A huge development overnight has the stock market rallying early Friday morning. Reports claim that a drug named remdesivir has helped treat those suffering severe symptoms of the coronavirus COVID-19. The report from STAT news says the drug was the first to show positive healing effects in lab tests and now the drug is being used in clinical trials at a hospital in Chicago. Those being treated with the drug, according to the report, are seeing rapid recovery from symptoms.
That news pumped life into the Dow Jones Industrial average with futures trading up 700 points, putting the Dow back over 24,000. The news of the clinical trial was a welcome respite from the bleak economic data released this week.
The tally is now over 22 million as 5.2 million more Americans filed initial unemployment claims this week. The Labor Department’s weekly report continues to paint a dreary picture as the United States economy suffers blow after blow related to the coronavirus COVID-19 pandemic and shutdown. The 6 month moving average, which is what people typically look at because it gives a clearer picture and less volatility, shows 6 million people per week have filed unemployment claims.
In short, all the data was bad this week. The Commerce Department showed March retail sales plummeted by 8.7%, the largest ever drop since 1992 when tracking of this data began. the Empire State Manufacturing Index crumbled, hitting a reading of -72.8. To put that into perspective, economists had predicted a -32.5 reading and the previous worst was -34.3 during the financial crisis.
Silver lining in housing
The silver lining in all of this is, coincidentally, mortgage rates. This week’s Freddie Mac average for a 30-year fixed-rate mortgage is sitting at 3.31% which is near an all-time low for Freddie Mac’s records. While purchases are still happening, refinances are still king. The Mortgage Bankers Association data shows that year-over-year, refis are up 192%.
The one issue, that has already been a problem for quite some time, is inventory. The pandemic has halted construction in many places. Housing starts in March are down 22.3% month-over-month, according to the Commerce Department. That is the worst monthly decline for housing starts since 1984.
Homes under construction saw a 6.1% decline in completion. So homes are being left partially constructed right now. When you separate out the single-family home construction, that number jumps to 15% left unfinished. To add insult to unfinished injury, applications for construction permits dropped by 6.8% last month as well.