Today was another where investors woke up to find stock futures rallying big off of news the IMF may be putting together a monster bailout program for Italy and possibly France. It's almost an automatic reaction for the markets these days to equate bailout news with a big rally. However, the rally never did build on the initial thrust. We did maintain a decent chunk of the gains, but volume was not as strong as we would have liked to see.
It was interesting to hear CNBC's favorite bank analyst Dick Bove come out this morning with a word of caution about implementing a new stress test for the major banks. His big concern is that banks could be required to increase capital ratios (essentially preparing for worst-case scenarios). These requirements, in turn, would impede the banks' lending ability, hurting profits as well as shareholders.
As much as I'd hate to see shareholders hurt, I'm much more concerned about the underlying health of the banks. It think it's wise to "look under the hood" now and eliminate the potential for further bailouts, should the banks encounter some more trouble down the line.
Taking a closer look at today's market action, the big spike helped many recently-battered sectors, including the financials and commodity plays. Among the biggest gainers in the financials were Deutsche Bank ( DB ), Citigroup ( C ), and Blackrock ( BLK ). In the commodity space, Freeport McMoran ( FCX ), Consol Energy ( CNX ), and CF Industries ( CF ) managed decent-sized gains. Meanwhile, Wall Street analyst upgrades helped move stocks higher as well, including Wynn Resorts ( WYNN ), T.Rowe Price ( TROW ), and Qualcomm ( QCOM ).
New Dividend Stock Recommendation
Be sure to check out the new name just added to our recommended list this morning as we continue to look for opportunities to expand our list of investment-worthy dividend plays. You can find the full run-down of our big upgrade here .
Residential Real Estate Permit Filings Hit Record Levels
An interesting data point out from BuildFax last week indicates remodeling activity reached a record high during the month of September. These permits run the gamut from homeowners making repairs to renovations (roofs, decks, bath/kitchen remodels, additions, etc.).
While the data doesn't exactly measure the cost activity, this could be the underlying catalyst for areas of the stock market such as the home improvement sector. We'll be monitoring stocks like Home Depot ( HD ) and Lowe's ( LOW ) as the likeliest biggest beneficiaries of this trend.
Who's Buying Real Estate Today?
Staying in the real estate theme, there was some interesting data points out from the NAR (National Association of Realtors) regarding the typical profile of today's home/property buyer.
- Only 37% of home buyers this year were purchasing their first home, a drop from the 50% of buyers in 2010 who nabbed their first pad.
- This year's typical home buyer was 45 years old. In 2010, the typical home buyer was only 39 years old.
- 64% of recent home buyers were married couples, the highest share since 2001.
- Single women made up 18% of recent home purchases, the lowest rate since 2004. Single men made up only 8% of recent home buyers.
- New home sales accounted for only 16% of all recent home purchases, considerably lower than the 2003 high of 28%.
Judging from the data above, the shift toward more "mature" buyers is happening - and that isn't necessarily a bad thing. There's no sense in marginal buyers being allowed to step up and buy, only to face the risk of foreclosure down the line. That trend only ends up hurting the real estate market more and more as time goes on. There's nothing like bad comps and disillusioned property owners struggling to sell their homes.
The mortgage bailouts we've been seeing recently will only delay the unfortunate but inevitable situation of many homeowners having to lose properties they can't afford. I'm not rooting for this scenario, but the health of the real estate market will continue to remain in question if the pipeline of homes on the market doesn't begin to decline.
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I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.
Thanks for reading everybody. I'll see you tomorrow!
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