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Markets Flat, with Homebuilders Turning Negative

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Markets closed flat for the most part on this first trading day of a new week. The Dow, S&P 500 and Nasdaq all finished the session up single basis points, aside from the small-cap Russell 2000, which fell behind early in the day and closed at session lows: -0.65%. Over the past five trading days, only the Dow clings to gains of -0.09% — the other indices are slightly in the red.

One of the most sluggish industries on the day was Real Estate, and some of this likely has to do with the first negative Homebuilders’ Survey in the past seven months: 45, from 50 posted a month ago. This September print comes in at levels not seen since April; we hit a cycle-high of 56 in July, when things like 7%+ mortgage rates were being better tolerated. Now we see, at an average mortgage rate of 7.32%,  high prices “taking a toll on builder confidence and consumer demand,” according to the company CEO.

As of now, 32% of homebuilders have cut prices to gather more interest among respective buyers. That’s up from 25% in August, and the average discount for listed housing is now -6%. That said, the market had been remaining positive on the space, with the homebuilder ETF, (ITB - Free Report) , +35% year to date. We’ll see if this continues or if the mid-summer peak winds up representing the cycle high.

We mentioned this morning in this space that the odds remain very low that the Fed will further raise interest rates at the end of their two-day FOMC meeting. Analyst have apparently kicked this can to the next Fed meeting, which doesn’t happen til November, to begin speculating on whether or not they will choose to raise another quarter-point. The Fed will remain data-dependent, as always, and the hope is that monthly economic reports continue the moderate but unmistakeable arc down from 40-year highs we saw a year ago.

We’re also still awaiting the finalization of Instacart’s pricing just before its IPO this week. The company had ratcheted up expectations from $26-28 per share to $28-30 per share, with 22 million shares on offer. At this level, Instacart could see its IPO bring in $660 million at the high end, at a valuation of nearly $10 billion. The grocery tech delivery firm’s public listing will have been sandwiched between last week’s very successful Arm Holdings (ARM - Free Report) IPO and marketing firm Klaviyo later this week.

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