Housing Data Up for March; JNJ, LMT Mixed in Q1

Tuesday, April 19, 2022

We’re getting busier in pre-market activity these days. For the next several weeks, we can expect potential market-moving consequences on a daily basis, for the most part. Market indexes are down to start the day, after rallying to near-flat during Monday’s regular session. The Dow is -25 points, the Nasdaq is -43 and the S&P 500 is down -6 points.

New Housing Starts numbers for March are out this morning, outpacing expectations and matching the previous month’s 1.79 million — a new high for the 12-month cycle and the fourth month out of the past five we’ve seen the headline number above 1.7 million. It’s about as clear a sign that the housing market remains very strong through the first quarter of 2022.

Building Permits, known as a proxy to future starts, also topped estimates by a significant number and even with the previous month’s 1.87 million. While not quite as high as the near 1.9 million we saw in January, it marks the fourth-straight month over 1.85 million. The low point of this cycle is back in September of last year, 1.59 million. The race for new housing continues unabated, helping keep the economy — and inflation — at multi-year highs.

These figures may not yet be factoring in higher mortgage rates, which are definitely in the mix these days. The Fed raised interest rates 25 basis points mid-March, and with the promise of another 50 basis points coming early May, mortgage rates for single-family homes have now gone back over 5% for the first time in years. Will this hamper demand in coming months, and if so, do these Starts and Permits figures represent the highs we’re likely to see this cycle?

We also see Q1 earnings reports from a couple Zacks Rank #3 (Hold)-rated S&P 500 companies. Let’s start with Johnson & Johnson JNJ, which surprised on the bottom liner by 7 cents to $2.67 per share. Revenues in the quarter, however, came in -1.37% light from expectations, though still up +$1 billion from the previous year’s Q1. Shares are down slightly in the pre-market on the news, but shares are still up year to date. For more on JNJ’s earnings, click here.

Defense industry major Lockheed Martin LMT put up similar results in its Q1 report: while being on the bottom line relatively strongly — $6.44 per share versus $6.22 in the Zacks consensus — it missed quarterly sales forecasts by -3.6% to $14.96 billion in the quarter. Shares are down -2% on the news in pre-market activity, though the stock is still up nearly +30% year to date. For more on LMT’s earnings, click here.

Netflix NFLX reports after the closing bell this afternoon. Earnings are expected to have dropped more than -20% from the year-ago quarter on revenues expected to actualize more than +10% gains year over year. Subscription numbers will be the key metric for the streaming giant: emerging from the pandemic with much more competition than it had a couple years ago are anticipated to have caused a few headwinds.

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