It was the old “sell the rumor buy the news trade”.  On Monday after the market closed, it was announced that the Trump administration was going to make an announcement regarding trade tariffs with China after the markets closed.  The Dow dropped a quick 100 points before stabilizing.  Later in the day, President Trump mentioned that the news would bring money into our coffers.  Basically, he was telling the markets that tariffs were going to be enacted, it was just a question of the amount and rate of tariffs.  Since the announcement was scheduled for after the markets closed, it gave traders time to digest the potential news.  It also took an uncertainty out of the market.  Today’s is a risk on day, as defensive groups (consumer staples, utilities and real estate) are the only groups in the red.        

National Association of Home Builders/Wells Fargo Housing Market Index

Home builder sentiment remained steady at 67 in September.  A reading above 50 is considered positive.  Although affordability remains a concern, demand remains firm.  According to NAHB Chairman Randy Noel, "Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market."

The NAHB did a study on approximately 6,000 products on the latest tariff list.  At first glance, it appears the NAHB found 600 products that are either connected to home construction or to tools used for building housing, including appliances and home furnishings.  This represented approximately $10 billion in goods, and at a 10% tariff rate, it puts the amount of potential tariffs on housing at $1 billion.  Last year, housing accounted for approximately $3.3 trillion of the U.S. economy.  One billion dollars is a drop in the bucket for the housing market. 

Metals and mining are strong for a second day in a row.  Beaten down copper and aluminum stocks are having a good day.  Century Aluminum (CENX) is up 10% on above average volume.  Technology is being led by semiconductors, Micron (MU) and Intel (INTC), both higher by 4% and 2%, respectively. 

• The Dow is higher by 165 points, 0.63%, at 26,227
• The S&P 500 is higher by 18 points, 0.64%, at 2,905
• The Nasdaq is higher by 67 points, 0.85% at 7,969

Breadth:

• NYSE advances 1,693 to declines 1,264; new 52-week highs 76 to new lows 103
• Nasdaq 1,851 advances to 1,110 declines; new 52- week highs 64 to new lows 68