In Wednesday morning trading, watch out for Nasdaq jumping, as it continues to erase recent losses. SpaceX (SPCX) gained in after-hours trading, which should lift Tesla (TSLA). It also renewed buyer enthusiasm for the big tech companies like Apple (AAPL) and Microsoft (MSFT).
The U.S. housing sector is an entirely different story. In the Federal Reserve minutes from the September meeting, the Fed said that most participants assessed another increase in its target range for the federal funds rate.
At first, U.S. 10-year and 30-year bond yields rose to multi-decade highs. In the last week, yields moderated. Still, that would not suggest the Fed would pause rate hikes.
Consumers are already bracing for higher credit costs. Credit card borrowers will need to pay more if variable rates rise. To price in higher margins for credit card firms, shares of MasterCard (MA) and Visa (V) closed at 52-week highs.
The housing market will likely continue its slump. Goldman Sachs cited elevated mortgage rates hurting homeownership levels. That, in turn, might weigh on the U.S. economy.
In September, pending home sales fell 7.3%. Sales are at their lowest levels since 2001. Mortgage rates are around 7.5%, up from 6.7%.
Investors should avoid holding D.R. Horton (DHI), Lennar (LEN), and PulteGroup (PHM). Financial firms like SoFi (SOFI) and mortgage firm Rocket Companies (RKT) are trading lower. Their shares are pricing in a housing slowdown.
