Trade Trends | Market Outlook

HousingZone Stocks Slide in September Quarter

September stocks ended mixed as Rita joined Hurricane Katrina to blow a huge question mark into the economy. Katrina is being tallied as perhaps the costliest storm on U.S. record, and both storms hammered consumer confidence to the lowest point in 13 years, according to a consumer sentiment survey released by the University of Michigan. August consumer spending dropped and inflation rose, attributed in large part to higher gasoline prices, and the Fed, as anticipated, hiked interest rates another quarter-point.

However, the Chicago purchasing managers’ index jumped to 60.5 in September, after 49.2 registered in August, the lowest number since April 2003. Economists had expected the index to rise to 51.00. “One cannot deny that Katrina ironically may have had a positive effect on this index because of the big surge in orders,” said Cary Leahey, senior managing director at Decision Economics in New York.

For our session ended September 30, 2005, both the Builders’ and the Product Manufacturers’ Stock Indexes slipped into the red. On the Builders’ side, the index fell 22.05 points, or 1.64%, to close at 1321.39. Declining issues overcame advancing issues at a count of 21-to-15. The Product Manufacturers’ Index lost 3.34 points, or 0.35 percent, to end the month at 947.49. Declining issues outpaced advancing issues at an 8-to-5 count.

In the Product Manufacturers’ Index, shares of USG bounded forward after the company said that an Internal Revenue Service audit will boost its third quarter earnings by $25 million, and its net cash outflow will increase by $105 million. The IRS made decisions on interest debt incurred before USG filed for bankruptcy protection. USG jumped 5.87 points, or 9.34 percent, and closed at 68.72. USG was our top dollar and percentage gainer.

Fortune Brands, however, slid 5.65 points, or 6.50 percent to close at 81.33. The company said that the Federal Trade Commission cleared its acquisition of Maker’s Mark. Fortune also owns Jim Beam bourbon, and regulatory scrutiny was initiated by Fortune’s prominent position in that sector. However, investment firm Banc of America Securities initiated coverage on Fortune with a rating of “neutral.” Fortune was our top dollar loser this month.

On the Builder’s side of the ledger, Fleetwood surged forward 2.19 points, or 21.66 percent, to end at 12.30. Fleetwood’s stock has been boosted by the expectation that the Federal Emergency Management Agency will need to make large-scale purchases of its products for those displaced by Katrina. Fleetwood was the Builders’ top percentage gainer.

St. Joe’s pullback after its recent rally continued, and shares faltered 12.76 points, or 16.97 percent. Wachovia Securities analyst Christopher Haley upped his rating on the stock to “outperform” from “market perform.” He said that the weakness in the stock’s performance is short term, although high gasoline prices may continue to weigh on the company. St. Joe ended at 62.45, and was our top dollar and percentage loser on the Builders’ side.