Weak Economic Data Good for Mortgage Stocks

Weaker than expected economic news actually turned into good news for the stock market on Thursday as investors saw that as a sign the Federal Reserve’s stimulus will continue.

The Dow Jones Industrial Average was up almost 22 points while the Mortgage Industry Equity Composite had 13 gainers, three decliners and one stock (Home Loan Servicing Solutions) unchanged.

The biggest loss on a percentage basis was recorded by Redwood Trust, down 1.24%. The company filed a registration statement with the Securities and Exchange Commission for its eighth jumbo mortgage securitization of the year.

Other stocks in the red were Radian, down 0.38% and PHH down 0.20%. In an 8-K filing which included news about the extension of its second largest warehouse credit, PHH said it received document subpoenas from the Office of Inspector General of the U.S. Department of Housing and Urban Development and the U.S. Attorney’s Office for the Southern District of New York.

The biggest gainers were Ellie Mae, up 2.75%, Bank of America, up 2.6%, and Fidelity National Financial, up 1.57%.

Investor infatuation with Fannie Mae and Freddie Mac seems to be over, as both companies tumbled below the $2 per share mark. Fannie was down $1.17 to close at $1.73, while Freddie was down $1.01 to close at $1.60.