Ahead of today’s opening bell, we discussed whether the markets were “boosted” again today, with the Dow plunging more than -500 points to the lows of the session and the Nasdaq at -4%. Well, the jigsaw came, but – on the Dow, at least – it disappeared as the session closed: the Dow was +0.15% at the bell, the S&P 500 was -0.80 %. The Nasdaq rebounded but still came out at -270 points or -2.35%, and the small cap Russell 2000 at -1.35%.

One of the metrics we’ve been paying close attention to last week and that’s in home sales, and today Sales of new homes for April came out much lower than expected: 591,000 versus the lower-revised 709,000 (March originally reported 763,000, so that’s a big drop). That equates to a -16.6% month-over-month decline, pushing inventories to 9-month supply levels. Year over year, new home prices are down -26.9%.

Although not a good development for home developers – Toll Brothers TOL, for example, was down -4.4% today – this implies downward pressure on asking prices, which is a good move to lower inflation levels overall. The median price of a newly built home jumped +20% from a year ago to $450,600. That compares to last week’s median existing home sales price of $391,200, up 15% year over year. We will start looking for these numbers to reverse in future monthly prints.

PMI Manufacturing and Services for May, both are down month over month, but nothing overwhelming: +57.5 on manufacturing is down from the 59.2 reported in April; Services hit 53.5, significantly lower than the 55.6 a month ago. Yet all of these data points are well north of 50, which distinguishes growth from contraction. Some decline here can also be interpreted as good news – at least on the goods production side, as this would indicate that higher inventories may be falling.

We’ve also talked at length about the struggles the retail sector has been experiencing this first quarter earnings season, but one company that seems to have a splendid plan in place is Nordstrom JWN, which posted positive surprises on both the top and bottom after the closing bell: -$0.06 per share was 2 cents better than the Zacks consensus, and a big improvement from the Covid-ravaged quarter of -64 cents per share a year ago; sales were $3.57 billion, easily beating the $3.33 billion expected by analysts and representing +19% year-over-year revenue growth.

Nordstrom also increased its guidance range for full-year earnings to $3.20-3.50 per share; the Zacks consensus was $3.30. The company cited higher pricing power and lower shrinkage rates in the quarter, and the words “supply chain productivity” sound like music to a retail investor’s ears. The improvements are approaching pre-pandemic levels for Nordstrom. Late trading had sent shares up +19% on the news, but have since come back a bit for Zacks Rank #2 (Buy) rated stocks.

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