Lower rates could boost housing stocks, but risks remain

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Lower U.S. interest rates could help support outperforming U.S. homebuilder stocks, even as they raise worries about the economy, while a bonanza of industry data and Federal Reserve speakers next week are likely to help shape the outlook.

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NEW YORK (Reuters) – Lower U.S. interest rates could help support outperforming U.S. homebuilder stocks, even as they raise worries about the economy, while a bonanza of industry data and Federal Reserve speakers next week are likely to help shape the outlook.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 13, 2019. REUTERS/Eduardo Munoz

Wedbush analysts in a research note on Thursday said that builders have been reducing square footages as mortgage rates have declined, which has addressed affordability issues. The firm has a bullish bias on homebuilder shares, with an “outperform” rating on William Lyon Homes (WLH.N), Beazer Homes USA (BZH.N), Lennar and others.

Investors will pay close attention to comments from Fed Chairman Jerome Powell, who is set to give a speech on rates and policy at the annual Jackson Hole, Wyoming, policy symposium.

“The fact that the Fed has moved to a more dovish position suggests that those rates should remain relatively low compared to what … we saw in late 2018,” said Robert Dietz, chief economist for the National Association of Home Builders.

Reporting by Evan Sully; additional reporting by Caroline Valetkevitch; editing by Alden Bentley and Jonathan Oatis


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Lower U.S. interest rates could help support outperforming U.S. homebuilder stocks, even as they raise worries about the economy, while a bonanza of industry data and Federal Reserve speakers next week are likely to help shape the outlook.

Source: {authorlink}

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