'Mild Recession' To Hit Homebuilders, Auto Stocks In Second Half Of 2024, Analyst Says
Portfolio Pulse from Neil Dennis
Analysts at Nomura predict a 'mild recession' in the second half of 2024, impacting homebuilders and auto stocks due to tight financial conditions. Equity markets have retreated in 2024, with concerns over an economic slowdown affecting corporate earnings. The SPDR S&P 500 ETF (SPY) and Invesco QQQ Trust (QQQ) showed slight pre-market gains after recent losses. Homebuilders like DR Horton (DHI), Lennar (LEN), and Pulte Group (PHM) face risks from high mortgage rates and a potential slowdown in housing markets. The iShares U.S. Home Construction ETF (ITB) also declined after a strong 2023. The labor market is cooling, with potential increases in unemployment rates. Consumer spending is expected to slow, with rising credit card delinquency rates and the resumption of student loan repayments. Auto stocks like CarMax (KMX), Ford Motors (F), and Dana Inc (DAN) have already seen declines in early 2024.
January 04, 2024 | 2:17 pm
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NEGATIVE IMPACT
Dana Inc has experienced an 8% drop. The company could see further short-term declines due to the broader challenges facing the auto sector.
Dana Inc's stock is likely to be negatively impacted in the short term by the broader challenges in the auto sector, exacerbated by the predicted recession and reduced consumer spending.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
DHI is down 2.7% over the past two days, and with the predicted recession, the stock may face further short-term declines due to a potential housing market slowdown.
DR Horton's stock is likely to be negatively impacted by the predicted recession and associated housing market challenges, leading to a potential decrease in stock price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Ford Motors is off 5.1% early in 2024. The predicted recession and consumer credit issues could further dampen the stock's short-term prospects.
Ford's stock may be adversely affected in the short term by the anticipated recession and the slowdown in consumer spending, particularly on large durable goods like automobiles.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
ITB is down 3.5% over the past two days after a strong previous year. The ETF could see further short-term declines amid recession concerns affecting the housing sector.
The iShares U.S. Home Construction ETF, which includes homebuilders, may be negatively impacted in the short term by the predicted recession and its effect on the housing market.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 85
NEGATIVE IMPACT
CarMax has seen a 5.5% decline in two days. With consumer spending expected to slow, the stock may face additional short-term pressure.
CarMax's recent decline could continue in the short term due to the expected consumer spending slowdown and the impact of the forecasted recession on the auto industry.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
LEN has fallen 2.3% so far in 2024, and the expected economic downturn could further pressure the stock, especially if the housing market weakens.
Lennar's stock may continue to suffer in the short term due to the anticipated recession and its impact on the housing market and consumer spending.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
PHM, up 111% in 2023, has lost 2.7% in 2024. The forecasted recession could lead to further declines, particularly in the luxury home segment.
Pulte Group's focus on higher-end homes may make it more susceptible to economic downturns, potentially leading to a decrease in its stock price in the short term.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
QQQ is up slightly in pre-market trading, but the tech-heavy index could be affected by the same economic concerns that are impacting the broader market.
Given that QQQ includes many tech stocks, which can be sensitive to economic cycles, the forecasted recession could negatively influence its short-term performance.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
SPY showed a slight pre-market gain after recent losses, but concerns over a potential recession could lead to increased volatility and potential declines.
As SPY tracks the broader market, recession concerns and economic slowdown predictions could lead to a negative impact on its price in the short term.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70