Weak Data For Housing Market in June
More important Q2 earnings and economic data are out ahead of today’s opening bell, although less-than-stellar results has so far done little to augment the market’s bullish trajectory in today’s pre-market. At this hour, the Dow is +20 points, the S&P 500 +3 and the Nasdaq +38 points. All three indices are coming off new near-term highs as of Tuesday’s close. Soon, it’s reasonable to expect market participants will question whether they are too far out ahead of future market gains, but so far the party continues.
Housing Starts for the month of June came in light of expectations and well down sequentially: 1.434 million seasonally adjusted, annualized units were lower than the 1.48 million consensus estimate, and follows the cycle-high 1.559 million (downwardly revised from 1.63 million reported initially a month ago), which begins to look like an outlier rather than a new leg higher. In fact, that original May print was the highest single month total in more than a year; today’s headline goes back to roughly a median of the previous few months.
Building Permits for June, basically a proxy for future starts, also tallied short of estimates: 1.440 million seasonally adjusted, annualized units is notably off the upwardly revised 1.496 million reported for May — a seven-month high in new permits. This amounts to a -3.7% drop, but again back within range of the previous few months. Going back to late 2022, new permits were well ahead of current figures; routinely we were putting up 1.5 - 1.6 million new starts per month. Could this mean that the housing market, which had just started to regain traction in other metrics, is already cooling back down?
Goldman Sachs GS disappointed investors with its Q2 earnings report ahead of today’s open, with earnings of $3.08 per share coming in lower than the $3.25 Zacks consensus. Revenues in the quarter did outperform expectations modestly, to $10.9 billion in the quarter from $10.79 billion expected. Well-known investment banking challenges in the quarter — banking revenues were off by $20 billion — and difficulties unwinding its fintech GreenSky are putting added pressure on CEO David Solomon’s tenure.
U.S. Bancorp USB also was short of earnings estimates in its Q2 report this morning, missing by a penny to $1.12 per share on the bottom line. Revenues of $7.14 billion in the quarter were also a miss, by -0.21%, though up respectably from $5.98 billion posted in the year-ago quarter. The bank has an optimistic outlook, however, and shares are +0.5% at this hour — though still down -11% year to date, well underperforming the S&P’s +18%.
Oilfield services giant Halliburton HAL put up mixed Q2 numbers ahead of today’s opening bell, outpacing estimates on the bottom line by 2 cents per share to 77 cents (and vastly ahead of the 49 cents per share reported a year ago) on quarterly sales of $5.8 billion, which missed the Zacks consensus by -0.84% in the quarter (up from $5.07 billion a year ago). Shares are down -1.9% in early trading, giving back the recently-attained year-to-date market gains.
After today’s close, Netflix NFLX and Tesla TSLA put out Q2 earnings, in what will be the most important moment thus far in Q2 earnings season. Tesla has had a big year — so big, in fact, that it will face a rebalancing in the Nasdaq 100 as of Monday so that its share does not overwhelm the sub-index — and is expected to make +47% in revenues year over year. The company looks to notch its 10th straight earnings beat. Netflix is expected to grow +3.7% on its top line but come in -11.5% lower on the bottom. It should be an eventful afternoon.
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