Housing, building materials stocks brought down by earnings
Dow, Nasdaq now ~flat; S&P 500 slips
Industrials weakest S&P sector; Staples lead gainers
Dollar ~flat; gold gains ~1%; crude up ~2.5%; Bitcoin off ~1%
U.S. 10-Year Treasury yield edges up to ~4.20%
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HOUSING, BUILDING MATERIALS STOCKS BROUGHT DOWN BY EARNINGS
Shares of housing and building materials companies are lower on Tuesday after investors were disappointed by quarterly updates from handful of housing-related companies.
On the homebuilder side, NVR Inc NVR.N shares are down about 3% after it missed Wall Street estimates for third-quarter earnings per share as higher lot costs and closing cost assistance weighed on profit margins.
Also, U.S. homebuilder PulteGroup PHM.N is seeing its shares fall about 6% after it reported home sale gross margins below year-ago levels even as it beat Wall Street estimates for third-quarter earnings.
On the materials side, shares of paint company Sherwin-Williams SHW.N are down >4% after it missed third-quarter profit estimates due to lower sales in segments catering to housing, as well as automotive and aerospace.
While they did not report earnings themselves, the reports appear to be pressuring related companies such as Builders FirstSource BLDR.N, which is off >2%, Martin Marietta MLM.N, down 1.7% 2% and Vulcan Materials VMC.N, down about 2%. Masco Corp MAS.N is down >2%, while Carlisle CSL.N is down 1.6%.
Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, pointed to the weaker than expected earnings reports for the declines as well as concerns that interest rates could impact demand.
"There's news from companies in the sector that is a little weaker than expected. That plus the backup in interest rates is making other companies in the sector weaker than the market today," he said.
While the broader S&P 500 index .SPX is off just 0.2% on Tuesday, the S&P 500 building products index .SPLRCBULD is down 1.4%. The building products index had gained sharply in September, but started to lose steam around mid October.
"As mortgage rates were coming down there was optimism more homebuilding would occur. When rates turn around there's a likelihood home sales and home building will fall off subsequent to that," said Tuz.
(Sinéad Carew)
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FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
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BENCHMARK TREASURY YIELD: CAN THE CLIMB CLEAR THE CLOUD? - CLICK HERE
CAUTION! S&P POSITIONING HAS BECOME 'STRETCHED' - CLICK HERE
BETTING ON M&A? HERE'S WHAT TO OWN - CLICK HERE
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