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Today in the Market (9/8/2022)

Good Evening. After fluctuating between gains and losses for the majority of the trading day, U.S. stocks increased for a second straight session on Thursday.

The Nasdaq Composite rose 0.60%, while the Dow Jones rose 0.61%. However, with a gain of 0.66%, the S&P 500 took the top spot for today.

CLOTHING RETAILER SUFFERS

American Eagle Outfitters (AEO) stock was declining today following the clothing retailer’s dismal second-quarter earnings announcement. American Eagle suffered from a slowdown in consumer spending and high inventory levels, which made it necessary for the company to mark down more products than usual.

  • Earnings Per Share: $0.04 vs. $0.13 expected

And… In order to increase its financial flexibility, management also announced that it was postponing its payout of dividends. It had been offering a hefty dividend yield of 6.20% before the earnings report.

Jay Schottenstein, the CEO, stated: This is an unprecedented time in retail. As we cycle exceptional demand from last year, a tougher macro environment is impacting consumer spending behavior. Second quarter performance reflected these challenges, constraining revenue and amplifying margin pressure as we fully cleared through excess spring and summer goods.”

Going Forward… According to advice, management anticipates that the difficulties will continue and the forecast and dividend suspension indicate that the stock will likely struggle until macroeconomic conditions improve.

HOUSE MARKET

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Mortgage rates touched their highest levels since November 2008, hurting homebuyer demand. According to Freddie Mac, the 30-year fixed mortgage rate increased from 5.66% the previous week to 5.89% this week. Rates are now over 2.50% points higher than they were at the beginning of the year after rising by over three-quarters of a point in only three weeks.

Rising borrowing costs and inventory shortages have driven away inflation-stricken homebuyers, and those who are still interested are no longer rushing to submit offers, pushing sellers to reevaluate their asking prices.

On top of that, According to Fannie Mae, a loss in seller confidence caused housing sentiment to reach a new record low in August. Only 59% of sellers think now is a good time to sell, which is the lowest percentage in two years, and 35% of respondents think now is a bad time.

Homeowners all around the country have been forced to reduce their listing prices in order to draw in purchasers. From 11% in August of last year to 19.4% in August, more properties had price reductions. That is close to the average for the period from 2017-2019.

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