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The stock market began the week with what could be labeled a half-hearted rebound effort following last week's sizable losses. The Russell 2000, for instance, gained 0.1% after losing 4.0% last week; moreover, it faded away after being up as much as 0.8% in Monday's trade.
Buy-the-dip efforts remain subdued this morning, too, following reports that Russian President Putin lowered his country's threshold for nuclear weapon use and that Ukraine fired U.S.-made missiles into Russia. Additionally, Russian Foreign Minister Lavrov declared the attack on Russia an "escalation signal," according to CNBC.
Market participants are dealing with some increased geopolitical angst that is keeping the market under wraps.
- The U.S. Dollar Index is flat at 106.28
- The 10-yr note yield is down six basis points to 4.35%
- The S&P 500 futures are 0.8% below fair value
- The CBOE Volatility Index is up 9.3% to 17.03
Currently, the S&P 500 futures are down 50 points and are trading 0.8% below fair value, the Nasdaq 100 futures are down 197 points and are trading 0.9% below fair value, and the Dow Jones Industrial Average futures are down 489 points and are trading 1.1% below fair value.
What is evident is that investors recognize stretched valuations reflect a lot of good news being priced into stocks and that, frankly, this market hasn't been overly concerned about bad things happening. Today's early indications, then, reflect a nod to the understanding that it isn't all good out there.
One can extrapolate the same from the otherwise impressive earnings report from Walmart (WMT), a leading low-price retailer. Note that Walmart said on its conference call that U.S. customers remained focused on value and convenience and that upper-income households drove share gains in the quarter. Shares of WMT are up 2.5%.
Home improvement retailer Lowe's (LOW), meanwhile, topped consensus Q3 estimates and bumped up its guidance ranges for FY25, yet its improved comparable sales guidance (down -3.0% to -3.5% from -3.5% to -4.0%) isn't exactly a picture of strength. Shares of LOW are down 1.2%.
That can be said as well for the October Housing Starts and Buildings Permits Report.
Total housing starts declined 3.1% month-over-month to a seasonally adjusted annual rate of 1.311 million units (Briefing.com consensus 1.340 million) with single-unit starts down 6.9%. Building permits were down 0.6% month-over-month to a seasonally adjusted annual rate of 1.416 million (Briefing.com consensus 1.441 million) with single-unit permits up just 0.5%.
The key takeaway from the report is that it included some weather impact from the hurricanes, evidenced by a 10.2% month-over-month decline in starts in the South -- the nation's largest homebuilding region -- but overall it was a generally soft report on a year-over-year basis with total starts down 4.0% and total permits down 7.7%.
