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US housing starts fell more-than-expected in July, to their lowest level since early 2021.
(Spencer Platt/Getty Images)
Stocks ended Tuesday mixed with little macro news after a relatively quiet trading day. income from
Walmart
and
home depot
beat Wall Street forecasts.
That
Dow Jones industry average
rose 239 points, or 0.7%, to 34,151.8. The index closed above 34,000 for the first time since May 4th
S&P500
rose 0.2% to 4,305.2 and the
Nasdaq
Composite slipped 0.2% to 13,635.2.
“I think you’re just kind of digesting… the very impressive rally that we’ve seen over the past few weeks,” said Tom Essaye, founder of Sevens Research.
Home Depot (Ticker: HD)’s second-quarter earnings beat estimates, but customer transactions fell 3% in the second quarter.
Walmart
Shares (WMT) rose 5.1% after the giant retailer’s profit and sales beat forecasts.
“Walmart has essentially broken a low bar. It wouldn’t surprise me if
target
did something similar. But is their business slowing down? Aren’t the prospects for these companies as rosy as they were three to six months ago? Absolutely,” Essaye said. “Especially at Walmart and then to a lesser extent at
target
,
The vast majority of people who shop there get squeezed.”
Government figures gave investors insight into the real estate market. Housing starts in July fell more-than-expected and to the lowest level since early 2021. They fell to a seasonally adjusted annual rate of 1.45 million, the Census Bureau said. The rate was 9.6% lower than the revised June rate of 1.6 million.
However, according to the US Federal Reserve, US industrial production rose by 0.6% in July, which was ahead of expectations.
“While July was better than expected, manufacturing industry surveys suggest a slowdown is likely next year. High inventories, a strong dollar and a contraction in the housing market are headwinds for manufacturers,” wrote Bill Adams, chief economist at Comerica Bank, on Tuesday.
On Monday, shares closed higher despite a surprise interest rate cut by China’s central bank after data showed a slowdown in retail sales and factory production in the world’s second largest economy. Also, the New York Federal Reserve’s Empire State Manufacturing Survey fell far short of expectations, and homebuilder sentiment fell nationwide for the eighth straight month.
“Headwinds from housing, tech, large retail and foreign trade make a recession more likely than not in the next few quarters,” Adams wrote.
Signs of cooling in inflation at both the consumer and wholesale levels have prompted investors to bet on a less aggressive Federal Reserve. The central bank has hiked interest rates four times this year – the last two by three-quarters of a percentage point – in an effort to slow the economy.
The Federal Open Market Committee is due to release minutes of its July monetary policy meeting on Wednesday. At that meeting, the Fed hiked rates by 0.75 percentage points for the second straight month. The minutes will be closely read for signals of the Fed’s next move.
CME FedWatch notes that futures markets are pricing in a 59.5% probability of the Fed raising rates by 50 basis points in September and an implied 40.5% probability of a 75 basis point hike. Earlier this month, price action suggested a 68 percent chance of a 75 basis point hike.
Tim Pagliara, chief investment officer at CapWealth, a wealth management firm in Franklin, Tennessee, said a few weaker inflation readings “do not mean the Fed will slow or even sustain the pace of rate hikes, which the market is expecting,” and that the recent market meltdown “Rather resembled a bear market rally, and we remind investors that the dot-com bubble saw four bear market rallies of 20% or more, each testing new lows.”
Some stocks on the move:
zoom video
(ZM) fell 3.6% after analysts at Citi downgraded their rating on the stock to Sell from Neutral.
Aerojet Rocketdyne
(AJRD) rose 4.2% after Elliott Investment Management reported a 3.7% stake in the defense company.
Ginkgo Bioworks
(DNA), a developer in the burgeoning field of synthetic biology, rose 7.5% after second-quarter sales beat analysts’ estimates.
ZipRecruiter
(ZIP) slipped 5.5% after lowering its revenue guidance for the year.
snowflake
(SNOW) fell 1.9%, according to an analyst
UBS
downgraded their rating of the stock from “buy” to “neutral”.
bed
bathroom and beyond
(BBBY) is up 29% on Tuesday as retail investors continued to buy meme stocks.
Write to Joe Woelfel at [email protected] and Angela Palumbo at [email protected]
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