The stock market is once again poised to set new record highs, and Wall Street will be watching this week’s data on the housing market to decide whether to forge ahead.
The National Association of Homebuilders on Monday releases its housing index for June. Last month, the May index registered at 30, down from 33 in April, suggesting a deteriorating outlook for the housing market.
The next day, the Commerce Department reports on housing starts and building permits. The market predicts that construction of new homes and apartments slipped in May, but that building permits rebounded from a 10-year low in April, according to economists surveyed Friday by Thomson Financial.
Though investors have recently been shrugging off weakness in the housing market, the snapshots could take on greater significance given the recent surge in Treasury yields. The 10-year Treasury note’s yield peaked at a five-year high of 5.295 percent Tuesday, then retreated to 5.16 percent by Friday.
Wall Street has been fairly confident that falling home prices and rising mortgage defaults won’t damage the broader economy, but if mortgage rates — closely tied to the 10-year yield — keep rising, fewer people will want to buy homes and fewer homeowners will be able to refinance. If that happens, the residential real estate market’s troubles could snowball, eat into consumer spending and dampen corporate profits.
Last week, the Dow Jones industrial average rose 1.60 percent, recovering from a brief sell-off triggered by rising Treasury yields after tame inflation data calmed jitters about a rate hike. The Standard & Poor’s 500 index climbed 1.67 percent last week, while the Nasdaq composite index gained 2.07 percent.
On Wednesday, San Francisco Fed President Janet Yellen and New York Fed President Timothy Geithner speak at a conference in San Francisco on the Asian financial sectors.
On Thursday, the Conference Board releases its May index of leading economic indicators. The market expects a rise of 0.2 percent, following a 0.5 percent decline in April.
Also Thursday, the Philadelphia Fed releases its June index of regional manufacturing activity, which the market projects will climb to 5.5 from 4.2, suggesting faster growth.
Best Buy Co. releases its fiscal first-quarter earnings Tuesday. The market forecasts a profit of 50 cents a share. The retailer’s stock closed at $47.77 Friday, in the lower half of its 52-week range of $43.51 to $58.49.
On Wednesday, Morgan Stanley and Circuit City Stores Inc. release their financial results.
Morgan Stanley is expected to post a profit of $2.01 a share. The investment bank closed at $88.48 Friday, at the upper end of its 52-week range of $56.10 to $90.53.
Analysts predict Circuit City will report a loss of 32 cents a share. The retailer’s stock closed at $16.70 Friday, at the lower end of its 52-week range of $15.28 to $30.80.
