If you’re checking the pre-market indexes this morning and feeling a sense of déjà vu, you’re not alone. Just like Monday’s early red turned into green throughout the day, leading to new all-time closing highs for the Dow and S&P 500, Tuesday is following a similar pattern. The Dow is up 5 points, the S&P is up 62 points, and the Nasdaq is up 36 points at this hour.
While the stock market is showing positive signs, the Case-Shiller Home Price Index, a definitive measure of home prices, reported a slight dip from expectations. The index showed a 5% growth in home prices for mid-summer, falling short of the 6% analysts predicted and below the downwardly revised 5.5% from the previous month. The 10-city survey saw home prices climb 6.8% in July, while the 20-city survey registered a 5.9% increase. Leading the way was New York with an 8.8% jump, followed by Las Vegas at 8.2%. It’s important to note that this data is still being reported within the context of high mortgage rates, which are expected to decrease rapidly in the future. The lowering Fed funds rate will eventually lead to lower mortgage rates, potentially stimulating more activity in the existing home sales market, which could put pressure on new homebuilders.
Moving on to corporate earnings, AutoZone (AZO), a Zacks Rank #4 (Sell)-rated company, reported a substantial miss on its bottom line for fiscal Q4. The company posted $48.11 per share, falling short of the expected $53.31, resulting in a negative earnings surprise of -9.75%. However, revenues exceeded expectations slightly, coming in at $6.21 billion for the quarter, a significant boost from the $5.69 billion reported a year ago. AutoZone shares are currently trading down 3.7% on the news, dampening the company’s year-to-date gains of 17.9%. Despite the setback, the stock is still underperforming the S&P 500’s strong growth of 19.9% this year.
Looking ahead, the stock market has a few key events to watch out for today. A half-hour after the opening bell, the Consumer Confidence Index for September will be released. Analysts expect a slight uptick to 104 from the 103.3 reported last month. With the Fed funds rate cycle easing, we may start to see consumer sentiment improve. Later this evening, two notable companies will be reporting earnings: KB Home (KBH) and Stitch Fix (SFIX). KB Home, a Los Angeles-based homebuilder specializing in single-family homes for first-time buyers, is expected to report a 13.3% growth in earnings for Q3 and an 8.8% increase in revenues. The company is aiming for its sixth consecutive quarter of earnings beats. Stitch Fix, an online custom apparel store, is expected to report flat earnings for the quarter, but revenues are anticipated to decline by 15.5%. Overall, the stock market is starting the week on a positive note, but investors should stay attuned to key economic data and earnings releases for further insights into market trends.
