Case-Shiller Home Prices Tick in Lower Than Expectations

If you're looking at this morning's pre-market indexes and experiencing deja vu, you're not the only one. Just as Monday morning we saw early trading in the red blossom into the green as the regular trading day started — on the way to new all-time closing highs on the Dow and S&P 500 — we have done the same so far Tuesday: the Dow is +5 points, the S&P +62 and the Nasdaq +36 points at this hour.

Case-Shiller Home Prices Increase, but Miss Estimates

The definitive measure on home prices is the Case-Shiller index, reported a month in arrears from most other housing data (in this case, July). Overall, we see +5% growth in home price data for mid-summer, but this is lower than the +6% analysts had been expecting, and below the downwardly revised +5.5% the previous month.

Breaking the findings down into the two separate indexes, the 10-city survey saw home prices up +6.8% for July, +5.9% on the 20-city. Among region leaders, New York led the way that month: +8.8%, followed by Las Vegas at +8.2%.

Of course, this data is still well within the high mortgage rate environment that we see coming down rather rapidly, looking ahead. With a lowering Fed funds rate, this will establish lower mortgage rates over time. Considering pent-up demand over the past couple years of high mortgage rates, we may also expect to see more activity in the Existing Home Sales space, which may put pressure on new homebuilders.

AutoZone Mixed on Q4 Report

Zacks Rank #4 (Sell)-rated AutoZone AZO posted a substantial miss on its bottom line for fiscal Q4 earnings today, with a reported $48.11 per share short of the $53.31 expected, for a negative earnings surprise of -9.75%. Revenues, however, outperformed slightly, by +0.37% to $6.21 billion in the quarter (and a nice boost from the $5.69 billion posted a year ago).

AutoZone shares are trading down -3.7% on the news, crimping the company's gains of +17.9% year to date. Even still, the stock is underperforming the S&P 500's strong growth of +19.9% so far this year.

What to Expect for Tuesday in the Stock Market

A half hour after the opening bell, Consumer Confidence for September will be released. Analysts expect a slight uptick to 104 from 103.3 reported a month ago. Especially now with a loosening Fed funds rate cycle underway, we may begin to see the clouds part before consumers surveyed here.

After the closing bell, two notable stocks will be reporting earnings: KB Home KBH, the Los Angeles-based homebuilder which specializes in single-family homes first-time homebuyers, and Stitch Fix SFIX, a 21st century online custom apparel store.

KB Home is expected to have grown by +13.3% on earnings in Q3 and +8.8% on revenues, and is working on a six-straight string of quarterly earnings beats. Fiscal Q4 results for Stitch Fix are expected to be flat on earnings for the quarter, but -15.5% on revenues.

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