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Markets Close Mostly Lower Again; ROST, PANW Report Earnings

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Market indices closed lower again today, following the single-worst trading day in two years yesterday and easily taking out whatever floor had been built the last time a plurality of investors believed the markets were trading at the bottom. The Dow, off session lows of -474 points, closed -236 points or -0.75%. The S&P 500 finished exactly at 3900, -0.59% on the day. The Nasdaq dipped -0.26%, still -30% from its November high. Only the small-cap Russell 2000 eked out a +0.075% gain.

Big-box retail is still out at the woodshed: Target (TGT - Free Report) is down another -5% today after getting beaten -25% following its disappointing earnings report yesterday, and even discount retail is getting hit after-hours. TJX Companies (TJX - Free Report) performed well yesterday, but that may simply represent exceptional execution on its part.

Ross Stores (ROST - Free Report) are down -15% in late trading Thursday, following its miss on both top and bottom lines on its Q1 report — only its third earnings miss in the past five years. Guidance is more conservative as it figures how to turn around -7% comps year over year. The drying up of government stimulus and dissipation of pent-up demand post-Covid look be things of the past.

However, Palo Alto Networks (PANW - Free Report) shares are +11% on its fiscal Q3 earnings report after the close, with earnings of $1.79 per share outpacing the $1.67 expected and $1.38 per share reported a year ago. Revenues grew +29% year over year on +40% Billings in the quarter, sending up next-quarter guidance, as well. The stock has already reduced more than half of its -20% deficit year to date.

Existing Home Sales Dwindle

Both because it provides part of the key to lower inflation over time — and because it’s less depressing than focusing on other aspects of our current trading environment — we’ve taken a closer look at Housing this week. Plenty of new data points released have helped firm up our understanding of this space, including today’s Existing Home Sales (seasonally adjusted, annualized) for April.

With help from CNBC’s Diana Olick in a report citing the National Association of Realtors today, we see that 5.61 million existing homes were on the market last month — the lowest mark we’ve seen since the start of the pandemic. Existing Home Sales are -2.4% month over month and -5.9% year over year, which is the slowest since June 2020.

Basically, homeowners appear more reluctant to sell these days, and it makes sense when you see mortgage rates have gone up 75 basis points on average to around 5.5%. Couple this with the highest-ever median single-family home price of $391,200, +14.8% year over year, and the sticker-shock effect is likely setting in on the home-buying market.

That said, this depends greatly on the value of the home in the first place: while houses between $100-250K are down -29% from this time last year, homes between $500-750K are +19%, and over $1 million they are +16%. Also, a solid 25% of existing home purchases are done in straight cash — a very high percentage, although these also likely pertain to those homes on the higher end of the value scale.

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