Technology took it on the chin Tuesday, with sector bellwether and AI revolutionary Nvidia (NVDA) giving back 3.5% and $154 billion in market capitalization. But it was a broadly "risk off" market again as participants evaluate earnings and incoming data and await more words from the Federal Reserve.
The Roundhill Magnificent Seven ETF (MAGS), which includes NVDA as well as Microsoft (MSFT), Apple (AAPL), Meta Platforms (META), Alphabet (GOOGL), Amazon.com (AMZN), and Tesla (TSLA), was down 1.6%.
All of the Magnificent 7 stocks were lower on the day, and Nvidia was No. 30 among the 30 Dow Jones stocks. But a combination of news from the earnings calendar and the economic calendar made it a Home Depot (HD) kind of day.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Census Bureau said before Tuesday's opening bell that housing starts increased 5.2% month over month but building permits declined by 2.8% in July. That's a second consecutive monthly increase for starts.
But permit issuance – historically a stronger indicator of overall housing demand, according to Barclays Chief U.S. Economist Marc Giannoni – shows "a sustained downtrend amid elevated mortgage rates and continued trade policy uncertainty."
A softer-than-expected July jobs report already has investors, traders and speculators pricing in an 84.9% probability of a 25-basis-point trim to the federal funds rate at the next Fed meeting in September, down from 93.9% a week ago.
Indeed, mixed inflation data make the case less clear than price action in the 30-day fed funds futures market. But Neil Dutta of Renaissance Macro Research sees something even ominous in the building permits data.
As Dutta explained to co-hosts Gunjan Banerji and Telis Demos of The Wall Street Journal during his appearance on their August 17 Take On the Week podcast, single-family building permits are down more than 30% from their peak.
And single-family residential real estate is "sort of the backbone of the housing market" and "the fact that that's down implies that we probably won't see much construction activity over the course of the year. You don't really have much growth in the pipeline."
Homebuilders, therefore, will be making fewer homes. "They're going to be focusing on the homes they've already sold, finishing those," Dutta adds, "and they're probably going to rationalize their labor demands."
As Banerji observes, falling employment in the construction sector can be a really bad sign for the economy. "It's growing at a pace now that's typically consistent with very, very weak economic activity," Dutta concludes.
By the closing bell, the blue-chip Dow Jones Industrial Average – which had traded in record-high territory earlier in the day – had inched up 10 points to 44,922. The broad-based S&P 500 was down 0.6% to 6,411, and the tech-heavy Nasdaq Composite had shed 1.5% to 21,315.
Fed chair candidate Bowman speaks (about bitcoin)
Fed Vice Chair for Supervision Michelle Bowman – on the expanded list of potential candidates to replace Jerome Powell as Fed chair – delivered a speech on "Embracing Innovation" at the Wyoming Blockchain Symposium.
Bowman and Fed Governor Christopher Waller – also in the running to be the next Fed chair – dissented from the Federal Open Market Committee's decision to keep interest rates unchanged at the July Fed meeting.
Bowman's presentation shed little light on her position on interest rates. Rather, she discussed how innovation in blockchain could create "profound" opportunities and possibilities down the road. That her appearance comes at a time when cryptocurrency and bitcoin are generally rising once more in profile as well as price is worth noting.
As for interest rates, Bowman told Bloomberg earlier that she hasn't changed her views and still supports a rate cut.
And Wednesday's release of the minutes from the July FOMC meeting will give investors, traders and speculators something more to talk about until Fed Chair Jerome Powell delivers his final Jackson Hole Economic Symposium speech Friday at 10 am ET.
HD tops the Dow despite EPS miss
Home Depot was No. 1 among the 30 Dow Jones stocks Tuesday even though the big-box retailer missed the FactSet-compiled consensus forecast for its fiscal 2025 second-quarter sales and earnings per share.
Home Depot reported EPS of $4.68 (+0.2% year over year) on revenue of $45.3 billion (+4.9% YoY) vs estimates of $4.72 and $45.4 billion, respectively. Management reiterated guidance for total sales growth for the full fiscal year of 2.8% and a "slight decline" of approximately 2% for EPS.
CEO Ted Decker said momentum from late 2024 "continued throughout the first half as customers engaged more broadly in smaller home improvement projects." Decker noted that Home Depot continues "to grow market share."
According to Louis Navellier of Navellier & Associates, "The shares initially dipped on the misses but rose on optimism that if and when mortgage rates fall that the company will benefit from pent-up demand from the housing market."
This is the first time Home Depot has missed on both the top and bottom line since 2014, according to S&P Global Market Intelligence.
Showing why it's one of the best retail stocks to buy and hold, HD stock was up 3.2% Tuesday and is now up 4.7% so far in 2025.
Related content
- Stock Picks That Billionaires Love
- How to Invest for a Fall Rate Cut by the Fed
- Best Closed-End Funds to Buy Now
-
My car is 10 years old. Should I drop down to minimum coverage on my car insurance?Reducing your car insurance to minimum coverage could save you thousands on premiums. But when is it worth the risk?
-
Suze Orman's Number One Retirement MistakeInterview Find out what Suze Orman thinks costs people thousands of dollars in retirement.
-
Don't Be a Sucker: The Truth About Guarantor and Cosigner AgreementsThere are significant financial and relationship risks involved if you agree to be a cosigner or guarantor. Make sure you perform your due diligence, and know exactly what you're getting into, before agreeing to such a commitment.
-
The Hidden Risk Lurking in Most Retirement Plans: Human BehaviorWhat's one of the differences between a good financial adviser and a great one? The ability to use behavioral coaching to guide clients away from emotional decision-making and toward retirement success.
-
Addressing Your Clients' Emotional Side: Communication Techniques for Financial AdvisersRather than focusing only on financial plans, you can better serve your clients — and grow your business — by learning what to say and do when a client gets anxious or emotional.
-
Stocks Struggle Ahead of Busy Fed Week: Stock Market TodayThe minutes from the July Fed meeting will be released Wednesday, while Chair Powell will deliver a key speech at Jackson Hole on Friday.
-
Is Crypto Investing Coming to a Credit Union Near You?Credit unions are getting in on crypto investing through partnerships with third-party platforms, but the risks to investors still apply.
-
Seven Hidden Downsides of Dividend Investing, From a Financial AdviserDividend investing could be draining your wealth with unexpected costs and limited growth potential. Here are some downsides, along with smarter strategies to take control of your retirement income.
-
How to Position Your Business for a Lucrative Exit Despite Private Equity's SlowdownAs private equity firms seek strongly performing companies, crafting a narrative about your business' high-quality assets and future opportunities can make a lucrative sale possible.
-
Don't Regret Buying a Home: An Expert Guide to Navigating Today's Tough Housing MarketWhether you're a first-time buyer, want to upsize/downsize or move closer to work or family, it's critical to stay within your budget and have an emergency fund.
