The Dow has logged a 300 point gain over the past three sessions to settle at 13,117.51 points at close on Monday. It jumped over 200 points on Friday, partly bolstered by a better-than-expected jobs report. After disappointing creation in June, payrolls added 163,000 positions in July, which was well over the expected number of 100,000.
However, we have seen quite a bit of debate about what the underlying value of these job numbers. Some of the positions added are due to seasonal additions (such as in restaurants and bars). To make a cut into the unemployment rate of 8.3 percent, we would need to average 300,000 jobs created. In other words, we still have a long way to go.
According to the reports we have been following, strength in stocks can also be attributed to the expectation of intervention by the U.S. Federal Reserve and the European Central Bank (ECB). Fed Chairmen Ben Bernanke acknowledged that the economy had slowed, but offered no evidence that the Fed would intervene beyond Operation Twist, its bond swapping program. The ECB, meanwhile, vowed to necessary action to aid the strength of the Euro, and the market responded to the possibility that the ECB would buy Spanish and Italian bonds to lower borrowing costs.
Thus, the rally in the stock market has something to do with speculation. As such, investors continue to pour money into the U.S. bond market. The 10-year Treasury, tracker of the 30-year fixed mortgage rate, fell below 1.50 percent early last week, before rising to 1.5467 by today.
Mortgage rates are better than ever. At the low end of rates, we have seen some APRs become more expensive, but the middle has remained steady for weeks now. In some cases, a rate such as 3.50 percent (3.488 percent APR) can be obtained free of cost.
Check out our rates HERE for more. The movement in the stock market throughout the week will determine where the cost (and APR) associated with some of the lower rates will move.