Group 1: Market Overview - Major stock indexes closed mixed on Friday but recorded solid weekly gains, with the Dow Jones Industrial Average rising nearly 1% for its first winning week in three weeks, and the S&P 500 and Nasdaq Composite achieving their best weekly performances since early August [2] - Treasury yields remained near recent lows, while gold prices reached new records as markets anticipated a potential Federal Reserve pivot [2] Group 2: Economic Indicators - Upcoming economic data includes a weekly update on jobless claims and fresh manufacturing data, which will provide insights into the strength of the economy [3] - Mortgage rates saw their largest weekly drop in a year, with the average 30-year fixed mortgage rate decreasing to 6.35% from 6.5% the previous week [3] Group 3: Earnings Reports - Earnings season is nearing its end, with key reports expected from FedEx, Lennar, General Mills, Darden, and Cracker Barrel, with FedEx's results being particularly significant as a proxy for global trade and the US economy [4] Group 4: Federal Reserve Decision - The Federal Reserve's interest rate decision and Chair Jerome Powell's press conference are anticipated to be the key economic events of the week, alongside the release of the quarterly "dot plot" indicating policymakers' interest rate projections [5] - In June, the Fed projected two rate cuts for 2025, but the committee showed division, with seven members opposing any cuts compared to four in March [6] Group 5: Tariffs and Inflation - Tariffs are contributing to inflation, with US customs duties reaching a record $29.5 billion in August due to new "reciprocal" levies implemented by President Trump [7]

Group 1 - D.R. Horton, Inc. (NYSE:DHI) is considered one of the best cheap stocks for beginners, with Wells Fargo analyst Sam Reid raising the price target from $175 to $190 while maintaining an Overweight rating [1] - Following a recent earnings report, D.R. Horton saw a 17% increase in stock price, attributed to adjusted price targets in the homebuilding sector and increased investor optimism regarding interest rates [2] - The company operates in the sale and construction of single-family housing, with geographical segments including Northwest, Southwest, South Central, Southeast, East, and North [3]

Core Insights - The U.S. housing market is experiencing a slump, with the Federal Reserve noting slow economic growth attributed to declining residential investment [1][2] - Housing demand is weakening, leading to an increase in available homes and a decrease in house prices [1][2] Market Data - Existing-home sales increased by only 0.8% year over year in July, while inventory rose by 15.4%, indicating a slackening market [3] - The months' supply of homes increased from 4.0 to 4.6, and new-home sales fell year over year, with the months' supply rate rising to 9.2 months from 7.9 months [3] Homebuilding Industry - The homebuilding industry is showing signs of caution, which may worsen the U.S. undersupply problem as the economics of new construction and lack of buyer demand create a negative cycle [4] Borrowing Rates Impact - High mortgage rates are affecting housing affordability, and many homeowners are "locked in" to low rates from the pandemic, complicating the supply issue [5] - Fed research indicates that nearly half of the drop in consumer mobility from 2021 to 2022 is due to the mortgage rate lock-in effect [5] First-Time Buyers - First-time buyers are particularly affected by higher mortgage rates, which disproportionately reduce home purchases among lower-income households, delaying homeownership aspirations [6]

Core Viewpoint - Nucor, a leading steelmaker, has been included in Berkshire Hathaway's portfolio, indicating strong investor confidence and potential for growth in the steel and construction sectors [1][4]. Company Overview - Nucor is recognized as the largest and most diversified steel company in the U.S., producing approximately 25% of the country's raw steel [7][10]. - The company utilizes electric arc furnaces (EAFs), which are more energy-efficient and flexible compared to traditional steel-making methods [9]. Financial Performance - Nucor has a history of consistent profitability and strong free cash flow management, having increased its shareholder dividend for 52 consecutive years [10]. - As of June 30, Berkshire's stake in Nucor was valued at $857 million, highlighting the company's financial significance [4]. Strategic Initiatives - In 2024, Nucor established Nucor Data Systems (NDS) to support the booming data center infrastructure market, positioning itself as a key player in the construction of facilities essential for AI technology [11][12]. - Nucor's focus on modernizing its operations and adapting to market demands reflects its forward-thinking approach [12]. Market Context - The investment in Nucor aligns with broader trends in American infrastructure development, driven by governmental support for domestic manufacturing [6][7]. - Nucor's innovative practices and commitment to sustainability position it well for future growth in the steel industry [9][12].

