The Federal Reserve was top of mind for investors Monday, with the central bank's next policy decision – a likely 75 basis-point rate hike – due out Wednesday. This led to back-and-forth trading for much of the session, though the major market indexes ultimately ended in positive territory today.
While the economic calendar is relatively thin over the next few days, Wall Street will see a round of housing data in the leadup to the Fed announcement. Today, that was the release of the National Association of Home Builders (NAHB)/Wells Fargo housing market index, which showed builder confidence fell 3 points in September to 46, its lowest level since spring 2020. This was the ninth straight monthly drop in the index, and came amid a "combination of elevated interest rates, persistent building material supply-chain disruptions and high home prices [that] continue to take a toll on affordability," the report stated.
"We expect the other housing market releases this week (housing starts, existing home sales and building permits) will show similar weakness," says Raymond James economist Giampiero Fuentes. "Bad news continues to be good news for the Fed, as it indicates its tightening cycle is working to slow demand."
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In terms of sector performance, materials stocks (+1.7%) were the leaders. Healthcare (-0.5%), meanwhile, lagged as COVID-19 vaccine makers like Pfizer (PFE, -1.3%) and Moderna (MRNA, -7.1%) slid after President Joe Biden said in last night's "60 Minutes" interview that "the pandemic is over."
As for the major indexes, the Nasdaq Composite rose 0.8% to 11,535, while the S&P 500 Index (+0.7% at 3,899) and the Dow Jones Industrial Average (+0.6% at 31,019) also closed higher.
Other news in the stock market today:
- The small-cap Russell 2000 gained 0.8% to 1,812.
- U.S. crude futures rose 0.7% to finish at $85.73 per barrel.
- Gold futures slipped 0.3% to settle at $1,678.20 an ounce.
- Bitcoin shed 0.3% to $19,561.50. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- AutoZone (AZO) fell 3.1% after the auto parts retailer reported earnings. In its fiscal fourth quarter, AZO recorded earnings of $40.51 per share and revenue of $5.35 billion, both higher than analysts were expecting. Same-store sales growth of 6.2% also beat the consensus estimate. "We think the release will go a long way towards easing investor concerns regarding a slowdown in DIY auto aftermarket sales after Advance Auto Parts' earnings miss and guidance cut last month, which it blamed on weak DIY demand," says CFRA Research analyst Garrett Nelson. "We maintain a Hold on valuation, noting that AZO has been the best-performing auto aftermarket stock so far this year."
- Airline stocks were some of the best performers today. Among those taking flight were American Airlines (AAL, +3.4%), Delta Air Lines (DAL, +2.6%) and United Airlines (UAL, +3.3%).
Why Investors Should Consider EV Stocks
Rising interest rates have made it a particularly difficult year for growth stocks. This is because higher rates can boost borrowing costs for these companies. And this, in turn, can weigh on their profit margins. One area of growth that has been hit particularly hard are makers of electric vehicles (EVs), which, in addition to battling higher rates, have also had to contend with rising competition, with nearly every traditional automaker throwing their hat into the EV ring.
But this ramp up in competition isn't necessarily bad for electric vehicle stocks. Rather, it expands the overall market, and that market is growing by leaps and bounds, with EV sales up 63% year-over-year in the first half of 2022, according to research firm Canalys. For investors, this year's pullback in EV stocks creates an opportunity to get in on a growing trend at a more attractive valuation. Here, we've put together 10 electric vehicle stocks to watch as industry sales heat up. Check them out.
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