Mixed Housing Data For December

This morning, big-box department store Macy’s (NYSE:M) released its fiscal Q4 2019 earnings report (ended January) this morning, beating bottom-line estimates while coming in-line on sales: $2.73 per share beat the Zacks estimate by 22 cents on revenues of $8.46 billion in the quarter. Same-store sales rose 0.7% year over year, though sales overall were lower than the $8.67 billion in the year-ago quarter. Macy’s had earlier warned about a difficult holiday shopping season being reflected in its Q4 results.

Macy’s is a Zacks Rank #3 (Hold)-rated stock, with a Zacks Style Score (Value - Growth - Momentum) of A. Shares are up slightly in today’s pre-market on the big bottom-line beat, though are still well off their early-year highs after the company warned about results. For more on M’s earnings, click here.

Home Depot (NYSE:HD) shares are down more than 3% after reporting its Q4 2019 earnings results, missing on both top and bottom lines. Earnings of $2.09 per share missed estimates by 7 cents, while $26.49 billion in sales was down from the $26.56 billion in the Zacks consensus. Even with comps up 5% year over year, a dividend increase of 32% and a $15 billion share buyback program announced, Home Depot has posted its first earnings miss in several quarters.

Housing Data Hits the Tape

We see new reads from the housing market, though they’re not really “new”: December numbers for Housing Starts and Building Permits (delayed from the 5-week government shutdown at the start of 2019) saw weakness on one side and slight improvement in the other. Housing Starts for December fell 11.2% versus expectations of -1.3%, with 1.078 million seasonally adjusted, annualized units in the month coming short of the 1.25 million expected and the downwardly revised 1.214 million in November.

Building Permits swung to a slight positive at 0.3% for December, up from the -2.9% anticipated. A total of 1.326 million new Permits — a forward indicator for future Starts — ticked up from the previous month’s 1.32 million. Yet the mortgage rate tumbled from 5% in November to under 4.5% in December, and we did not see much growth on new homes slated during that time period. That said, winter months for new Starts and Permits are not the crucial read for the housing industry; we look toward increased activity in the spring months.

Also, housing data from the Case-Shiller index (from December as well, but this report always comes out this late) showed the slowest growth in home sales for 3 1/2 years. A headline of 4.7% growth slipped from the downwardly revised November read of 5.1%. Housing prices are considered steep in most regions, so slowing growth rates was somewhat expected.

After the Bell

A new Consumer Confidence Index for February is expected after today’s opening bell, along with a New Homes Sales report for January (also delayed from the government shutdown). Also, Fed Chair Jerome Powell gives his testimony on the Hill this morning.