Core Insights - KB Home has announced the grand opening of Belcourt Place, a new-home community in El Monte, California, which is characterized as a vibrant and culturally rich city [1] - The new homes are designed with modern living in mind, featuring popular elements such as modern kitchens that overlook large great rooms [1] Company Overview - KB Home is recognized as one of the largest and most trusted homebuilders in the United States [1] - The company focuses on creating homes that cater to contemporary lifestyles, emphasizing family-friendly activities and a dynamic mix of dining, shopping, and entertainment in the communities they develop [1]

Business Overview - A company built a business constructing houses for Florida's "Marvelous Middle" [1] Financial Performance - The company's current situation is facing challenges [1]

Core Insights - Companies are experiencing reduced margins due to a surplus of inventory in certain regions while facing high demand in others [1] Group 1 - The presence of surplus inventory in some areas is negatively impacting profit margins for companies [1] - High demand in other regions contrasts with the inventory surplus, creating a mixed market environment [1]

Market Overview - The S&P 500 and Nasdaq 100 have reached new all-time highs, driven by expectations of Federal Reserve interest rate cuts [2][4] - The Dow Jones Industrials Index has decreased by -0.31% [1] - Higher bond yields are limiting stock market gains, with the 10-year T-note yield rising to 4.06% [3][8] Economic Indicators - The University of Michigan's September consumer sentiment index fell to a 4-month low of 55.4, below expectations of 58.0 [5] - Inflation expectations for the next 5-10 years increased to +3.9% from +3.5% in August, contrary to expectations of a decline [5][8] - Markets are pricing in a 100% chance of a -25 basis point rate cut at the upcoming FOMC meeting [6][9] Company Movements - Warner Bros Discovery (WBD) surged over +11% following reports of a potential acquisition bid from Paramount Skydance [13] - Tesla (TSLA) rose more than +5% after receiving approval for testing autonomous vehicles in Nevada [13] - Micron Technology (MU) increased by over +3% due to strong demand for AI chips, contributing to a +13% rally this week [14] - Super Micro Computer (SMCI) gained more than +2% after announcing high-volume deliveries of Nvidia systems [14] - Microsoft (MSFT) rose over +1% after reaching a preliminary agreement with OpenAI regarding their partnership [15] Declines in Stock Prices - Lululemon Athletica (LULU) fell more than -3% after a price target cut by Bank of America [16] - Oracle (ORCL) decreased over -3% amid reports of insider backing for a competing acquisition bid [17] - MGM Resorts International (MGM) declined more than -1% due to insider selling activity [18]

Market Overview - The S&P 500 Index is down -0.25%, the Dow Jones Industrials Index is down -0.26%, and the Nasdaq 100 Index is down -0.13% [1] - Stock indexes turned lower due to an increase in bond yields, with the 10-year T-note yield rising +5 basis points to 4.49% [2] - Initial gains in stocks were seen, with the S&P 500 and Dow Jones reaching one-week highs, and the Nasdaq 100 hitting a three-month high [2] Economic Indicators - US MBA mortgage applications fell -1.2% for the week ending May 23, with the purchase mortgage sub-index up +2.7% and the refinancing sub-index down -7.1% [4] - The average 30-year fixed mortgage rate increased by +6 basis points to 6.98% [4] - The May Richmond Fed manufacturing survey rose by +4 to -9, aligning with expectations [4] - The market is currently discounting a 2% chance of a -25 basis point rate cut at the next FOMC meeting on June 17-18 [4] Earnings and Corporate Performance - Over 90% of S&P 500 companies have reported Q1 earnings, with 77% beating estimates, marking the highest percentage since Q2 2024 [6] - Q1 earnings growth is at +13.1%, surpassing the expected +6.6% [6] - Full-year 2025 corporate profits for the S&P 500 are projected to rise +9.4%, down from an earlier forecast of +12.5% [6] Company-Specific Movements - Okta is down more than -12% after forecasting Q2 performance obligations below consensus [12] - Galaxy Digital is down more than -12% following an underwritten offering announcement [12] - PDD Holdings is down more than -3% after a double downgrade by UOB [12] - Elevance Health is up more than +1% after reaffirming its full-year profit forecast [14] - Fair Isaac is up more than +7% after an upgrade by Baird [14] - Abercrombie & Fitch is up more than +25% after reporting Q1 net sales above consensus and raising its full-year sales forecast [15] - Box Inc is up more than +17% after increasing its full-year revenue forecast [15] - Vail Resorts is up more than +12% after reaffirming fiscal guidance and CEO reappointment [16]

Core Insights - KB Home has announced the grand opening of Cielo Reserve, a new single-story home community in Tucson's Valencia Corridor, emphasizing its proximity to historic downtown and pedestrian-friendly amenities [1] Company Overview - KB Home is recognized as one of the largest and most trusted homebuilders in the U.S., indicating a strong market position and brand reputation [1] Product Offering - The new homes at Cielo Reserve are designed with modern living in mind, featuring popular elements such as modern kitchens that overlook large great rooms, catering to contemporary lifestyle preferences [1]