Monday, January 13, 2025

Market indexes closed mostly higher to start off a new trading week, with the Dow gathering +358 points, +0.86%, and the S&P 500 +9 points, +0.16%. The Nasdaq is the only one of the major indexes to finish the session in the red: -73 points, or -0.38%. The small-cap Russell 2000 gained +5 points on the day, +0.24%.

Ultimately, markets are down over the past month of trading, but still up nicely over the past six months, from +0.3% on the small-cap Russell to +5.2% on the blue-chip Dow. Bond yields had risen from last week but behaved themselves today: +4.792% on the 10-year and +4.396% on the 2-year. We’re now more 100 days beyond the inverted bond yield among 2’s and 10’s, which lasted from July 2023 through August 2024.

A recent estimate on property damages from the fires in Los Angeles today ballooned up on the high-end of expectations, from $150 billion in potential losses expected earlier to $270 billion currently. This would make it at least very near what California Governor Gavin Newsom said could be the single-worst natural disaster in U.S. history, at least by property value. These events will ultimately lead to insurers firming up prices at higher levels, but for now, there is still a lot of work to bring back Pacific Palisades and the other neighborhoods from this disaster.

KB Home Performs Better than Expected in Q4

Homebuilder KB Home KBH reported beats on both earnings and sales in its Q4 this afternoon, with earnings of $2.52 per share outpacing the Zacks consensus by 7 cents, and +2.0 billion in quarterly revenues narrowly beyond the $1.99 billion in the Zacks consensus. This represents year-over-year growth of +19% on the top line.

While the homebuilder — which specializes in first-time homes and “move-up” single family housing — was a tad light on gross margins in the quarter, but deliveries rose +17% year over year, to 3978 units. The Average Selling Price grew +3%, and shares of KBH are up +8% in late trading on the news. This more than makes up for the -3.7% sell-off year to date.

Check out the updated Zacks Earnings Calendar here.

What to Expect in the Stock Market Tuesday

We’ll see Producer Price Index (PPI) numbers out tomorrow morning. These are expected to track mostly in-line with what we’ve seen recently: +0.4% on headline month over month, with core increasing to +0.3% from the previous month’s +0.1%. Year over year PPI was +3.0% a month ago, +3.4% on core. These figures represent the highest levels of the previous 12 months, and off the lows of +1.0% on headline and +1.8% on core.

There will also be an updated Beige Book out at 2pm ET Tuesday. We’ve been slight improvements in most regions in this economic survey, with nearly all in positive territory as of the last edition. Other economic prints would lead us to believe we’ll see more of the same in this first Beige Book release of 2025. Public addresses from Fed Presidents John Williams (New York) and Jeffrey Schmid (Kansas City).

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