Housing Under Pressure
Mortgage rates hit their highest level of the year, adding fresh strain on housing. Pending home sales dropped 2.3% in July, the lowest since January, as high borrowing costs and record home prices kept buyers away. The average 30-year mortgage rate sat near 6.77% in early August, still close to a one-year high. Homes are staying on the market longer, and fewer buyers are bidding above asking prices. Housing activity could weaken further in the coming months.
Tesla's Cybercab Push
Tesla (TSLA) is reportedly aiming for an August launch in Austin for the Cybercab, a robotaxi with no steering wheel or brake pedals. Autonomous driving is meant to become a major future revenue source. Tesla plans to first offer Cybercab rides to employees on public roads, after already running them on private roads, before folding the vehicles into its robotaxi service. The timeline could change, and it stays unclear whether Tesla has regulatory approval for commercial rides.
Amazon (AMZN)-backed Zoox already won approval from the NHTSA in July to offer commercial rides in its own steering-wheel- and pedal-free vehicles, a regulatory head start. Tesla's robotaxi fleet has logged 380,000 driverless miles, against more than 220 million for Waymo. Tesla's AI-focused capital spending is more than doubling year over year, to nearly $5.8 billion.
The Global Bond Sell-Off
Yields are backing up across the world, with bonds selling off from Germany to France to Japan. The drivers: government spending, corporate bond issuance, and higher oil prices. Some say the bond vigilantes are stirring. The key question for stocks is when higher yields start to matter. So far, the move has triggered a rotation across global markets rather than a full sell-off.
In the US, the rise in yields has been a slow creep rather than a spike. Because that move has not been sharp over the last several months compared with past periods, market breadth held up. Higher rates compete with stocks, yet banks in Europe and Japan are benefiting from the steepening yield curve and performing well.
Other Data
Industrial production is holding up, still helped by AI investment. That fits with strong ISM manufacturing PMIs at 4-year highs and the Empire State Manufacturing Survey, its best since 2021. The weak spot was import prices, especially at the core, which came in strong relative to history, much of it concentrated in capital goods tied to AI. That points to some inflation pressure building.
Earnings on Deck
TJX Companies (TJX) reports in the morning, a read on the lower-to-middle-end consumer. EPS is expected near $1.18 on revenue of $15.14 billion, a projected year-over-year gain of about 7.3% for EPS and 5% for revenue. The most important figure is comparable store sales, to see whether the first quarter's 6% rise held and whether shoppers stay in bargain-hunt mode.
Retail earnings continue with Target (TGT), a comeback story up almost 60% year to date. Lowe's (LOW), down 10% year to date, is having a tough run and will serve as another check on housing amid high rates and slow sales, following Home Depot (HD). The focus is on whether Lowe's operational efficiency gains can offset the macro headwinds hitting the sector.
