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Asian stocks today closed mixed with the Nikkei index up +0.90%, but with Hong Kong closing -2.55%. The Chinese stock market remains closed for the Golden Week holidays. The European DJ Stoxx 50 is slightly higher by +0.06%

Mortgage applications – Today's weekly MBA report showed a -2.7% decline in the MBA mortgage applications index, a -1.8% decline in the purchase mortgage sub-index to a 5-month low, and a -3.8% decline in the refinancing sub-index. Last week, the weekly MBA mortgage applications index fell –2.8%, the purchase sub-index fell –7.2%, and the refi sub-index rose +3.3%. Mortgage applications are now fading after initial strength seen after the mortgage crisis began in early-August as people tried to push through purchase and refi mortgage applications before conditions became any worse. However, anecdotal information suggests that banks are turning down more than the usual number of mortgage applications due to the tighter underwriting restrictions. That means that the mortgage applications index is overstating the number of mortgages that are actually being closed. Yesterday’s Aug pending home sales report fell sharply by –6.5%, adding to the –10.7% plunge seen in Augus t. The 2-month plunge in pending home sales is a negative leading indicator for existing home sales and mortgage applications. The only thing the housing market has going for it right now is lower mortgage rates. The 30-year mortgage rate has fallen sharply by a net 32 bp to the latest level of 6.42% from the 14-month peak of 6.74% seen in mid-June. That has made mortgage cheaper and homes more affordable, at least for those that can still qualify for a mortgage.

ISM non-manufacturing index – Today’s Sep ISM non-manufacturing index is expected to show a modest decline of -1.2 to 54.6 following August’s report of unchanged at 55.8. The expected report of 54.6 would leave the index at the third lowest level in 2 years, just 0.4 points above the 2-year low of 52.4 posted earlier this year in March. Still, the index would remain above the boom-bust level of 50, indicating a continued expansion in the US service sector. The markets are continuing to watch the US economic data very closely for signs of a possible significant drop in business and consumer confidence due to the housing and financial market crisis.
Dec S&Ps this morning are trading lower due to some negative technology stock news for Intel/AMD and Micron Technology and due to some long liquidation pressure after Monday's rally. The US stock market yesterday closed mixed following Monday's sharp rally (Dow -0.29%, S&P 500 -0.03%, Nasdaq Composite +0.22%). The stock market yesterday held Monday's gains as the market was encouraged that UBS and Citicorp came clean on writing down fixed income portfolios and as buying emerged at the beginning of the quarter. There is general optimism that the US economy will continue to chug along at a decent pace, supported by global growth and demand for US exports. Moreover, US stock market valuations remain reasonable.",1]


ISM non-manufacturing index – Today’s Sep ISM non-manufacturing index is expected to show a modest decline of -1.2 to 54.6 following August’s report of unchanged at 55.8. The expected report of 54.6 would leave the index at the third lowest level in 2 years, just 0.4 points above the 2-year low of 52.4 posted earlier this year in March. Still, the index would remain above the boom-bust level of 50, indicating a continued expansion in the US service sector. The markets are continuing to watch the US economic data very closely for signs of a possible significant drop in business and consumer confidence due to the housing and financial market crisis.