Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



3 Things That Will Affect Stocks This Week

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

While every week offers a unique set of economic reports and company events that affect the S&P 500 (SNPINDEX: ^GSPC  ) , some weeks are bigger than others. And the next five days fall into the latter category. What follows, in turn, are the three most important events that investors should watch out for as the week progresses.

1. Housing starts -- Wednesday
The housing market is a critical litmus test for the economy, not only because it was affected so severely by the last recession, but also because it's at the heart of our economic engine. Every new house that's built creates between two and three new jobs. And home values have a direct impact on consumer confidence, as a house is traditionally the largest asset that most consumers own.

It's for this reason that investors will be watching housing starts closely when the Commerce Department releases the data on Wednesday. In July, the most recent month on record, overall housing starts were up over the previous month by 14.5% and by 12.9% compared with the same month last year. More disturbing, however, was that single-family starts experienced a decline on a sequential basis.

2. Existing-home sales -- Thursday
On the other end of the housing supply-chain are existing-home sales -- a seasonally adjusted measure of previously owned home sales. With respect to the housing market itself, this is arguably the most important metric, as between 5 million and 5.5 million houses are currently changing hands on an annual basis.

When the National Association of Realtors last reported this statistic, the data revealed a sharp increase in home sales. For July, total existing-home sales grew by 6.5% on a seasonally adjusted annual basis over June. And compared with the same month last year, they were 17.2% higher.

3. The Federal Reserve -- Wednesday
Last but not least, on Wednesday, the Federal Reserve is set to announce whether it will reduce its support for the economy. As I noted yesterday, the guidance will almost invariably dictate the direction of stocks for the week.

Most commentators seem convinced that the central bank will indeed start to taper its monthly purchases of Treasuries and agency mortgage-backed securities. Patti Domm of CNBC, for instance, predicted that the purchases will fall by $10 billion to $15 billion, "a relative baby step compared to the massive amount of stimulus applied." If true, the net result is likely to be higher long-term interest rates.

The trend in this direction thus far has wreaked havoc on balance sheets across the financial sector. Two of the hardest-hit companies have been the mortgage REITs Annaly Capital Management (NYSE: NLY  ) and American Capital Agency (NASDAQ: AGNC  ) . In the second quarter, Annaly saw its book value per share fall by 18%, while American Capital Agency's has dropped by nearly 20% since the end of last year.

The big question now is what will happen to their quarterly dividend payouts. Both have been forced to aggressively cut their payouts over the last few years. Annaly's is down by nearly $1 since the end of 2010. American Capital's is off by a similar magnitude since the end of 2011. Whether they have to continue doing so will have a direct impact on their underlying share price.

Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2638110, ~/Articles/ArticleHandler.aspx, 5/28/2016 8:27:17 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 17,873.22 44.93 0.25%
S&P 500 2,099.06 8.96 0.43%
NASD 4,933.51 31.74 0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/27/2016 4:43 PM
^GSPC $2099.06 Up +8.96 +0.43%
S&P 500 INDEX CAPS Rating: No stars
AGNC $18.88 Down -0.13 -0.68%
American Capital A… CAPS Rating: ****
NLY $10.61 Down -0.09 -0.84%
Annaly Capital Man… CAPS Rating: ****