Housing, oil reports, 3Q earnings and more: Wednesday's 5 things to know
Investors will be looking for the Commerce Department to release its latest housing report, which is expected to show a decrease in new homes under construction
Here are the key events taking place on Wednesday that could impact trading.
HOUSING REPORT DUE: Another housing report is on deck for investors at 8:30 a.m. ET Wednesday morning, when the Commerce Department is expected to say the number of new homes under construction in September tumbled 6.3% to a seasonally adjusted annual rate of 1.475 million.
That would follow a strong and unexpected surge of 12.2% in August, driven by construction of multi-family housing units.
Housing starts have tumbled 13% in the four months since April when they hit a near 16-year high of 1.810 million (the highest since June 2006) as increased borrowing costs and rising prices slammed affordability.
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Houses under construction at the Norton Commons subdivision in Louisville, Kentucky, US, on Friday, July 1, 2022. (Luke Sharrett/Bloomberg via Getty Images / Getty Images)
Permits for future construction, a good gauge of upcoming housing activity, are anticipated to fall 0.8% to 1.530 million in September, the lowest since August 2020 (for context, January’s print of 1.899 million was the highest since May 2006).
It would also be the sixth consecutive monthly decline in building permits, which hasn’t happened since January 2009 near the end of the global financial crisis.
The report follows the NAHB’s housing market index, out Tuesday morning, which tumbled more than expected to the lowest since May 2020 as high mortgage rates and rising construction costs weighed on the mood of homebuilders.
OIL INVENTORY: The DOE’s Energy Information Administration will release its inventory report for last week at 10:30 a.m. ET Wednesday.
Crude stockpiles of oil are expected to rise by 1.38 million barrels, following a much larger than expected build of nearly 10 million barrels the previous week.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| USO | UNITED STATES OIL FUND - USD ACC | 74.25 | +1.05 | +1.43% |
| CVX | CHEVRON CORP. | 162.36 | +0.75 | +0.46% |
| XOM | EXXON MOBIL CORP. | 121.78 | -0.14 | -0.12% |
Watch for declines of more than 2 million barrels in distillate supplies (heating oil, diesel fuel) and just over 1 million barrels in gasoline inventories.
Oil prices have been trending lower on slowdown worries since spiking to a 5-week high two weeks ago after OPEC+ announced production cuts of 2 million barrels a day.
3Q EARNINGS: Health care will be in focus for third-quarter earnings reports Wednesday morning with insurer Elevance Health (formerly Anthem) and health care equipment maker Abbott Labs reporting ahead of the opening bell.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ELV | ELEVANCE HEALTH INC. | 402.55 | -1.05 | -0.26% |
| ABT | ABBOTT LABORATORIES | 117.76 | +0.50 | +0.43% |
| PG | PROCTER & GAMBLE CO. | 176.25 | +3.48 | +2.02% |
| TRV | THE TRAVELERS COS. INC. | 262.62 | +1.83 | +0.70% |
We’ll also get numbers from two Dow members: household products giant Procter & Gamble and property and casualty insurer Travelers Companies.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 352.56 | +12.92 | +3.80% |
| IBM | INTERNATIONAL BUSINESS MACHINES CORP. | 222.98 | +0.66 | +0.30% |
| MTB | M&T BANK CORP. | 221.12 | +4.50 | +2.08% |
| ALLY | ALLY FINANCIAL INC. | 37.86 | +0.66 | +1.77% |
In the afternoon the spotlight will turn to electric vehicle maker Tesla, with another Dow component – software services and cloud computing firm IBM – also posting.
MARKETS EDGE HIGHER: U.S. stock indexes rose on Tuesday, rallying for a second day as a combination of better-than-expected earnings and an easing of turmoil in U.K. markets lifted investors' confidence.
The S&P 500 climbed 42.03 points, or 1.1%, to 3719.98 while the Dow Jones Industrial Average rose 337.98 points, or 1.1%, to 30523.80 and the technology-heavy Nasdaq Composite moved ahead 96.60 points, or 0.9%, to 10772.40.
The moves come a day after the major indexes soared. Big swings have become commonplace for U.S. stocks, with the S&P 500 closing up or down at least 2% in the three prior trading sessions.
Even with some runs higher, all three indexes remain in a bear market, entered into after a drop of 20% or more from a recent high.
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Traders work on the floor at the New York Stock Exchange in New York, Wednesday, June 15, 2022. (AP Photo/Seth Wenig / AP Images)
"When you're in the throes of a bear market, to see meaningful moves higher for stocks, you need to also see a big move in the bond markets. You need yields to meaningfully fall," said Michael Antonelli, managing director and market strategist at Baird. That hasn't happened.
Instead, the yields on U.S. government bonds have been climbing higher, with the yield on the 10-year Treasury note settling above 4% for the first time since 2008 on Friday. On Tuesday, the yield on the 10-year Treasury note edged lower to 3.996% from 4.012%.
Bond yields and prices move in opposite directions. Investors had been bracing for a difficult earnings season, with the threats of soaring inflation, rising interest rates and flagging growth weighing on consumer spending and corporate profits. But results thus far have proved better than expected, prompting a rally for U.S. stock markets after months of declines.
GOLDMAN SACHS
On Tuesday, Goldman Sachs rose $7.14, or 2.3%, to $313.85 after it said profits fell in the recent quarter but remained above targets.
Lockheed Martin's shares rose $34.53, or 8.7%, to $431.84 after the defense company said its profit rose and maintained its full-year guidance.
SALESFORCE
Meanwhile, shares of Salesforce Inc. rose $6.35, or 4.3%, to $153.53 and Splunk Inc. gained $2.11, or 2.8%, to $76.15 after activist hedge fund Starboard Value LP discussed the firm's stakes in them at a conference.
After the market closed, Netflix said it added more than twice as many new subscribers as expected in the last quarter. Shares of the streaming giant rose 16% in recent after-hours trading. United Airlines shares also rose 8.3% in after-hours trading after solid results.
WHERE’S THE SAVINGS?: The average price of a gallon of gasoline is nearly double what Americans were paying exactly two years ago, but White House press secretary Karine Jean-Pierre touted savings at the pump on Tuesday.
"Every month, the typical two-driver family saves about $120 at the pump compared to where we were in mid-June," Jean-Pierre said at a press conference. "Every day, Americans save about $420 million at the pump compared to mid-June."
The average gallon of gas stood at $3.871 on Monday, a roughly 23% drop from the $5.006 that Americans were paying in mid-June.
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Despite the fall in recent months, gas prices are still about 62% higher than they were in January 2021, when President Joe Biden first took office and the average gallon of gas was $2.392. Gas prices are about 80% higher than they were exactly two years ago in October 2020, according to Department of Energy data.
Energy prices have soared in the United States and elsewhere around the world amid Russia's invasion of Ukraine.
OPEC+’s decision to cut oil production last week threatens to reverse the recent downward trend in gas prices as supply becomes restrained.
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Domestic oil production fell below 12 million barrels a day this month, more than 1 million barrels a day below November 2019 levels, prompting lawmakers to call on Biden to ramp up production at home.