Stocks Inch Higher, Oil’s Rally Continues

U.S. equity markets moved slightly higher as investors shift their focus away from rising interest rates and toward company earnings reports. Oil’s rally continued on expectations for rising demand.

Shares of banks are mixed as more financial firms announce quarterly numbers. Shares of Morgan Stanley (MS) and Bank of America Corporation (BAC) are rising the financial giants reported results that topped estimates, while shares of U.S. Bancorp (USB) and State Street Corporation (STT) are falling on their reports.

The Procter & Gamble Company (PG) shares are gaining after its sales and profit beat estimates, and it raised its revenue outlook (more below). Shares of UnitedHealth Group Incorporated (UNH) are up as the insurer’s revenue and earnings were also better than forecasts. 

Caterpillar Inc. (CAT) is the worst-performing stock in the Dow Jones Industrial Average (DJIA). Ford Motor Company (F) shares are dropping after the automaker recalled 200,000 cars for a brake light problem.

Oil Hits $87 per Barrel

Oil futures are rising again, up to $87 per barrel, after the International Energy Agency (IEA) increased its forecast for demand growth in 2022. Bond yields are losing ground following their recent run-up. The rate on the 10-year Treasury note is 1.84%. 

 Prices for major cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) are rising.

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Chart of the Day: Mortgage Money

The Mortgage Bankers Association (MBA) reported that mortgage rates rose last week to the highest since March 2020, and the average size of a loan to buy a home hit a record. The MBA said the rate on an average 30-year, fixed-rate conforming loan (up to $647,200) last week was 3.64%, up from 3.52% the previous week. It has increased 30 basis points in the past two weeks. 

The report found the average amount borrowed to buy a home rose to $418,500, a jump of almost $18,000 from the week before. The MBA indicated that the rise was driven by high home price appreciation and lack of inventory, especially for lower-priced properties.

Harder for First-Time Buyers

Joel Kan, the MBA’s associate vice president of economic and industry forecasting, added that the higher loan balances are making it even harder for first-time buyers to afford a home. The group noted that applications for home purchases were up 8% as potential buyers were motivated to move quickly before borrowing costs increased more. Meanwhile, refinance applications dropped 3% as higher rates made refinancing less attractive. Overall, applications were up 2.3%.

Stock of the Day: Procter & Gamble

Procter & Gamble shares are rising after the consumer products company said that price increases offset rising costs and led to better-than-expected sales and profit in its fiscal second quarter. The company also raised its full-year revenue guidance. 

P&G reported net sales rose 6% to $21 billion, with earnings per share (EPS) of $1.66. Both were above analysts’ forecasts. Organic sales also rose 6%, with the company noting that half of that gain was attributable to price hikes. CEO Jon Moeller explained the strong results came despite “significant cost headwinds.”

P&G indicated that organic sales in its Health Care segment were boosted by demand for respiratory products because of a more intense cough, flu, and cold season as compared to the year before. Gains also came in the Fabric and Home Care segment as consumers purchased more laundry detergent pods and fabric enhancers.

Raising Revenue Forecast

P&G lifted its estimate of full-year revenue to 3% to 4% from the previous 2% to 3%. It also noted that it expects higher commodity and transportation expenses to limit fiscal 2022 earnings, and it plans more price increases in the months ahead.

Shares of Procter & Gamble are up 4% during trading on Jan. 19, and they are less than 1% below their all-time high set earlier in January.