US markets finished neutral on Tuesday following a fall from all-time highs, with retail results expected to keep investors busy as they await a key inflation data.
The Dow Jones Industrial Average (^DJI) fell by less than 0.3%, while the S&P 500 (^GSPC) gained 0.2% in late trade. The Nasdaq Composite (^IXIC) topped the major indices, finishing up around 0.4%.
Stocks have lost pace as investors recover from the dramatic run-up last week and emphasis shifts to the health of the US economy. Investors are watching the PCE index data, which is scheduled on Thursday and is a crucial inflation factor in the Federal Reserve’s rate-setting decisions.
Given the market’s focus on the timing of a rate decrease, the PCE reading is viewed as a possible trigger for stock movements in either way. Meanwhile, consumer confidence in the US economy appears to be declining.
The Conference Board’s Consumer Confidence Index for February fell to 106.7 from a revised 110.9 in January. January’s preliminary reading was 114, a two-year high for the indicator. Bloomberg surveyed economists, and they projected a reading of 115 for February.
Investors examined other economic news on Tuesday, including another increase in house prices and the sharpest decrease in US durable goods orders in four years.
In contrast, the price of bitcoin (BTC-USD) has risen to two-year highs, surpassing $57,000 per token, boosted by a large investment by MicroStrategy (MSTR). Bitcoin miners and cryptocurrency exchanges, such as Coinbase (COIN), saw their shares rise alongside the dominant digital currency.
The appetite for home improvement projects will most certainly be sluggish this year, but there are strong reasons to believe the dip will be short, according to Lowe’s (LOW).
“When you hear these factors with trends like chronic undersupply of homes, millennial household formation, baby boomers ageing in place, and a sustained number of people working from home — you can see why we are confident that home improvement demand will trend upwards over time across both homeowners and Pros,” Lowe’s CEO Marvin Ellison said on the company’s fiscal fourth quarter earnings call Tuesday.
Sales of previously inhabited houses remain at a record low, mortgage rates remain near 7%, and home prices have yet to fall, preventing many from moving or selling.
According to Ellison, such factors will put pressure on DIY demand in the near future. The second factor in this equation is the timing of the Federal Reserve’s interest rate decreases, which might stimulate the housing market and, as a result, big-ticket purchases at Lowe’s.
“While there is increased confidence of a soft landing, there’s still a lot of speculation on the timing of anticipated interest rate cuts in the face of slowing inflation,” he added. “It’s also unclear how quickly the consumer will react to these changes and how quickly their spending habits will change.”
Some Wall Street analysts are sceptical that demand for home repair will recover this year, citing increased mortgage rates and a slowdown in new building projects.
Jessica Rabe, co-founder of DataTrek, explained that the outperformance witnessed in Nvidia, Meta, and, to some extent, Amazon makes sense in light of recent changes in earnings estimates. Over the previous 30 days, as Wall Street analysts studied the most recent batch of corporate reports from all seven Big Tech giants, Meta, Amazon, and Nvidia experienced the highest rises in profit expectations for both this year and next year.
Meanwhile, Tesla and Microsoft’s negative earnings shifts were the only two in the group to have their profits fall more than the S&P 500’s for the next year.
“US Big Tech’s superior earnings estimate momentum versus the S&P 500 as a whole goes a long way in explaining why most of them have been able to continue to build on their [more than one] year run of outperformance,” Rabe said in a letter to investors on Monday morning. “Although interest rates have risen this year, most Big Tech stocks are in far better fundamental health than the overall US equities market.
“As long as they keep delivering on earnings results in the same manner as last quarter, most of these stocks should keep outperforming and driving the S&P higher.”
ExxonMobil (XOM) and China National Offshore Oil Corporation (CNOOC) said that they are evaluating pre-emption rights for their Guyana project, which is a major asset in Chevron’s planned acquisition of Hess.
ExxonMobil is the project’s operator, with a 45% share; CNOOC holds 25%. Hess controls the remaining 30%, which was scheduled to be transferred to Chevron after the deal was completed.
In a press release, ExxonMobil said: “We owe it to our investors and partners to consider our pre-emption rights in place under our joint operating agreement to ensure we preserve our right to realise the significant value we’ve created and are entitled to in the Guyana asset.”