Stocks waver after key data as Micron slides

High home prices and elevated mortgages are keeping prospective buyers away from the housing market.

Pending home sales, a forward-looking indicator of home sales based on contract signings, fell 2.1% in May from the month prior, according to National Association of Realtors data. Year-over-year, they were down 6.6%.

The Midwest and South posted a drop in contract signings in May from the month before. The Northeast and West recorded gains. All regions across the country registered losses in activity on an annual basis.

“The market is at an interesting point with rising inventory and lower demand,” said NAR chief economist Lawrence Yun. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”

Mortgage rates are sitting at their lowest average in three months, but that’s still not enough to lure buyers. About 95% of mortgage borrowers have interest rates below current market rates, and almost 80% have rates more than 2 percentage points below market rates, per Goldman Sachs data.

Looking ahead, Yun expects “moderately lower mortgage rates, higher home sales and stabilizing home prices.”

Walgreens stock plunged 24% to touch its lowest level since 1997 after the pharmacy chain lowered its fiscal 2024 earnings guidance given “challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment”

“Our customers have become increasingly selective and price-sensitive in their purchases,” said Walgreens Boots Alliance CEO Tim Wentworth during the company’s earnings call on Thursday morning.

Management indicated 25% of the company’s stores are not currently contributing to the long-term strategy and “changes are imminent.”

Walgreens plans to close “a significant portion” of its underperforming stores over the next three years.

The company expects adjusted earnings per share for the year to come in between $2.80 and $2.95, down from its prior forecast of $3.20 to $3.35.

Communication stocks lifted the Nasdaq Composite (^IXIC) into positive territory to rise 0.3% shortly after the market open on Thursday.

Netflix (NFLX) and Meta (META) both rose more than 1%, helping lift the tech heavy sector which had previously dipped just below the flatline.

The S&P 500 (^GSPC) also rose 0.2% while the Dow Jones Industrial Average (^DJI) was little changed.

Meanwhile chip giant Nvidia (NVDA) was fractionally down after Micron’s (MU) sales forecast failed to enthuse investors on the AI craze that has fueled the broader market rally this year.

Stocks opened slightly lower on Thursday morning after a GDP reading for the first quarter of 2024 came in slightly higher than the prior print for the same three-month period.

The S&P 500 (^GSPC) was little changed while the Dow Jones Industrial Average (^DJI) slipped 0.1%. The tech-heavy Nasdaq Composite (^IXIC) fell just below the flatline.

Real gross domestic product (GDP) increased at an annual rate of 1.4% in the first quarter of 2024, according to the third estimate by the Bureau of Economic Development released on Thursday morning. The print was slightly higher than the prior estimate of 1.3%.

A reading on initial weekly jobless claims came in at 233,000, a decrease of 6,000 from the previous week, according to Department of Labor data.

On the corporate front, Chipmaker Micron’s (MU) sales forecast for the current quarter met expectations but failed to satisfy investors looking for stellar outperformance from AI-linked companies. The stock fell about 4% in early trading. AI chip giant Nvidia (NVDA) also fell almost 1% at the open.

Levi’s (LEVI) shares are getting slammed by 15% in the pre-market following earnings.

And I think it’s deserved for two reasons.

First, China sales tanked 10% from the prior year. I have been chatting to a good number of folks of late who have recently visited China. One theme is that Chinese consumers are feeling on the gloomy side and not spending like in years past. That mood is impacting demand for Levi’s jeans, Starbucks (SBUX) coffee and — according to General Mills’ (GIS) earnings call yesterday — Haagen Dazs ice cream.

It’s hard to see the inflection point in China.

Same goes for the Levi’s wholesale business, or the business that sells into department stores. Sales fell 4% from the prior year. The company’s commentary suggests wholesale demand may not inflect until 2025.

I plan to put some of my concerns to Levi’s CFO Harmit Singh today at 10:30 a.m. ET on Yahoo Finance. Tune in!