The Housing Market Is Hitting a Wall 🧱

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Tech stocks bounced Monday after their worst week since June, but the housing market is flashing red: builder confidence just hit its lowest level in more than 14 years.

Let’s get into it 👇️ 

📊 Wall Street rebounded Monday as tech stocks recovered from last week's sell-off. The S&P 500 rose 0.41% to 7,690.73 and the Nasdaq gained 1.11%, while the Dow slipped 0.07% to 51,966.03. A chip index climbed 1.6% after eight straight daily declines, with a heavy slate of AI-related earnings due this week.

🛢️ Brent crude settled at $109.55 a barrel Monday, while U.S. crude rose $2.25 to $103.66, its highest close since Sept. 15. Market reports said the expiring November contract distorted the U.S. figure. Expensive oil feeds into gasoline, shipping and airfares, and it complicates the Fed's inflation fight.

💰️ Salesforce agreed to buy software maker Braze for $47.50 per share in cash, a deal with an enterprise value of about $5.66 billion. The companies announced the agreement Tuesday. It still needs Braze shareholder approval and regulatory clearance, and is expected to close in Salesforce's fiscal 2028, which begins in February 2027.

💵 Tradeweb agreed Monday to buy bond-trading platform Trumid for about $1.97 billion. The price includes roughly $1.75 billion for the business and $220 million in tax assets, and Tradeweb will pay mostly in cash. The deal expands its reach in electronic credit trading and is expected to close in the first half of 2027.

✈️ GE Aerospace raised its 2026 profit forecast after orders jumped 49% to $19.0 billion. The jet-engine maker now expects adjusted earnings of $8.00 to $8.10 per share, up from $7.65 to $7.85 and above the $7.92 analysts expected, per Bloomberg. Strong demand for engines and services is the driver.

🇫🇷 French stocks and bonds sold off Monday as protests highlighted the government's struggle to cut its deficit. The CAC 40 fell 1.1%, and the gap between French and German 10-year yields widened to 147 basis points from about 110 in late September. That gap is the extra return investors demand to hold French debt, and it is near levels last seen in the 2011-2012 euro debt crisis.

📈 Bitcoin hovered around $82,000 Monday, rising with tech stocks but stalling below the $84,000 level that capped rallies last week. It touched roughly $83,000 early in the day before slipping back. Analysts described the move as a rebound rather than a resumption of upward momentum.

🔼 The 10-year Treasury yield rose to 5.14% Monday, keeping borrowing costs high across the economy. That yield is the benchmark for mortgage rates and corporate loans. Reuters noted recent comments from Fed officials suggest they are in no rush to raise rates again, but the central bank meets Oct. 27-28 with inflation still running hot.

The National Association of Home Builders' sentiment index fell three points to 29 in October, its lowest reading since June 2012.

Economists had expected 31. Some 43% of builders cut prices, the highest share since at least 2020, and 65% offered sales incentives.

Tuesday's government data pointed the same way: housing starts fell 5.2% in September to an annual pace of 1.221 million, a four-month low, and single-family starts dropped 4.6%.

Mortgage rates are the squeeze. The 30-year fixed rate averaged 7.40% in Freddie Mac's latest weekly reading, its highest since November 2023 and well above 6.27% a year ago.

That rate tends to move with the 10-year Treasury yield, which rose to 5.14% Monday. Builders also face higher energy-related material costs from the Middle East conflict, plus labor shortages and tariff costs, according to Reuters. For buyers, that works out to roughly $300 more a month in principal and interest on a $400,000 loan than a year ago.

For builders, it means thinner margins and fewer new homes, which can keep prices elevated even as demand cools.

What to watch:

• The Fed's Oct. 27-28 meeting, since any hint of another rate hike would push borrowing costs higher still.

• Freddie Mac's next weekly mortgage rate reading comes Thursday, and the 10-year yield remains the best real-time gauge.

• Also watch homebuilder stocks, which fell Monday, and whether more builders keep cutting prices to move inventory. Rising price cuts would signal weaker demand, not just higher rates.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.