Tech stocks took a hit this week, dragging Wall Street down with them. The Dow Jones Industrial average saw a sharp sell off Thursday, dropping around 400 points. Apple, Amazon and Microsoft all took losses with Microsoft faltering by 4%. Travel also took a huge hit, with companies like Southwest Airlines reporting a loss of $915 million in Q2. 

Part of the reason for the drop in stocks like Microsoft was a worse-than-expected unemployment report. For the 18th straight week, more than 1 million Americans filed initial unemployment claims. This latest data set from the Labor Department, however, shows that we just snapped a 15-week streak of declining initial claims. In response, the 10-year note yield dropped to 0.584% with the 30-year yield trading down at 1.274%. 

The spotlight now falls on the U.S. government as the Senate GOP has said it's ready to reveal a plan for a new stimulus package to the tune of $1 trillion. However, the current plan expires at the end of the month and this new legislation likely would not be approved until August at the earliest. That means the extra $600 per week stipend for unemployed Americans will expire without a new plan in place to assist them. 

In addition to the “CARES Act 4.0” discussion, the U.S. government has also found itself embroiled in rising tensions with China. Friday morning, the Chinese government ordered a U.S. consulate office in Chengdu to close. This was in retaliation to the U.S forcing a Chinese consulate in Houston, Texas to close in order to protect “American intellectual property and the private information of its citizens.” The U.S. Justice Department accused two Chinese nationals of hacking into the computer systems of companies working on a vaccine for COVID-19. 

Housing is the silver lining for 2020

Fannie Mae released a new, very bullish, forecast for 2020-2021. In an interview with HousingWire, Fannie's Chief Economist Doug Duncan said mortgage lending will reach $3.14 trillion this year, the highest level since 2003. He also believes that interest rates will keep going down, with the average rate touching 2.8%. The caveat for Duncan is that this prediction is backed by the belief that the Federal Reserve will stay its course in continuing to purchase mortgage-backed securities to the tune of $40 billion per month.

This week was the first time in a while that the average mortgage interest rate rose. Freddie Mac's 30-year fixed-rate mortgage average went up to 3.01% this week, which is still incredibly low. To put it in perspective, someone who bought their home in 2018, just two years ago, was seeing an average interest rate of 4.54% for a 30-year fixed-rate mortgage. 

Existing home sales for June jumped by a whopping 21%, according to the National Association of Realtors. That is the biggest gain since the NAR began keeping the statistic in 1968. The downside is the NAR reports the supply of existing homes dropped by 18.2% year-over-year. New home sales also jumped month-over-month. The Census Bureau shows a 13.8% increase from May to June, and an annual increase of 6.9%.