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Pre-Markets Try Again for Gains; J&J, Halliburton Beat in Q2

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Tuesday, July 19, 2022

Pre-market futures indicate investors will try it again today: we’re up on the major indices, as we were 24 hours ago — before the trading session lost its mojo on weaker guidance from Apple (AAPL - Free Report) in its hiring practices. Today, we’re seeing modestly higher levels that have not changed much since economic and Q2 earnings data has dropped: the Dow is +160 points, the Nasdaq +95 and the S&P 500 +25 points.

A new Housing Starts report for June is out this morning, with a new cycle low set at 1.56 million seasonally adjusted, annualized units — down -2% versus expectations of +1.4%. The May headline was revised up to 1.59 million, which would still have been the lowest print since October of last year. As recently as April of this year, we were still north of 1.8 million new housing starts.

Building Permits — seen as a forward indicator of future starts — performed slightly better than anticipated to 1.69 million from 1.68 million expected, down -0.6% from the previous month’s unrevised 1.70 million. But today’s headline is still the lowest figure since the 1.62 million new permits we saw issued in September of last year. On both starts and permits, it’s clear the U.S. Housing sector is losing steam from its robust period over the previous six months or so.

The biggest weakness in this data is also the place where the sector relies heaviest: single-family homes, which have fallen -8% on both starts and permits, -11% year over year. Multi-family is improving, which is good news for Housing overall; the market is in need of new multi-unit rental properties. But the real gains are made in single-family, which is falling off.

This is good news for bringing down the tautness of U.S. inflation, even if it is a short-term hardship for homeowners looking to put their property on the market. From about the start of the Fed hiking interest rates, we’ve seen the housing market cool noticeably. In fact, one could argue we saw Q1 housing activity pulled from Q2 in anticipation of higher interest rates directly leading to higher mortgage costs.

Ahead of today’s bell, Johnson & Johnson (JNJ - Free Report) has reported Q2 earnings two cents ahead of expectations to $2.59 per share, higher than the $2.48 reported in the year-ago quarter. J&J is one of those companies that never misses on its bottom line — scroll back on its earnings charts for more than a decade for proof. Revenues of $24.02 billion in the quarter topped expectations by +0.45%.

Shares are up +1.1% on this news in today’s pre-market; the company is trading in the green throughout 2022, up +4.6% over the past six months. This, even though the company is trimming the hedges on its guidance through the rest of the year. For more on JNJ’s earnings, click here.

Meanwhile, oil services behemoth Halliburton (HAL - Free Report) posted a strong Q2 in its report released this morning: earnings of 49 cents per share on $5.07 billion in quarterly sales outperformed the Zacks consensus by +8.9% and +7.7%, respectively. The company has benefited from high oil prices during the quarter, and the Zacks Rank #2 (Buy) stock has only one miss on its bottom line in the past five years. Shares are up +1.5% in the pre-market, +20% year to date. For more on HAL’s earnings, click here.


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