The stock market was largely flat on Thursday as investors waited to see if a new stimulus agreement could be reached. Most major indices were in positive territory as of 2:50 p.m. EDT, but not by much.
On the other hand, recent IPO Rocket Companies (NYSE:RKT), parent company of leading mortgage lender Rocket Mortgage, as well as Quicken Loans, was having a tremendous day, with shares up by nearly 11%.
There are a couple of potential reasons investors may be optimistic today. Since the stock's price spiked higher at about 10 a.m. EDT, the most likely catalyst is the announcement that mortgage rates have fallen, yet again. The latest mortgage data from Freddie Mac, which was released at 10 a.m. EDT Thursday, showed that the average 30-year mortgage rate fell to 2.88% in the most recent week. In a nutshell, lower rates mean more demand for refinancing and purchase mortgages.
And while the timing of the price spike suggests that it isn't the primary catalyst, it's also worth noting that Rocket announced a new deal with Realtor.com, where Rocket Mortgage ads will appear on Realtor.com's listings, which could help boost the company's market share even further.
The key questions surrounding Rocket Mortgage are how long low rates are going to last and how long refinancing volume can stay elevated. Think of it this way: Even if rates stay at 3% or slightly less for years, at some point, substantially everyone who wants to refinance will have done so. But for the time being, at least, investors don't seem too worried about an eventual decline in mortgage activity.