nasdaq gained 1.3% and 1.13%, respectively. But the sizable gains did not completely wipe out the losses from Friday’s rout

In an encouraging sign, the National Association of Realtors reported that pending home sales for May rose 44.3% from the month before, the highest month-over-month gain since the index began in 2001. Sales are still about 5% lower than May of last year, however.

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” Lawrence Yun, the association’s chief economist, said in a statement. “This bounce back also speaks to how the housings sector could lead the way for a broader economic recovery.”

Yun said he expects new home sales to extend past last year’s high mark, though annual existing home sales are projected to decrease by 10%. The association said that active listings for homes are up more than 10% for several metropolitan areas.

Another boon to investors was the Federal Reserve’s announcement of term sheets for its corporate-bond liquidity facility. The central bank will purchase corporate bonds rated at least BBB- as of March 22, when lockdowns took hold over the coronavirus.

Less rosily, however, a composite index from business leaders shows most corporate officers think the recovery will be slow. The yearly economic index from the Business Roundtable dropped to 34.3 points during Q2 2020 from 72.7 points last quarter, the lowest the index has been since the second quarter of 2009. Most businesses in the survey said they expect business conditions to recover by the end of next year. 

“Our battle against Covid-19 is far from over, and our top priority remains the health and safety of our employees, customers and communities we serve,” said Doug McMillon, CEO of Walmart and the roundtable’s chairman.

Wall Street has remained fixated the last few days on the recent uptick in coronavirus cases and hospitalizations, with several states in the Sun Belt clocking in record numbers on both fronts daily. 

To date, more than 10.2 million people have been infected by Covid-19 worldwide, while about 503,000 have died, according to data compiled by Johns Hopkins University. In the United States, 2.5 million people have contracted Covid-19, while nearly 126,000 have died.

During its daily press briefing on Monday, the World Health Organization warned the pandemic is speeding up globally despite certain countries’ progress. “The virus still has a lot of room to move,” WHO Director-General Tedros Adhanom Ghebreyesus said. “We all want this to be over. We all want to get on with our lives, but the hard reality is that this is not even close to being over.”

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