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Today in the Market (5/7/2024)

Good Morning! On Tuesday, the U.S. stock market closed relatively flat. At the same time, investors were less optimistic about Disney’s (DIS) results, causing a significant decline in the stock price. The Dow Jones and S&P 500 both had small gains of 0.08% & 0.13%, respectively, while the Nasdaq fell slightly by 0.10%.

NOT WHAT WE WANTED

Disney (DIS) said that a significant component of its streaming business achieved profitability for the first time. However, the company anticipates less favorable outcomes in that particular sector for the current quarter, leading to a decline of almost 10% in its stock value.

The details! The direct-to-consumer (DTC) division of Disney’s entertainment sector, which includes streaming services like Hulu and Disney+, reported operating profitability of $47 million in the company’s fiscal second quarter, up from a loss of $587 million in the same time last year. However, Q2 profits weren’t all positive for some of Disney’s streaming services. For example, the overall direct-to-consumer losses, including ESPN+, were $18 million, down from $659 million in the previous quarter.

So why weren’t investors happy? Even though Disney revised its near-term profits forecast upwards in response to its robust financial performance, investors seemed to be more focused on the possible short-term difficulties that lie ahead, such as a historically sluggish third quarter for the streaming business and a slower rate of new movie title releases.

ON SECOND THOUGHT, I WILL JUST WAIT

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Based on a recent poll conducted by the New York Federal Reserve, only 40% of renters hold the belief that they would eventually transition from renting to becoming homeowners. The reason? Credit high mortgage rates and listing prices.

These are the stats! Nearly 75% of renters see securing a mortgage as an obstacle, in contrast to 51% during a period of almost non-existent interest rates in 2021. Americans anticipated that mortgage rates would continue to increase, and house prices are projected to grow by 5.1% over the next 12 months, which is over double the yearly increase predicted for 2023. On top of that, only 13% of individuals anticipate relocating within the upcoming year, while 25% believe they will relocate during the subsequent three years.

The big picture? Some homeowners demonstrate caution in relocating due to concern about obtaining a new mortgage at an elevated interest rate, which has been diminishing the inventory of available properties. In fact, according to Redfin, over 60% of homeowners had a mortgage rate below 4% last year.  If you have a mortgage below 4%, should you use extra cash to pay it down or even pay it off?  Check out our YouTube video that suggests a better option than paying off your mortgage.  

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