Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Though it started the day above break-even, the Dow Jones Industrial Average (DJINDICES:^DJI) has fallen back into negative territory for the fourth day in a row. Despite some decent economic news, investors have little to rely on as means for new trading inspiration. As of 11:45 a.m. EDT, the index is down 25 points, with only 10 components giving it hope of returning to a positive trend.
Little picture, big picture
This morning's jobless claims report was a little mixed. On one hand, there was a small increase of new jobless claims last week -- 5,000 new claims bumped up the weekly rate to 333,000. Though this is in line with what economists had expected, it still signals an increase in firings when the nation's labor market needs more hiring.
On the other hand, the four-week rolling average for new unemployment claims fell to 335,500, its lowest level since November 2007. Since the four-week average is used more broadly to determine the overall health of the labor market (as opposed to the single weekly figure), this is a big win for the labor market and the whole U.S. economy. Still, investors may need something more than the jobless report to help get Mr. Market out of his four-day slump.
Good news for banks
The recent trend in mortgage defaults has been declining, so much so that some of the Big Four banks have been reducing their workforce within their mortgage servicing divisions -- the latest being Bank of America (NYSE:BAC), which notified Pennsylvania regulators that it would be terminating 209 positions. Keeping with the trend, the Mortgage Bankers Association reported this morning that mortgage defaults and foreclosure rates are down to pre-recession levels. Overall, the level of homes with at least one payment late or in the foreclosure process fell to 10.13%, down 149 basis points from the same time last year.
Though it doesn't seem to be helping the banks tremendously this morning -- with only one of the Big Four in positive territory as of writing -- the longer-term implications of the declining foreclosures is huge for them. Not only can the banks release the reserves they've been holding for the related losses, but their expenses will also decrease. And they need some good news, since legal woes have recently taken over the minds of most investors.
Bank of America has been in the sights of both the Department of Justice and the Securities and Exchange Commission over $850 million in mortgage-backed securities that it sold to investors. The claim against the bank says it allegedly failed to properly inform the investors of the risk of the securities, thereby leading to millions in losses. But B of A might have to move over as the DOJ is focusing some attention on rival JPMorgan (NYSE:JPM) over its sale of mortgage-backed securities leading up to the financial crisis. The DOJ criminal probe is just the next legal headache for JPMorgan, as it's already contending with suits over its alleged participation in commodities pricing manipulation. Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) are largely unscathed by the legal matters this week, though there's no telling if the DOJ probe-fever will spread to them in the coming months.