Stocks opened mixed as focus turned to inflation data

He lives6 updates

• Tuesday, May 28, 2024 at 4:38 PM GMT+2

  Home prices hit another record high in March

  Home prices reached an all-time high in March, according to data released Tuesday.

  The S&P Corelogic Case-Shiller National Home Price Index rose 6.5% in March from a year ago, matching the year-over-year increase in February.

  Regionally, San Diego continued to post the highest year-over-year gains among the 20 largest cities, rising 11.1% in March. New York and Cleveland also rose by 9.2% and 8.8%, respectively.

  High mortgage rates, rising home prices, and limited housing inventory have presented a challenge for homebuyers. In March, mortgage rates were hovering around Average range 6%. Last week, it fell below 7% for the first time since early April.

  Despite pent-up demand for homes, low inventory remains an issue, which has not allowed home prices to decline. But this dynamic is expected to change.

  “Although we expect mortgage interest rates to decline in the next few years, we also expect inventory to gradually normalize which should help calm the market.” Thomas Ryan, North America economist at Capital Economics, wrote in a note to clients after the release. Ryan and his team expect home prices to rise 3% in 2025 and 2.5% in 2026.

• 

  Tuesday, May 28, 2024 at 4:28 PM GMT+2

  New data shows that home prices remain high

  Oxford Economics said in a report that the seasonally adjusted S&P CoreLogic Case-Shiller national home price index rose 0.3% month-over-month in March and jumped 6.5% year-over-year — the second-strongest annual gain since late 2022. Note to clients after the release data.

  “We expect house price growth to remain positive in the coming quarters, with risks skewed to the upside,” wrote Bernard Jaros, chief economist at Oxford Economics. “Tight supply in the resale market, a strong job market, and pent-up demand from millennials aging into their prime family-forming years all point to potential home price gains that are firmer than in our baseline forecast.”

  Yaros added that although he expects “declines in mortgage interest rates as the first Fed rate cut comes into play,” prices should continue to remain high amid a “historically tight” supply of homes for sale.

  Meanwhile, the seasonally adjusted Federal Housing Finance Agency (FHFA) home price index also rose during March but at a slower pace compared to previous months. The index rose just 0.1% after rising 1.2% month-on-month in February.

  “Although fundamental effects are starting to become less favorable to the FHFA index, they are still rising faster year-over-year than they have been for most of 2023,” Yaros said.

  

• 

  Tuesday, May 28, 2024 at 4:08 PM GMT+2

  Consumer confidence rebounded for the first time in 3 months

  Consumer confidence rose unexpectedly in May.

  The latest index reading from the Conference Board was 102, higher than 97.5 in April and higher than the expectations of 96 economists surveyed by Bloomberg. The May reading ended three months of declines for the index.

  “Consumers’ assessment of current business conditions was slightly less positive than last month,” Dana Peterson, chief economist at the Conference Board, said in the statement. “However, the strong labor market continued to bolster consumers’ overall assessment of the current situation. Views on current labor market conditions improved in May, with fewer respondents saying it was ‘hard to get jobs.’

  “Fewer consumers expected future business conditions, job availability, and income to deteriorate, leading to an increase in the expectations index,” Peterson added.

• 

  Tuesday, May 28, 2024 at 3:32 PM GMT+2

  Dow Jones declines and Nasdaq rises at the open

  US stocks opened mixed on Tuesday, with technology serving as a bright spot ahead of a critical inflation report due later this week.

  The S&P 500 (^GSPC) rose about 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) added about 0.4% after strong closing gains on Friday. The Dow Jones Industrial Average (^DJI) was the biggest decliner of the morning, falling 0.3%.

• 

  Tuesday 28 May 2024 at 12:53 PM GMT+2

  Foot Locker is not out of the woods

  Foot Locker (FL) has had a terrible year.

  The poor financial performance has led to a surprisingly poor outlook, sending shares down 16% in the past year.

  The Street is bracing for another terrible quarter for the athletic and sports footwear retailer when it releases a report Thursday morning.

  Investors should expect a “very difficult quarter,” says Michael Benetti, an analyst at EvercoreISI. The company can warn again for a full year.

  He points to several reasons:

  “In addition to pressure from lower-income consumers, we believe key product launches like the Air Max DN have underperformed, and the Jordan 4 Industrial Blue is recently selling for below MSRP in the resale channel ($185 vs. $215 MSRP “)

• 

  Tuesday 28 May 2024 at 12:47 PM GMT+2

  EvercoreISI’s take on Trump 2.0 tariffs

  We’re starting to see Wall Street crunching the numbers on the economic impact of the new tariffs that President Trump will be keen to implement if he wins a second term.

  Today, EvercoreISI weighs in on the following:

  “Presidents rarely enact or implement the entirety of any campaign idea, and Trump in particular likes to use bold ideas as a starting point. However, it is crucial that we understand what Trump’s dramatic starting point is because that has implications for where we are if we look at it.” On an eventual basis, the combination of the proposed 10% tariff and China’s 60% tariff would result in an overall weighted U.S. tariff rate of about 17%, the highest since the 1930s on a constant basis ( That is, assuming no dynamic economic effects), tariffs would rise from 0.3% of GDP to 1.9% of GDP – and such a dramatic move would almost certainly trigger major retaliation by trading partners. “