The markets are coming back after yesterday’s losses and are all firmly in the green around +0.5%.  Consumer Staples, Health Care, Technology and Utilities are the leaders today while Consumer Discretionary, Financials, Real Estate, and Telecom Services lag.  Energy is also up about 0.5% with WTI trading at around $64 per barrel.   Advancers outpace decliners 1827/1033 on the NYSE and 1656/1126 on the Nasdaq.

Mortgage applications rose 4.1 percent last week, with a 5.6% increase in volume from previous year.  This is rather unusual given that rates have been rising, with the average 30-year fixed rate conforming loan now at 4.33% with 0.54 points, from 4.23% with 0.35 points for 80% LTV (loan to value). However, many fear that rates will continue to increase and take the plunge now. Refinance application also rose 4%.

The Housing Market Index (HMI) data declined two points to 72 in January, coming off an 18 year high in December. Demand for single family homes should continue to see strength as the economy improves, while supply remains constrained.

According to NAHB Chairman Randy Noel, “Builders are confident that changes to the tax code will promote the small business sector and boost broader economic growth.” He continued, “Our members are excited about the year ahead, even as they continue to face building material price increases and shortages of labor and lots.”

HMI is based on a monthly survey of NAHB members that rate market conditions for the sale of new homes from present to the next six months as well as the traffic of prospective buyers of new homes.

Also on the economic front was the latest industrial production and capacity utilization for December.  Industrial production increased at the fastest pace since 2010 and was up 0.9% in December. November was revised down from +0.2 to -0.01. Capacity utilization increased to 77.9%, while November was revised from 77.1% to 77.2%. Highlights include:

• Utility output +5.6%
• Mining output +1.6% as oil and gas extractions gained
• Annual mining output increased to 12.7%
• Manufacturing output up fractionally, 0.01%
• Durables increased +0.3%
• Publishing and logging +0.2%
• Nondurable -0.1%