The major equity indices are sporting magnificent reversals. The Dow Jones Industrial average is up over 300 points so far this session. The markets are being helped by news that the People’s Bank of China (PBOC) has lowered interest rates. The bank decreased its one-year benchmark lending rate by 25 basis points to 4.6%. Also, PBOC lowered the reserve requirements by 50 basis points to 18% for large banks. The NASDAQ is also up substantially thanks to Apple and its suppliers sporting strong gains of +2-6%. We had a couple positive economic releases today, to strengthen the market.

Firstly, the Census Bureau released its new homes sales report for the month of July. During the month, new single-family houses were sold at a seasonally adjusted annual rate (SAAR) of 507,000. This is up 5.4% month over month, or 25.8% over July 2014’s SAAR of 403,000. The Midwest was the only region to demonstrate a decline in units sold as sales fell to 54,000 houses versus 58,000 houses in June. The Northeast saw the fastest gain, with sales rising by 23.1% to 32,000 units from 26,000 units the prior month. The West, where a bulk of the homes sold are based, saw sales rise by 6.7% to 127,000 units from 119,000 units. While the median sales price of new homes sold was $285,900 for the month, the average sales price was actually $361,000. July’s seasonally adjusted estimate of new homes was 218,000 units resulting in a supply of 5.2 months.

The Conference Board released its final reading for August consumer confidence. During the month, the confidence index rose sharply to a reading of 101.5, significantly higher than the 94.0 consensus and the upwardly revised July final reading of 91.0 (from 90.9). Consumers are becoming more optimistic about the job market. For the month of August, the amount of consumers that believe finding employment to be difficult decreased by 6.5 percentage points to 21.9%. The present situation component rose by 11 points to 115.1. The expectations component rose by over 10 points to 92.5, largely due to a positive outlook for employment over the next six months. It is nice to see that consumers have been able to maintain and increase their confidence despite the performances of the major equity indices.