Shares were mixed at the open on Tuesday after earnings from
beat Wall Street forecasts, but a decline in housing starts provided further evidence of a slowing economy.
gained 53 points, or 0.2% to 33,970.
fell by 0.2% and the
The composite index fell by 0.7%.
“I think you’re just seeing a digestion this morning…of the very impressive rally we’ve seen over the past two weeks,” said Tom Essaye, founder of Sevens Research.
Home Depot second quarter earnings (ticker: HD) beat estimates, but customer transactions fell 3% in the second quarter.
stock (WMT) rose 5% after giant retailer’s profits and revenue beat forecastss.
“Walmart has basically passed the low bar. It wouldn’t surprise me if
does something similar. But is their activity slowing down? Isn’t the outlook as rosy as it was three to six months ago for these companies? Absolutely,” Essaye said. “Especially with Walmart, and then to a lesser extent with Target, the vast majority of people shopping there are in a rush.”
The government figures gave investors insight into the real estate market. Housing starts in July fell more than expected and to the lowest level since the start of 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.
Mondaytocks closed higher despite a surprise interest rate cut from China’s central bank after data showed weakening retail sales and industrial production in the world’s second-largest economy. Additionally, the New York Federal Reserve’s Empire State Manufacturing Survey largely missed expectations and nationwide homebuilder sentiment declined for the eighth consecutive month.
“The housing correction deepened in July,” Comerica Bank chief economist Bill Adams wrote on Tuesday. “Headwinds from housing, technology, retail and foreign economies make a recession more likely than not in the coming quarters.”
Stocks had risen for four straight weeks as signs of slowing consumer and wholesale inflation led investors to bet on a less aggressive Federal Reserve. The central bank has raised interest rates four times this year – the last two by three-quarters of a percentage point – in its effort to slow the economy.
The Federal Open Market Committee will release the minutes of its July policy meeting on Wednesday. During this session, the Fed raised rates by 0.75 percentage points for the second month in a row. The minutes will be read carefully for signals on the Fed’s next move.
CME FedWatch says 57.5% of investors expect the Fed to hike rates by 50 basis points in September and 42.5% expect a hike of 75 basis points. Earlier this month, investors predicted a 68% chance of a 75 basis point hike.
Tim Pagliara, chief investment officer at CapWealth, a wealth management firm in Franklin, Tenn., said a few weaker inflation readings “doesn’t mean the Fed will slow or even pause the pace of inflation hikes.” rate, what the market expects.”
Pagliara said the recent market “meltdown” was “closer to a bear market rally and we remind investors that the dotcom bubble has seen four bear market rallies of 20% or more, each testing new lows.” .
Some moving actions:
(ZM) fell 7.6% after Citi analysts downgraded their rating on the stock to Sell from Neutral.
(AJRD) rose 2.3% after Elliott Investment Management announced a 3.7% stake in the defense company.
(DNA), a developer in the emerging field of synthetic biology, rose 7.3% after second-quarter revenue beat analysts’ estimates.
(ZIP) fell 7.8% after cutting its revenue forecast for the year.
(SNOW) fell 6.3% after a UBS analyst downgraded the stock to Neutral from Buy.