Shares of Orange County’s interest rate-sensitive companies fell Wednesday, following an inflationary surprise from the Federal Reserve Bank yesterday.
Some stocks of mortgage companies and homebuilders regained a bit of ground later, while others continued falling.
Newport Beach-based Impac Mortgage Holdings Inc. led the decliners, closing at $16, down 4% from Tuesday’s close. That follows yesterday’s drop of about 4% just after the Fed’s announcement Tuesday that signs of inflation have risen in recent months.
Economists and investors speculated the Fed might drop its perennial reference to “measured” rate hikes. It did not, but they were surprised by its acknowledgement of higher inflation.
The Fed also raised a key short-term rate a quarter point to 2.75%, as expected.
Another sign of inflation was released today by the Labor Department. It said consumer prices rose 0.4% in February, the biggest increase in four months. The consumer price index rose 0.1% in January.
Excluding energy and food prices, which can be volatile, so-called core prices rose by 0.3% in February,the largest increase since September. Core prices rose 0.2% in January.
Impac buys and sells mortgages to borrowers with credit scores less than perfect but not as spotty as subprime.
Meanwhile, Irvine-based subprime lender New Century Financial Corp. closed at $44.1, down slightly from yesterday’s close.
Stocks of homebuilders Standard Pacific Corp. in Irvine and Newport Beach-based William Lyon Homes Inc. were down 2.6% and 1.7%, respectively.
The stocks rose yesterday leading up to the Fed’s announcement and began trading down afterward. They closed Tuesday roughly even.
