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Housing Numbers Shrink as Q1 Earnings Heat Up: BAC, JNJ, UNH

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Tuesday, April 16th, 2024

New housing data has hit the tape this morning. Housing Starts for March came in -14.7% to 1.3 million seasonally adjusted, annualized units. The previous month’s tally has been downwardly revised to 1.45 million from 1.52 million initially reported. Both single-family and multi-family units were lower than expected: 1.1 million and 299K, respectively.

Only the West posted a positive number: +7.1%, compared with the -36% result in the Northeast and -23% in the Midwest. Mortgage rates all around the country — still up near 7% — are keeping a real damper on the new housing market.

Building Permits — a proxy for future Starts — also fell, though not as precipitously. Coming in -4.3% from estimates, permits reached 1.46 million, below the 1.51 million anticipated and the lowest monthly figure since July. The last year and a half has brought some real flatlining to these numbers: the trailing 12-month high came in August of last year, 1.54 million, and the low came from April ’23: 1.42 million.

Pre-market futures took a positive message from this. Futures ahead of the print were +185 points on the Dow, +2 on the S&P 500 and the Nasdaq +5; immediately afterward they were +215 Dow, +8 S&P and +30 Nasdaq. A cooling housing market is part of what the Fed needs to see before pulling the trigger on lowering interest rate levels.

By the same token, lowering rates in the near term may constitute a heating up in housing, which would increase inflation. While generational homeownership trends look to have hit a snag — not only from high mortgage rates, but “work from home” culture as well — in the near-term it’s probably a “good problem” to have.

Bank of America (BAC - Free Report) posted Q1 earnings results ahead of today’s opening bell. The banking major outperformed the Zacks consensus by 6 cents to 83 cents per share, though was still down from the 94 cents reported in the year-ago quarter. Revenues of $25.82 billion outpaced estimates by +2.4%. Unsurprisingly, interest rate income came in hotter for the quarter, as did its investment banking business. Shares were up +2% on the news in early trading. For more on BAC’s earnings, click here.

Johnson & Johnson (JNJ - Free Report) also released Q1 earnings this morning. The diversified pharma and medical devices giant beat expectations on its bottom line — $2.71 per share versus $2.64 consensus, for a +2.65% positive surprise — on revenues which came in a smidge light of estimates, -0.09% to $21.38 billion. Shares have sold off another -1% from the -7% year to date. Shares are close to near-term lows from late October last year. The company brought a Zacks Rank #3 into the earnings release. For more on JNJ’s earnings, click here.

UnitedHealthcare (UNH - Free Report) , on the other hand, is +7% on its Q1 report. Earnings of $6.91 per share sped past the $6.63 anticipated, for a +4.22% positive surprise, on $99.8 billion in quarterly sales, which narrowly beat consensus by +0.55%. Shares had taken a hit on news reports about a cyber hack having hit a recently acquired outpost — Change Healthcare, acquired in 2022 by UNH unit Optum — but shares have blossomed +7.5% in pre-market activity on the strong earnings report. For more on UNH’s earnings, click here.

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