Market indices were agnostic as of the opening bell, but quickly found religion — shooting up to session highs within the first 45 minutes of the trading day. An attempt to match those highs ahead of lunchtime did not materialize, and from there we saw a notable fade into negative territory across the board. Each of the four major indices were finished normal trading tepidly in the red: the Dow -0.15%, the S&P 500 -0.17%, the Nasdaq -0.44% and the Russell 2000 -0.22%.
We are collecting data points throughout the day, even though it feels as if we’ve struck a void in meaningful market direction this week so far. No Fed meeting, no Employment Situation, no CPI/PPI — we’ve been downright spoiled with meaningful metrics over the past three weeks. That said, Personal Consumption Expenditures (PCE) are out Friday, and even though the do not tend to spark markets in real time, the Fed pays close attention their numbers and trends over time.
The Case-Shiller Home Price Index for January came out today. This notoriously late-reporting survey is nevertheless regarded as the most iron-clad of housing data, thus it is worth noting that some of the hottest cities for home price growth over the past few years have now cooled significantly: in the 20-city survey, San Francisco home prices fell -7.6%, Seattle dropped -5.1% and San Diego -1.4%. The usual suspects for home price growth over the past few months remain at the top of the heap: Miami +13.8%, Tampa +10.5% and Atlanta +8.4%.
For years, home prices on the West Coast had far outpaced the rest of the country, whereas the Southeast had been the laggard. With two cities in Florida leading the way in home prices and Atlanta not far behind, its the warm weather and in some cases low tax policies which have attracted Americans to the Southeast. Mortgage rates, while off multi-year highs, are still holding in the high-6% range. While both 10-city and 20-city headlines were +2.5%, all cities listed were lower in home prices from December to January.
Consumer Confidence for March — a more forward-looking data point — rose unexpectedly to 104.2 from the 101.3 consensus estimate. This follows an upwardly revised 103.4 posted for February. Expectations month over month moved from 70.4 to 73, while the Present Situation dipped a tad from 153 to 151. Importantly, this survey was conducted more than a week after the news of Silicon Valley Bank (SVB) going under; this near-term data would suggest notable consumer resiliency.
Zacks Rank #4 (Sell)-rated chipmaker Micron MU missed estimates on both top and bottom lines in its fiscal Q2 report released after the closing bell: a bottom line of -$1.91 per share nearly tripled the -67 cents expected. Revenues of $3.69 billion came up short of the $3.76 billion in the Zacks consensus. Revenue guidance for fiscal Q3 stayed in-line, but negative earnings guidance for the present quarter slipped to -$1.58 per share from -92 cents expected.
lululemon LULU also reported earnings after today’s close (fiscal Q4), beating expectations on both top and bottom lines: earnings of $4.40 per share outpaced the Zacks consensus by 15 cents, and more than a dollar higher than the year-ago quarter; sales of $2.77 billion in the quarter bettered the $2.69 billion estimated. Comps grew +27% in the quarter, +3% higher than analysts were expecting.
In both cases, Inventories are a big part of the story here. While Micron did show some improvement, write-downs of $1.43 billion (the biggest per-share impact on its bottom line in the Q2 report) remain not insignificant. LULU was also able to bring Inventory levels to $1.4 billion, which represents a -50% drop — very good news for the specialty retailer. In late trading, MU shares are +1.6%, LULU is +9.8%.
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